Investing your money, instead of hoarding, is something that has been trending for some time now. People don’t only want to save for later – they are constantly thinking about the ways to multiply what they already have. Among the most popular means to do that, there’s forex trading. According to Engine Forex, every day, it generates more than 5 trillion US dollars in sales. And it will probably only rise, as more and more people decide to try their luck and skills, and make some money. Of course, nothing is perfect. Forex trading can be risky, that’s why it can also be profitable, but many benefits convince people to choose it over different ways of investing. What are some of these perks?
- It’s open 24h/5
Except for the weekends, when the whole market is closed, you can almost always get a place to trade – because of time zones, you will be able to find something open and ready to welcome you at practically any time. The market closes when the last major market, New York, closes on Friday at 5 pm, so you only won’t have a chance to work on weekends. However, if you prefer to trade during the nights on weekdays – no problem. There’s no centralised exchange, like in the case of stocks, you don’t have to wait for a bell or rush to execute an order before the end of the day.
- There’s high liquidity
Because of the number of participants (a quick reminder: $5 trillion in sales daily), there’s much higher liquidity on the currency market than on any other financial market in the world. What does it mean for you? Well, liquidity is about converting your assets into cash. When it’s high, you can do it quicker, smoother, and with small spreads. Plus, that’s why you can always trade – there will be someone on the other side willing to trade back at any time.
- There’s leverage
Even a small deposit (or margin) may allow you to go all the way into trading and with leverage you, in a way, borrow money from your broker to trade more than you actually have in your account. The leverage offers may differ among various brokers, but you will always have an opportunity to get something. This may be a more efficient way of trading, but you have to bear in mind that just like your potential gain is amplified, so are the losses.
- Transaction costs are low
Normally, the transaction cost is included in the price in the market in the form of the spread which is later taken by forex brokers as payment for enabling you to trade. In the case of most currencies, it’s 1/100 of a per cent, but not all of them, though, so make sure to check it every time you decide to trade. Also, you need to know if the broker of your choice charges any kind of a commission, as it’s an individual thing.
- The market has no owner
Due to its size and all participants, it is impossible for any man, any institution, any trader to really control the market and its prices for a more extended period. There are no middlemen, and there’s no central market for forex trading. It really levels itself when necessary, and it’s only influenced by the situations in the world – the economy, politics, etc. You trade directly with other participants while a forex broker only makes it easier for you, doesn’t control it.
- It’s for everybody
You don’t have to know how to swim with the sharks to start trading currencies with a profit. You don’t need a lot of money to get going (it seems especially not-costly when you compare it with stocks or options). It’s easily accessible for people all over the world, and it’s not that complicated. It’s important to start with smaller amounts of money to see if it’s something for you. Do your research and take it slow.
- There’s always a profit potential
It all depends on your chosen strategy, but you can trade at all times and even profit from both rising and falling prices of your currencies. If your timing is right, you may profit more from volatile periods; of course, it’s riskier, but so is everything that’s beneficial. It doesn’t matter if you chose a long-term strategy or you trade day-to-day – you can always find an opportunity.
As you can see, there are many advantages to forex trading, and it’s not surprising that it attracts so many people willing to put their money into it. If you decide to join them, it’s important to stay cautious, but there are many different investment strategies to choose from, and you can easily find something that will suit your needs, abilities and limitations. It’s easy to start exchanging currencies and, with time, you will gain knowledge and experience to be able to predict changes better, and make more money.