There are literally millions of people who have considered trying their hand at Forex trading, only to turn their back on the idea at the last minute. While there are countless reasons for people opting out of Forex trading, one of the main factors in people deciding against the venture can be put down to confusion. There is a lot of information about Forex Trading available, both online and in books, and it is often difficult to know how to approach Forex trading as a beginner. At a certain point, an abundance of information, as well as a large number of brokers and service providers available, can prove to be too intimidating for someone who is trying to make their way in the world of Forex Trading for the first time.
The feeling of intimidation that can come when trying something new for the first time often causes you to forget why you wanted to do it in the first place. Instead of focusing on learning a new skill and the numerous benefits of Forex Trading for digital natives, it is very easy to begin framing the activity in a negative way. We don’t believe new Forex Traders should have to endure this kind of hardship and so we decided to help. This article has been put together in order to outline five benefits of Forex Trading as well as to provide some tips on getting started.
Table of Contents
What is Forex Trading?
Before getting into the benefits of Forex Trading, let’s make sure we all know what it is. After all, for many individuals, a lack of understanding of what it actually involves is often the first stumbling block. Even if you think that you know nothing about trading, we don’t believe that this is the case.
First things first, Forex stands for Foreign Exchange and it is exactly that, the trading, or exchanging, of one currency for another. So in fact, odds are that not only do you know what Forex Trading is, but that you have actually already done it in some capacity. That’s right, if you have ever exchanged one currency for another at a bank or other financial establishment when going on holiday, then it is accurate to say that you already have some experience in Forex Trading. Of course, when we scale this up to begin talking about the actual Forex Market, we are discussing the largest financial trading market in the world.
What is Traded on the Forex Market?
The good news is that the answer to this question is as straightforward as you could have hoped. That answer of course being that currencies are bought and sold on the Forex market. You trade one currency for another, for example, you can trade British Pounds for American Dollars.
This is what is referred to as a currency pair and is written as GBP/USD. The first listed currency is referred to as the base currency and the second is called the quote currency. If, for example, the GBP/USD rate stood at 1.50, this would mean that one British pound is worth 1.50 US Dollars. In simple terms, you can think of a currency pair as an easy way to compare the value of one currency to another.
Why Forex Trading?
So, now that we have established the basics of Forex Trading, you may be asking yourself if it is the right option for you. It is true that becoming an expert trader takes time and effort but this should not stop us from remembering why it is an excellent option. The Forex market has a number of unique advantages over its counterparts. And so, without further ado, let’s take a look at the benefits of Forex Trading in the digital age…
– Comparison & Review Sites
– Forex Market Hours
– Demo Accounts
– High Liquidity
Comparison and Review Sites
For beginners, one of the most difficult decisions to make is which trading platform and/or broker to use. Thankfully, we are living in the digital age, an age in which the internet is both easily accessible and full of information.
There are a number of trustworthy comparison and review sites, including Moneytotem, that simplify this process, making the decision as easy as possible. It reviews and compares a variety of options, allowing you to quickly narrow down your options as you set out on your journey.
Forex Market Hours
The Forex market is open 24 hours a day, five days a week. Additionally, because the market is global, you can easily take advantage of the different trading hours based on time zones. This means that as long as there is a market open somewhere in the world you can trade as you please.
OK, this one is incredibly important. You can think of demo accounts as your best friend when you are learning the ropes. They are exactly what you may be thinking they are and trust us, it is not too good to be true.
The majority of Forex trading platforms allow you to set up a free demo account and trade with fake money on the actual Forex market. This is the perfect way to hone your skills and learn how trading works based on real experiences. The ideal conditions for learning include being able to make mistakes without fear of consequence and a demo account creates exactly that.
The truth is that no matter how much you read about trading, the best way to learn how to trade is to trade. We highly suggest that you take advantage of this offer in order to build your trading skills before opening a live account and trading with real money.
Once you have begun trading, it is possible to take advantage of the fact that the price movements of some currencies can be incredibly volatile. This means that you can potentially make a large amount of money if you can speculate on which way the market will go. While this is riskier than playing it safe, the rewards are big.
Finally, you have the ability to buy and sell in the market using what is referred to as leverage. In essence, this means that you can trade with more money than you have in your account. Be aware that while this means you can make a large profit from a small investment, it can also backfire if the market does not move in your favor. Just like the high liquidity in the Forex market, these options give you the unique ability to make big profits if you can play the market correctly.
The Choice Is Yours
So whether you choose to trade Forex or stocks, at least now you now know the basics of Forex Trading as well as some of the benefits of trading Forex.
Our final piece of advice is to try a demo account, consider the advantages of the Forex market over the stock market and then do what you think is best for you!