Why Is Forex Trading So Popular?
8 reasons that make Forex Trading so Popular:
Reason 1) You can trade anywhere
Reason 2) You can trade at anytime
Reason 3) Different traders can use different trading strategies
Reason 4) You can earn large profits
Reason 5) There is a huge liquidity in the Forex market
Reason 6) You can leverage your position
Reason 7) There are loads of different instruments to trade
Reason 8) There are plenty of free helpful tools
Lets take a further look into each of these reasons in more detail, and what they mean for you as a trader.
Trading Forex is very accessible. All you need to need to have is a smart device (phone/PC) and an active internet connection. This means that you are able to trade from practically anywhere. Whether you plan to trade from your bedroom, or on the beach it doesn’t matter.
This is a massive benefits for Forex traders as it means that they can travel, check the markets and trade all at the same time.
The Forex market is open 24 hours a day, 5 days a week. Within a 24 hour period, the ‘trading session’ shifts between different regions throughout the world. A ‘trading session‘ is the official working/trading hours of that country/region.
The Forex market takes advantage of 4 different trading sessions (seen below), all of which are in different time zones. All of the trading sessions overlap each other. This is how the Forex market is able to operate 24 hours a day!
This means that if you’re busy throughout the day, then you can always trade in the evenings, and vice versa. This is unlike the stock market, where (for example) the UK market opens at 8am and closes at 4pm (GMT).
Different Traders can use Different Trading Strategies
There are hundreds of different trading strategies that suit different people for their differing needs. Whether you’re able to check the market constantly, or if you want to place only a couple of trades a week – then there is a strategy that will suit your needs. Check out our free Forex course, where we cover different loads of different strategies that may suit you.
You can earn Large Profits
It’s not unusual to earn large profits by trading Forex. Of course to get to that stage you need to have a solid amount of education and experience behind you. If you’re interested in taking your learning to the next stage, check out our advanced Forex courses.
There is huge Liquidity in the Forex market
Liquidity is the ease with which an asset can be converted into its cash value. The term liquidity can apply to any asset you may own.
How long will it take you to get the cash equivalent for your phone? Car? Tv? Currency Pair?
In Forex trading it is imperative that there is a huge liquidity pool to be able to match the huge volume of trades made every second.
When you open a long or buy position, someone must therefore take the other side of the trade with a short or sell position (and vice versa). Whenever you buy something – someone has to be selling it, and when you sell something – someone has to be buying it! This is how you are able to SELL a currency pair before you own it. Luckily, the Forex industry has great liquidity allowing traders to open and close positions instantaneously.
You can Leverage your position
Leverage is a concept that allows traders to open positions of much higher value than their account balance. Leverage decreases required margin levels and is one of the main reasons that makes Forex trading so popular. It is important to note that leverage is referred to as a ‘double-edged sword’, as it can amplify profits as well as losses.
Typically leverage will vary quite widely from anywhere between 2:1 up to 400:1. This means that for every 1 unit (of currency), you are able to manage positions anywhere between 2 to 400 times bigger than the funds that you have in your account.
There are loads of different instruments to trade
There are plenty of currency pairs and commodities that you can trade. From major currency pairs, to exotic currency pairs and precious metals.
There are plenty of Free Helpful tools
There are loads of helpful tools around the web that can help you out, like us! Check out our free Forex course to get you on your way to becoming a trading expert!