The foreign exchange is often seen as a gateway to trading for many beginners because of the simplicity behind it. Most people have a basic understanding of how currencies work, which can make the learning curve seem less steep for beginners. The forex market also has a very low barrier to entry and almost anyone can start trading, even with limited capital. But there are tons of other factors that make the forex market so interesting to both seasoned and new traders. Let’s take a look at some of the reasons why you should consider trading forex.
Accessibility and Size
One of the best things about the foreign exchange market is that it’s open 24/7, unlike the stock market, for instance. No need to wait for any institution to close or open and no having to scramble at the beginning of the trading session either. You could sign up with a broker like CM Trading and start trading around the clock through a variety of platforms.
Another factor that makes the forex so popular is its size. It is estimated that anywhere between two and five trillion dollars are being exchanged every day on the forex market. One of the advantages of this is that the market cannot be as easily manipulated by bigger players. You won’t have to worry about a huge buyout affecting the price of a currency, for instance. This gives the average trader as much power on the market as institutional players.
Different Ways to Trade
Each broker will have a wide variety of trading options and platforms you can choose from. CM Trading, for example, allows traders to trade currencies using their web browser, tablet or mobile through their MT4 platform. They also have a platform that allows you to copy successful trades from other traders. This makes learning the markets much easier and gives you much more flexibility than other methods. You’ll also have the chance to make profits much faster.
Another reason why the forex attracts so many traders is because of its liquidity. With forex, you know that there will always be buyers and sellers under normal market conditions. So, there’s never a chance that you’ll get “stuck” in a trade like with penny stocks or other financial instruments.
Use the Power of Leverage
Leverage allows you to control more assets than what you actually put down. For instance, if you go with a broker that gives you 50:1 leverage, this means that you’ll be able to control up to $5,000 in currency with only a $100 margin deposit. With leverage, you can maximize your profit opportunities while limiting risk capital. However, you should also know that you’ll need to have a solid risk management strategy since misusing leverage could lead to huge losses as well.
Investing in the forex market is a great idea if you have limited capital and want to test the waters with a market that is easier to understand. It’s also a great tool for people who want flexibility and access to the most liquid market on the planet.
Video – Do you Want to be a Trader?
Forex, stock, and commodity traders make a very good living. There are hundreds of different types of traders. Watch this Market Business News video for an explanation of what traders do.