Why Should You Learn Forex Trading?
The global economic downturn has led to the global financial markets taking a bit of a hammering over the last few years. That is with one exception – the foreign currency exchange market. In Forex trading currencies are traded in pairs, so the value of a currency is measured relative to another currency so there will always be profit opportunities in Forex trading. In times of economic uncertainty the foreign exchange market often becomes volatile which creates excellent trading conditions for traders. This is one of the reasons since the collapse of the stock market the financial world has seen a mass migration of financial investors into the Forex market.
In addition there are a number of distinct advantages of Forex trading compared to other financial markets:
A 24-hour market – The Forex market opens in Sydney on Monday morning and doesn’t sleep until the Friday afternoon close in New York! The 24 hour nature of the market is fantastic for anyone wanting to trade on a part-time basis – you can literally trade at any time, day or night!
A Pure Market – The shear size of the Forex market means that no single player in the market, not even a Government central bank can control the market price for an extended period of time. This means you are always trading on a level playing field.
High Liquidity – Upwards of $3 trillion is traded on the Forex market every day, this makes it the most liquid of all financial markets. What does that mean for you as a trader? This means with a click of a mouse you can instantaneously buy and sell at will because there will be someone in the market willing to take the other side of your trade. This liquidity ensures you never get ‘stuck’ in a trade. You can even set your online trading platform to automatically close your position once your desired profit level (a limit order) has been reached, and/or close a trade if a trade is going against you (a stop loss order).
Low Start Up Capital – Unlike trading shares, futures or options, Forex Trading does not require large sum of money to get started. It’s possible to get started with as little as £50 which makes it very accessible to the average person.
No Commission – brokers are compensated for their service by the ‘bid-ask spread’
Low transaction costs - The retail transaction cost (the bid/ask spread) is typically less than 0.1% under normal market conditions.
No Middlemen - Spot currency trading eliminates the middlemen and allows you to trade directly with the market responsible for the pricing on a particular currency pair.
Tax Free in the UK – If you are a UK resident it is possible to trade using a spread-betting platform. All profits from spread betting are Tax Free in the UK!
The key to successful Forex trading is a sound education and a sound strategy. Why not download our Forex Trading Mini which covers all the basics and will give you a great insight into becoming a professional Forex trader.