Why invest in the Forex market?
The answer is simple – for many different reasons, which we will examine, Forex Market is thought by many to be a perfect market.
Forex is short for foreign exchange and is the world’s largest market. Completely virtual, its size makes it less open to outside influence and less volatile than other markets. Forex Market generates over $3 trillion in revenues every day as a result of exploiting small fluctuations in the value of foreign currencies. It is a very dynamic business and there are significant opportunities to make a hefty profit, however, although there are a huge number of people now involved in forex trading it is still something that remains relatively unknown to the majority of people.
Forex is accessible – you don’t need a great deal of money to get involved so it provides an excellent opportunity for small investors to make money. One of the benefits of Forex is the option to pay only a small proportion of the purchase price in advance, it is also free of commission and is not subject to exchange fees, instead the trading cost is incorporated within the bid/ask spread offered by the market maker. This makes it an excellent prospect for those who wish to trade frequently.
Learning how to trade Forex is a skill that is almost guaranteed to pay once you have mastered it. Forex is not easy, so you will need some knowledge to make good investment choices. Forex is not something that can be mastered in a single day, so it does take some study to become good at it. You need to see it as a long term investment in your financial future.
Unlike other markets such as futures, Forex is available to trade 24 hours a day, 7 days a week. This is because trading hours overlap each other in the various countries around the world, meaning that the market is almost always open. There are major forex trading centres in London, New York and Tokyo as well as other cities such as Sydney. With the different time zones in operation, you can trade at any time of the day or night, and day of the week; including Sunday.
Forex is known as a leveraged market. This can work for or against you, and means that, for example, if your broker offers you leverage of 100:1 leverage, for every 1 unit in your account, you are able to control 100 units. If you can manage this correctly then there is the possibility of making lots of money quickly. By treating Forex as your own business and taking responsibility for it, you can find yourself in a very lucrative market indeed.
It has been said that “not trading forex is like leaving it there for someone else to pick up” and that “trading forex is like having an a.t.m. machine on your own computer”. Forex can be an extremely lucrative business independent of your location and time of day. It is the most liquid market in the world of trading and is all about freedom – some have said that trading forex is like picking money up off the floor! Clearly with the number of private and corporate investors investing in this market, it would seem to be an incredibly lucrative opportunity to get involved in.
Unlike the London Stock Exchange or the American Stock Exchange, Forex is not a physical market. Instead it can be described as a worldwide network of banks, investment firms, hedge fund, currency traders, and other financial and banking entities. Forex operates as an over-the-counter (OTC) market also known as an off-exchange market. The Forex market is constantly fluctuating, which means that if the rate of exchange on a particular currency is not good enough today, then you can certainly expect some difference in the coming weeks. Forex trading happens by phone, on the internet or via a broker.
Changes in the currency market happen fast and these changes are affected by many different factors. The Forex market is also continually growing as the number of individuals participating in the market increases.
Trading Forex is absolutely not a game, however many people feel that it is more like gambling, and consequently don’t treat it seriously. Forex is a serious way to make money, and it is possible to get involved at ground level. Trading forex is perfectly legal and is based on probabilities, provided you can accurately weigh up the associated risks and rewards, you should do well!
Common Mistakes Made When Investing in the Forex Market
Learning to trade Forex is a learning curve and every trader is bound to make mistakes no matter how experienced they are. The important thing to remember is that you should treat any mistake as an opportunity to learn from it and remember that tomorrow is another trading day, so you can just start all over again. Here we take a look at some of the most common mistakes made by Forex traders, and how we can try to avoid them.
By being aware of these pitfalls and the potential mistakes that a Forex trader can make, you will go a long way towards making sure that you finish up with a profit.Home,