7 Reasons Why You Should Start Trading Forex Today
The forex market has been around for years, offering traders all around the world to trade currency 24 hours a day, 5 days a week. It’s no wonder that the forex market has grown from the $1 trillion dollars it was worth in 1992 to an astounding $5 trillion dollars in 2013, with no signs of slowing down anytime soon. It’s no secret that trading currency can be profitable if you know what you’re doing, and here are 7 good reasons why you should start trading forex today!
Low Minimum Deposit
There are many reasons why traders may want to trade forex. The most significant benefit of trading the foreign exchange market is the low minimum deposit required. In most cases, all you need to get started with forex trading is a couple hundred dollars or less in order to open an account and purchase a currency pair. Unlike some other asset classes, including traditional stocks, bonds, and mutual funds; low minimum deposits allow investors without a lot of money to use leverage or margin on foreign exchange transactions. For instance, if a trader has $200 to invest in the forex market, they can buy $1,000 worth of euros by borrowing $800 from their broker for leverage. Low Minimum Deposit: If a trader has $200 to invest in the forex market, they can buy $1,000 worth of euros by borrowing $800 from their broker for leverage. Leverage allows traders to make bigger trades that they would not be able to afford otherwise while still keeping their exposure at manageable levels. Essentially, the more risk someone wants to take on a trade, the more capital they have to put up front (or borrow). It's important to note that leverage also comes with risks. The higher the amount of leverage used, the higher chance there is for loss due to adverse price movement.
This could lead us into another topic about how these risks are mitigated but we'll save that discussion for another day!
The bottom line is this - trading forex offers you opportunity even if you're starting out with limited capital because it requires such little initial investment! What are good reasons to trade the forex market?
- Very low trading fees: Many people turn to forex trading because of its lower commissions as compared to other forms of investing. Some brokers offer commissions as low as 0% when you trade online through a reputable dealer. When commission rates are lower, more profits will remain in your pocket after making a sale which means that this form of investing has one of the lowest barriers to entry around. - Short and Long Term Strategies: One of the key features that sets apart forex trading from other forms of investing is the ability to apply short term strategies like scalping or longer term strategies like trend following. Scalping involves taking quick profitable positions using small increments of time and/or volume within minutes or hours whereas trend following involves holding positions over months or years. Because these two styles work differently, it helps traders diversify their portfolio and capitalize on different timescales.
- Diversification Benefits: Trading forex provides a great way to diversify your portfolio too. As previously mentioned, it's possible to trade both short term scalps AND long term trends. This means that the forex market is one of the best ways to hedge against a variety of scenarios.
- Increased Exposure to Global Markets: Foreign exchange markets exist 24 hours a day, 5 days a week. This makes forex trading accessible to everyone, regardless of whether or not they live in a developed country or an emerging nation. With increased global access, forex traders are exposed to new opportunities and new markets. This gives them a competitive edge against those who choose to limit themselves geographically or only trade during standard business hours.
- Higher Returns than Stocks and Bonds: So far, we've touched on many benefits that make trading forex appealing for beginners and experienced investors alike.
Higher Leverage
One of the biggest reasons that traders prefer forex to other markets is because there is much more leverage. Leverage enables you to trade with less capital, and this can result in higher profits for you. The more you have at stake, the greater your risk, but also the potential for higher gains. A 1:100 leverage means you can use one percent of your initial capital to buy one hundred units of a currency pair and sell it when the price goes up by one percent. For example, if I have $1000 in my account and I want to buy £50 worth of a currency pair, then I need $10 worth of base currency to do so (because 1% = £1). This would give me 10pips profit per point on my trade. However, if I had £200 in my account instead (£2000 total), then I would only need 0.5% of my total amount - or just £2 - to make the same trade as before. It’s important to remember that most brokers offer different types of accounts which may not allow 100% margin trading. Some will require 50%, while others will charge interest rates depending on the level of your account's balance. Margin requirements are something you should consider before signing up with any broker since they vary between companies.
Continuation (five+ sentences): Higher Volume and Open Markets: Trade volumes are typically higher than those seen in other financial markets, making forex an attractive option for many investors who don't want to miss out on opportunities due to lack of liquidity. There are always open markets available around the world, and some countries even offer 24-hour trading sessions such as Japan and Hong Kong.
Continuation (three+ sentences): No Fixed Entry Point: With traditional stocks, investors must purchase them from their original entry point. With forex, there is no fixed start point. Instead, investors place trades in whatever position they like - whether long or short. It’s impossible to predict what the market will do next; therefore, traders might be willing to put down larger margins knowing that losses won't exceed their deposit as quickly as they might have done with other investments. Plus, new traders will find it easier to learn how the forex market works without having to spend time studying charts and trying to decide where to enter a trade.
Continuation (two+ paragraphs): Further Benefits: Investing in the forex market offers additional benefits including transparent pricing structures and unlimited exposure. Traders can take advantage of free real-time quotes offered by many brokers which help them determine how likely they are going to get a good return on their investment. Plus, trading currencies allows you to diversify your portfolio among various regions all over the world. The ability to invest internationally makes this type of trading appealing for people living outside of large global economies like China or Brazil who want additional opportunities for growth outside of their local markets. Continuation (six+ sentences): Once you understand the forex market, trading becomes second nature. This can provide a peace of mind that is more difficult to achieve with other markets. And, there are few regulations or restrictions on the forex market, meaning that traders can take risks they wouldn't otherwise be able to in other markets.
Continuation (four+ sentences): Another great thing about the forex market is that there are no exit fees - unlike stocks and bonds which often have charges when you sell your holdings. So once you're ready to pull your money out of the market, there will be no cost involved for doing so. That means that any profits made through forex trading are yours to keep.
Continuation (eight+ sentences): For these reasons, many analysts believe that now is the perfect time to get started with investing in the forex market. If you need any advice on how best to go about opening up an account and getting started with trading, contact one of our team members today! We'll make sure to answer any questions you may have and walk you through the process of beginning to trade.
Continuation (seven+ sentences): Like forex? Be sure to check out 5 Tips To Get Started In Forex Trading for more information.
Lower Risks
Most people assume that the most risky form of trading is investing in stocks and shares. However, the forex market is where traders can see their investments dramatically go up or down in minutes or even seconds. One of the key benefits of this type of trading is that forex trades allow for an almost unlimited variety when it comes to what currency you are buying or selling which means that there are many opportunities for higher returns on investment.
In addition, as with all forms of trading, forex also has its risks and traders need to be aware before they start. They should always think about how much money they are willing to risk before starting a trade and look at what might happen if the trade goes wrong. There is no way of telling how any particular trade will turn out so it's important to weigh up all possible outcomes before committing your money. As with any type of trading, beginners should only invest small amounts of money until they get used to the process and build up their experience but those who have been doing this for a while may want to explore more high-risk options like margin trading which allows them to borrow extra funds from a broker in order to amplify their potential profits. The downside of these types of trades is that if the trader loses too much money then they could end up owing a lot more than they originally invested and that can lead to serious financial problems. Margin trading can also lead to situations where investors owe more than they actually own which is known as overleveraging and there are cases of people losing their entire life savings through this. It's very important for traders to carefully consider the costs involved with each trade before committing themselves and not just rely on luck to make a profit because forex trading requires discipline, skill, knowledge and time. If someone doesn't know what they're doing then it's likely that they'll lose more money than they would have gained if they had stuck to safer methods of investing such as stocks and shares. Of course, one thing that is good about forex trading is that it can give traders the opportunity to see their investments grow quickly. One study found that 60% of traders in the UK were taking advantage of online platforms for making quick transactions with currencies and other foreign exchange assets which means that a lot of people are already benefiting from the advantages offered by this type of trading.
In conclusion, forex trading gives traders lots of advantages including opportunities for higher returns on investment, low risk levels when compared to other types of trading and a chance to take part in potentially quick growths. With some discipline and careful consideration it's possible to enjoy increased profitability without worrying about taking on too much risk. Forex trading offers many advantages and traders should weigh up the pros and cons before deciding whether it's right for them. Forex trades involve relatively low risk levels when compared to other types of trading, giving traders opportunities for better returns on investment. However, it's important to remember that there is no guarantee of success and successful traders need to balance the benefits against any potential losses. Unlike other forms of trading, forex does not offer protection from loss and the consequences can be huge. For example, one person lost everything due to leveraging their bets so far beyond what they could afford - he ended up owing more than he owned. Before embarking on this type of trade people should first ensure that they fully understand how it works in order to avoid making decisions based purely on intuition.
Many Good Education Sources Online
One of the best reasons to trade the forex market is to do something for yourself. Successful traders make money and most importantly, enjoy trading. The forex market is a 24-hour market so you can find many good education sources online, from video tutorials to in-depth analysis that provides extensive insight into how this market operates. And with the vast amount of opportunities that exist every day, it's no wonder why people who get involved say they enjoy trading like never before. You can also leverage your experience by taking advantage of time zones, so if there are three different markets open at any given time, then you'll have better odds at finding an opportunity to profit. When you use all of these tools together, your success will be determined by hard work and dedication. One key to being successful is knowing when to enter and exit trades, which takes knowledge on what the market is doing at the time. With practice and patience, anyone can become a profitable trader! So, what are some other benefits of trading? 1) Minimal Skill Level Required: In contrast to other types of investing, forex trading doesn't require significant skill levels or financial know-how. 2) Predictable Outcomes: A number of factors contribute to each outcome in the stock market, but the potential outcomes in forex trades remain predictable because the currency pairs move independently from one another (no correlation). 3) Higher Profits Potential: If you're going to take risks anyway, then it may as well be worth it because profits are typically higher than traditional investments due to high volumes of transactions each day. You can take more risks without having to worry about unforeseen consequences like interest rates changing because the rates change automatically.
Another benefit of trading is that it offers a means for international diversification - which means putting your investment portfolio across multiple countries instead of only one country. Investing in different countries helps to balance out possible losses that could happen in any single country, since not all countries are affected equally during times of crisis. When you combine international diversification with hedging, investors greatly reduce their risk exposure while increasing their potential gains significantly - which makes this strategy ideal for both beginners and experienced traders alike. International diversification means betting on winners around the world instead of just one area where you might not even live; plus, hedging protects you against further downside risk without limiting upside potential.
Broad Market Coverage
Forex markets represent the most liquid market for exchanging currency in the world. There are a number of reasons why trading forex is a good choice: leverage, diversity, risk management, availability and low costs. The way the forex market works means that it is particularly appropriate for traders with smaller amounts of capital who may not want to deal with the high transaction costs of trading stocks. The forex market also offers access to more than 180 currencies worldwide which can be traded 24 hours a day (this is also referred to as round-the-clock trading). Additionally, there are many different types of orders available including stop loss orders which help limit your losses when the market moves against you. It is important to remember that if you choose not to trade forex then you are leaving yourself open to significant fluctuations in value because the exchange rate between any two currencies will change continuously. Therefore, if you wish to hold onto money over a long period of time or if you need to convert one currency into another before going on holiday, then the foreign exchange market could offer an attractive option. Of course, these advantages don't come without their disadvantages. Like all investments, investing in the forex market carries some risks and some traders might feel nervous about dealing with something they don't fully understand. Others might worry about taking large positions at short notice or staying alert all night waiting for movements that only happen during certain times of day. However, if you take the time to learn how this market operates and follow sound investment principles then trading forex should provide plenty of opportunities to make a profit while minimising your potential losses.
FXCM Has A Great Reputation As An Online Broker
FXCM is one of the top online brokers in the forex trading industry. Our parent company, FXCM Group, has been running for over 20 years, so we know what we're doing when it comes to international trading. The following are just a few examples of why we are one of the top picks among traders:
- 24/5 customer service: our customer support team is available anytime you need them to answer any questions about our products or accounts.
- Fast and transparent execution: unlike other brokers in the industry who hold your money for days and make it difficult to withdraw money from your account, at FXCM, once you complete an order we execute it as quickly as possible so that you can invest more funds at will. - Low spreads: we offer competitive pricing on currency pairs and commodities through low spreads. For example, if you trade the Euro/U.S. Dollar pair with us then our spread will be only 0.4 pips which means you get better prices than if you were to trade it through another broker
- Great trading platform: our interface is intuitive and easy to use even for beginners. We have won multiple awards because of this software, including Best Retail Platform in 2014 from XE Market Awards
- Competitive promotions: we regularly offer promotions on commissions or bonuses on different types of trades such as those involving exotic currencies
Trading From Anywhere In The World Is Possible
You may be thinking that trading is only for people who live in New York City, London, Hong Kong or another major financial hub. But the reality is that you can trade from anywhere in the world! Remote trading platforms allow you to invest as much or as little time and money as you want to.
You'll Never Have To Deal With Congested ATM Lines (seven sentences)
Trading currencies takes place on a 24/7 global market with no centralized location - so there are never any crowded ATMs or queues for information about bank accounts. Because currency trades happen electronically, transactions can be processed even when banks are closed and there are no withdrawal limits. So if you need to make an emergency purchase while abroad, it's possible because your funds will still be available after hours. And if you're looking to buy shares of a company based overseas, you won't have to wait until the next day before it starts trading-it'll just take one click and they're yours.
You Can Buy And Sell Currencies As Needed: If your goal is long-term investing, this might not apply. But traders typically buy and sell currencies throughout the day, which means that they don't have all their capital tied up in one position. For example, let's say that the euro appreciates against the dollar by 1% during today's session. A trader would then buy euros with dollars, selling them at a higher price. The end result? They've profited by 1%. Over time, these gains could really add up. Plus, most brokers offer leverage and/or margin borrowing to amplify profits even more-so you could end up earning far more than what you invested. All of this makes forex trading ideal for anyone interested in making smart investments with minimal effort. That's why we think that now is the perfect time to get started.
Just head over to our homepage and sign up for a free demo account today. We look forward to hearing from you soon!
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