5 reasons why Forex is the best market to trade
Forex is the largest and most liquid market in the world. Its retail part appeared with the development of the Internet. This allowed retail traders to trade on Forex through various trading platforms. Forex opened its doors to retail clients in the late 1990s. At this time, the first online retail brokers started their activities.
Currently, there are trillions of U.S. dollars in the Forex market, with retailers occupying almost 5% of the total volume or about 250 billion U.S. dollars in daily turnover. Why is the Forex market so big?
As you can see, one currency is bought online in another currency, and this creates a rather significant flow of funds. In other words, Forex is a global place to trade currencies.
Now we understand what the Forex market is, let's take a look at ten reasons to trade in the currency market.
The main advantages of working in the Forex market are
Different traders have different reasons for choosing the Forex market. The truth is that Forex has something to offer any trader, and there are many reasons to trade on Forex online. Below are the main reasons why Forex is the leading market for trading.
1. Advantages of Forex trading and currency pair volatility
How do traders make money online? The mechanics of trading is quite simple. You buy an asset at a bargain price and you wait for a convenient time to get rid of it. The more you change the market, the more you can buy and dispose of your assets.
As you can see, if the market is not moving, there is little point in holding your capital. The volatility in the Forex market is excellent, and you can expect that almost any day of the week one of the major pairs will cost about 50-100 points.
This means a potential loss or profit of 500-1,000 USD if one lot (or 100,000 currency units) is traded and the quoted currency is USD. Traders are always looking for volatile markets and unstable instruments, so volatility is one of the main advantages of the Forex market.
2. Forex Pros and Availability of Forex Trading
Although volatility is very important, we must not ignore accessibility. Although the Forex market is unstable and you can catch many market movements, it is more accessible than any other online trading market. Forex trading can start with just $200. Compared to many other markets, this is quite a low capital requirement.
You can also easily open a trading account from your PC. Most retail Forex brokers are online, and all you have to do to start trading Forex is register, send your documents and deposit into your Forex trading account.
Although availability does not really affect the quality of the market, it certainly makes Forex the most interesting market to trade. Inexperienced traders can first open a free demo account and practice trading in minutes.
3. Technology and advantages of Forex
Advances in software make our lives easier and the same thing happens in online trading. Every year there are more and more Forex trading floors, and there are even more regular updates to the installed software for Forex trading.
Compared to many other markets, technological advances are certainly the reason why Forex is one of the most potentially lucrative markets for trading.
In addition to this, the software industry for is also enriched by third-party software vendors who supply various add-ons and plug-ins for the most common trading platforms, including MetaTrader 4 and MetaTrader 5. This is why Forex is an innovative way to trade online.
4. Forex Trading Opportunities and Benefits
You probably know that a simple rule of thumb is to buy at a minimum and sell at a maximum. For example, you have 10,000 euros in your account and you want to trade the USD/JPY currency pair. Without buying either dollars or JPY, you can simply open a short position on this pair and sell the yen for dollars, while your real account balance is in euros.
This feature tells us why Forex is a good market to trade. In addition, you can trade on Forex with margin, which means using leverage. With credit you can trade amounts that exceed your deposit.
This is an advantage and disadvantage at the same time, as your potential winnings can be many times greater than your deposit, but your potential loss can also be great.