Have You Thought About Trading FOREX? Here Are Some Good Reasons To Start
By: Tracy Lenyk
Are you looking to make money? Have you thought about trading on the forex? If you answered yes keep reading. Maybe you have thought that forex trading is just for people with a lot of knowledge and experience with traditional type of investments such as stocks, bonds and commodities. The true of the matter is forex trading is for anyone. Forex traders are made up of a large group of people ranging from everyday people to large corporations.
The foreign exchange market offers you, as an investor the potential to make a lot of money. I don't want to miss lead you but, with any investment there is also a chance to loss money. So do bet the farm, educate yourself and get all the proper tools that you need be a successful forex trader. I have come up with a few good reasons why you should start trading on the foreign exchange, which is commonly referred to as the forex or FX. More and more well informed, individuals and entrepreneurs are diversifying their traditional investments like bonds, stocks & commodities with FOREX
Here are some good reasons to start trading on the FOREX.
1) As a forex trader you will be trading in the world's largest financial market.
The FX market typically involves one party purchasing a quantity of one currency in exchange for paying a quantity of another. The foreign exchange market is the largest and most liquid financial market in the world, and includes trading between large banks, central banks, currency speculators , corporations, governments, and other institutions. The average daily volume in the global forex and related markets is continously growing and was has been reported to be over $4 trillion US.
2) The FX market is open 5 days a week / 24 hrs a day.
The stock market has set business hours and closed on banking holidays and weekends. The forex market is 24 hrs a day except on the weekends. The hours of the FX are 22:00 Coordinated Universal Time (UTC) on Sunday until 22:00 UTC Friday. As one market is opening, another countries market is closing. This is appealing to traders because it gives them the flexibility of when they want to trade. This allows forex traders to trade before or after their daily obligations. Most forex traders are using automated forex software applications. The forex trader enters the data into the application and then lets it run. Amazing!
3) The FOREX market is never a bear or a bull.
As a forex trader you can have access to an array of currencies. When you trade on the forex you are trading currencies "pairs". For example, US dollar vs. CHF (Swiss franc), one side of every currency pair (for example, USD/CHF) is constantly moving in relation to the other. When you make a forex transaction you are buying a particular currency, but at the same time you are selling the other currency in that particular pair. As the market moves, one of the currencies will increase in value and other will decrease in value. The key it is up to you to choose the correct currency to be long (the currency you bought) or short (the currency you sold).
4) The FOREX market offers a great amount of leverage.
You are permitted to trade foreign currencies on a highly leveraged basis sometimes up to 400 times your investment (400:1) with some brokers.
The mini FX accounts allow you to trade with just 0.25-7 of the contract value. They will instantly recognize that the FX market provides much greater leverage. The stock trader, who must post at least 50% margin, there's no comparison. If you're looking for an efficient market to trade in look no further, the Forex Market is the place.
5) Predictable Cycles and Trends.
Currency prices in the FX market generally repeat themselves in relatively predictable cycles, creating trends. The trends that foreign currencies develop are
Advantageous for traders who use the "technical" analysis verse the "fundamental" analysis. It is my opinion that both methods should be used. But, as a technically trained trader, you can easily identify new trends and breakouts, to enter and exit positions.
6) Forex brokers commissions and FX liquidity.
There are none of the usual fees, which futures and equity traders pay. FOREX transactions are traded over-the-counter (OTC), via a global electronic network. When a FX transaction takes place, what you see on your trading screen, is what you get. Thus, allowing you to make quick decisions on your trades without having to worry or account for fees that may affect your profit/loss or slippage. But in the equity and commodity markets, you must pay both a commission and exchange fees. The OTC structure of the FX market eliminates exchange and clearing fees, which in turn lowers transaction costs.
Like all traded financial products, over-the-counter currency (OTC) trading involves a bid/ask spread. This spread represents the prices at which your counterpart is willing to trade. The broker receives a part of this bid/ask spread.
What is traded, bought and sold on the forex market is something that can easily be liquidated, meaning it can be turned back to cash fast, or often times it is actually going to be cash. From one currency to another, the availability of cash in the forex market is something that can happen fast for any investor from any country. Because the currency market offers round-the-clock liquidity, you receive tight, competitive spreads both intra-day and night.
As you can see the FX market can be a very profitable market. As a forex trader you do not need a degree or any special training. But you do need to educate yourself and be aware economic factors that relate to FOREX. Using an automated software application will help you get the ball rolling. Happy trading
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