Forex trading has evolved as a passion for many traders around the world. Investors feel desperate to invest in forex to crave some crazy profits in less time. The risk involved in forex trading is also relatively lower than any other form of investment. To get started, you don’t need big amounts, all you have to do is to open a forex account with a broker, deposit funds in your account and you are all set to go trading. In this piece, we discuss top 10 reasons to start with forex trading.
Forex trading can be done round the clock five days a week. Traders can access a wide range of tradable instruments to invest in, using the leverages offered by many brokers across the globe. It is considered to be one of the most volatile as well as the liquid markets of the world that has a daily trading volume of more than 5.3 trillion dollars on an average. Listed below are top 10 reasons to start with forex trading.
Round The Clock Accessibility
The forex market remains open throughout the week except for Saturday and Sunday. People can trade various financial instruments day and night by accessing different forex markets of the world. Forex trading starts with a session starting in New Zealand from Sunday night and ends on Friday in New York. It is to be noted that the market is supposed to be highly volatile during the time when different time’s zones overlap one another across different regions of the world.
High Liquidity
Forex market due to its high liquid nature allows investors to grab different trading opportunities. People can take advantage of the forex market’s high liquidity factor and make money trading various financial instruments without delaying them for no reason. High liquidity refers to the ability to convert assets into quick cash without affecting the prevailing price of an underlying asset. Even if the impact due to conversion is deemed necessary, it is supposed to be relatively small or negligible.
Forex Trading For Everyone
One of the main reasons to start with forex trading is that it is easy to access. Often investors need to invest a lot of capital to receive a return on their investments, however, forex trading can be started with any amount. It can be as less as you can afford. Investors can also choose to invest a big amount in order to receive greater returns. In short, forex is for everyone.
Provision of Leverages
Forex trading is usually done by availing leverages. There are many brokers who offer generous leverages to their customers making them trade big lots. This means that even with limited funds available to trade, big positions can be opened. Let’s make it simpler, for instance, a person having $500 invested in the forex is able to trade a lot of worth $250,000 by availing the leverage of 1:500 offered by his/her broker.
Unrestricted Trading Conditions
Traders are free to trade the forex the way they wish to, unlike equity market trading where one is restricted to sell short-term positions. You are allowed to both buy and hold your stock or sell it off right away acting as per prevailing market conditions.
Low Cost of Trading
Forex trading involves low transactional cost. Only a fraction of cost per transaction is charged by brokers. Unlike other forms of investments where you sometimes need to incur additional charges which may exceed your potential profit.
Transparency
Being highly volatile, the forex market is free from biased trading outputs or funds manipulation, unlike exchange oriented markets where key players have got an edge to dominate the market keeping all the potential benefit to themselves. Therefore, transparency of the forex market is yet another reason why one should start with forex trading.
High Volatility Levels
Since forex trading undergoes massive turnover, therefore, the volatility level of the forex market remains always high. Therefore, traders can access more trading opportunities. One can choose his/her favorite currency pair to trade. Let me mention some of the currency pairs that are always considered favorite for novice traders such as AUD/NZD, USD/CHF etc. On the other side, more experienced traders may wish to trade EUR/USD because of its high range and increased volatility.
Flexible Contract sizes
Unlike futures markets, forex contracts can be managed or controlled by brokers instead of exchanges. It works over the counter. What I mean to say is that forex traders can choose the size of a trading lot. Trading lots starting from 0.01 to 1000 pips are all available to get into. This is how traders can manage their risk efficiently.
. Less Capital Requirement
As mentioned earlier, forex trading doesn’t require you to invest big amounts as compared to that of stock or futures trading. Even trading options may cost you more than trading forex. You may find many brokers offering mini or micro accounts to start with. You can start as low as depositing $25 only. Where on earth would you ever be able to find such a low-level cost investment opportunity?
Final Words
Having said that I would like to end my discussion here stating that no investment can yield a result until managed properly. Same goes for trading forex. Besides being a highly profitable investment opportunity, it has the tendency to make you go liquidated in all of a sudden. The best thing to start with forex trading is to learn it. Avoid committing same mistakes repeatedly. Stay calm and focused while trading. Believe me if you keep going the same way sooner or later you are going to become a successful trader for sure.