Home Investing Top 11 Reasons to Trade on the Forex Market

Top 11 Reasons to Trade on the Forex Market

546
7

In order to achieve financial independence, one needs to employ various money making strategies: saving, investing, running a business etc. While Forex trading is still something new for many people, there are clear reasons why it’s a great idea to start trading on the Forex market.

The Forex market is just HUGE

The FX market simply dwarfs the futures and equities markets, at an estimated $5.3 trillion / day in trading volume (as reported in Jan. 2014). This means an unlimited earning potential for someone who is skilled enough and takes the time to get educated as much as possible.

You get a 24 hour access to the Forex market

Not being tied to a ‘regular’ schedule, you can enter or exit a position whenever you like it. It’s an ideal money making strategies both for the full time investor and someone who still has to work a ‘9 to 5’ job. Another aspect to have in mind is that you can react fast at any news break that would influence your trading. Many big companies withhold major news (earning reports, big personnel moves etc.) until the market closes, so that traders cannot react as fast. with Forex, whatever happens, you can react immediately to minimize your losses or increase your potential gains.

The Foreign Exchange market is more liquid than the equity market

Being the LARGEST in the world, the Forex market allows its traders to always find a fair price, since there’s always someone willing to buy or sell, depending on your needs.

Profits can be made on both failing and rising markets

Whatever happens on the market you can still earn a profit by selling or buying, depending on your strategy. The Forex market starts to get predictable for experienced traders, this allows you to maximize profits, by being able to ‘sense’ when there’s a change in the market.

Currency prices cannot be influenced by the big ‘players’

We all know that example of a big investor who either sells a lot of shares or buys a lot of them, influencing the market for that stock in such manner, that other investors are gonna start losing money. In Forex trading no investor can too big as to influence the market.

Monetary leverage

Even with small accounts (say $1000), an investor can control a large currency position. You can trade even $100,000 for instance with just a ‘grand’ invested. With a leverage of up to 50-1, the FX trading allows you to control a large amount of one currency with a very small percentage of its true value. Of course, this can work against you, but there is a great opportunity for earning, if you are using it prudently.

Limited risk

As opposed to the futures market, where you are sometimes stuck in a position and losing money, on the Forex market, you can leave your position at any time, if news break related to your investments. We cannot discuss about zero risks, any trading does carry risks, but they are smaller, especially for the more educated and experienced investors.

No commission fees

Most brokers don’t charge commissions, they earn money off the spreads between currencies. This allows you to minimize your costs and maximize profits.

Transparency

A great thing about the Forex market is the fact there are no hidden figures. You get what you see, without any surprises. This allows the trader to move fast and minimize losses on a particular trade.

Small initial investment

Most Forex traders don’t have tens of thousands of dollars to invest, so being able to start with as little as $1,000 (or less) allows many small-investors to get access to the market.

Easy to learn

For a first time trader, the Forex market is similar to learning Chinese, but there are a gazillion of resources out there to consult. You can (and should) create a test account to learn trading and then slowly move to a regular account that allows you to work with your own money. Forex is very logical and transparent, so, with some time spend educating yourself you can start successfully trading.

What other advantages do you think there are to trading on the Forex market. What makes you consider this type of investing?

7 COMMENTS

  1. I’ve just set up a test account and am trying to understand how Forex trading really works. It’s a bit complicated indeed, but I’m starting to get the hang of it, I think!
    I’m glad I stumbled across your website though. Any piece of advice on Forex trading is useful to newbies like me.

  2. “Big players” have always worried me. I have little knowledge about what the forex market is but I’m glad to hear about making a test account to test the waters so to speak. When I manage to save enough money for this, I would like to make a test account for myself. Being able to do more research for myself is just as important.

  3. I absolutely loved your article! I’m surprised you mentioned 11 reasons to start trading (I usually just stumble upon “top 5” LOL).
    In the least few years I noticed Forex trading is a very popular subject among people who talk about finance related topics, and for a long time I thought I’d stay away from it, since I compared it a lot with gambling your money away 😀 I never would have thought there’s an actual science behind it.

  4. Another interesting article! I’ve always read about Forex trading but never really had the courage to try it. A lot of people say that it’s fast money and you never had to time it. That reason alone makes me want to reconsider it as another income stream.

    Being a potential forex investor, what are particular resources would you suggest as a starting point? I agree that having a trial account will help me gain first hand experience. But how do I choose which currencies to pick?

LEAVE A REPLY

Please enter your comment!
Please enter your name here

*

CommentLuv badge