It’s no exaggeration to say that the forex market has taken the world by storm in recent years. From first-time traders to business veterans, just about anyone and everyone can try their hand on this global trading platform – but what’s all the fuss really about, we hear you ask? Well, today, the trading experts over at Learn to Trade explain exactly that, detailing how and why this international trading market is gaining popularity by the day.
First things first… what is forex trading?
In layman’s terms, forex (short for foreign exchange) trading is the buying and selling of global currencies, profiting from the difference in valuations and exchange rates. Currencies are traded in pairs through the purchase of one currency and the simultaneous selling of another.
Why is it so popular?
The forex market is the world’s most liquid market, with a mammoth $5.3 trillion traded each day. While there are a multitude of factors that contribute to the market’s popularity, there are commonalities that strongly appeal to every trader…
Ease of access
As a globally interconnected online platform, accessing the market is quick and easy. Traders are able to place trades from the comfort of their own homes, on the go or from a trading suite – making this an appealing option for banks, businesses and average Joes alike.
What’s more, in order to accommodate all of the world’s major time zones, the market is open 24/5, meaning it’s open for business all hours throughout the working week. This means that trades can be placed at a time convenient to the trader, allowing many part-time traders to conveniently work the markets around their busy day-to-day schedules.
There’s a wealth of resources available
To the less informed, trading can be an intimidating prospect. Whether it’s the daunting charts and graphs, advanced technical analysis or simply the idea of risking capital, it’s understandable that there are a whole range of factors that may put off a trading novice.
When it comes to the forex market, however, there is an extensive range of resources available to help you get started. From expert-led industry seminars to handy blogs, online tools to simple mobile applications, there’s educational material available to suit a variety of different learning styles – meaning obtaining the fundamental knowledge required to start trading has never been easier.
There’s a profit to be made
Perhaps the most common reason for forex’s popularity is that there’s profit to be made on this market. Paired with the aforementioned convenience of the market, foreign exchange trading provides, to many, a possibility of a second stream of income. Just like on any trading market, however, the possibility of big wins comes with the possibility of big losses. Substantial profits aren’t uncommon, but these are usually a result of a well-informed, carefully considered trading strategy. As such, novices should be wary of how realistic their expectations are.
Should I join the fun?
Well, that depends. If reading this article has you keen to place your first trade on the forex market, it’s important to thoroughly weigh up the pros and cons first.
While the prospect of short-term financial gains may sound very tempting, it’s important to consider that this market tends to be very volatile, meaning valuations can change quickly and unexpectedly. The bottom line is, in essence, quite simple – it all boils down to risk awareness.
As evident in this post, the forex market boasts many great advantages, but also brings with it some considerable levels of risk. It’s clear what all the fuss is about, but always ensure you’ve considered whether the market is right for your personal circumstances before rushing onto the bandwagon.
John James is a content writer for Learn To Trade, the foreign exchange education and learning specialists – offering a range of training courses to help people understand the currency trading market, as well as its opportunities and risks.