It is widely known that forex is the most traded market in the world so once someone understands its benefits, it will become easier to understand why they need to trade forex, too. To start with, forex trading occurs even when the sun goes down, in contrast to other markets. Forex is traded all around the globe, therefore, the forex market is open 24 hours a day, 5 days a week. This allows you to trade at your own convenience.
There are no commissions or extra costs. Most brokers include the extra costs of trading in the spread, so there are no added fees or commissions. This way traders know exactly how much their trades cost.
Forex trading involves trading with leverage, which allows you to take a position in the market with a fraction of the money you would normally need. However, leverage also brings losses, so you always need to understand the risks involved. $5.1 trillion are traded per day, making forex the most liquid market in the world. Liquidity makes prices more actionable and gives traders the ability to respond to currency fluctuations with great immediacy. There is easy access to markets worldwide. Aside from the most popular currencies, in which most trading is done, traders also have access to other emerging currencies including MXN and PLN.
How to trade Forex – 4 easy steps
There are 4 easy steps to making your first forex trade:
- Choose a currency pair – Forex trading involves exchanging the value of one currency for another. You will, in other words, buy one currency while at the same time selling the other. As a result, currencies are always traded in pairs. Most traders trade the most popular currency pairs such as the EUR/USD but as long as there is enough money you can trade any currency pair.
- Do your homework and analyse the market. Researching and analysing should be the key steps in your trading journey. Otherwise, you are trading on emotion. There is a wealth of forex resources online. Research deeply and look for historical and current charts, monitor economic news, check indicators, and perform technical and fundamental analysis.
- Read quotes – When looking at a quote of a currency pair there are two prices. The price at which you can buy a currency (bid price) and the price at which you can sell a currency (ask price). Their difference is called the spread and it is the amount brokers charge. Spreads vary according to the brokerage.
- Choose your position – With forex trading you can speculate on up and down movements in the market. You should be able to determine when to enter a buy position or a sell position. In the first scenario, you speculate that the value of the currency will rise higher compared to the quote currency. In the second case, you speculate exactly the opposite.
Benefits of a 24-hour market
This never-ending market means that trading week begins on Monday morning in Australia, then moving west where the world’s major capital markets open and close from Tokyo to London, and eventually closes on Friday evening in New York.Unique benefits:
- Act upon any trading opportunity globally, whenever it arises
- Trade at your own convenience
- Benefit from highly volatile periods when markets overlap
Keep in mind that Forex trading involves a significant amount of risk. Research well and find the market that suits you and your trading needs the best.
