Have you ever thought of quitting your nine-to-five job to start earning a passive income instead? Perhaps you’re looking for an investment that’ll help you grow your money. Or maybe some extra finances would come in handy in helping you pay your college tuition fees. If any of these situations sound familiar, then Forex trading might just be the thing for you!
Trading Forex involves the exchange of currencies and it happens every day, everywhere. You would have dealt with Forex at some point in time but might have never realised it. If you’ve been to a foreign country and have exchanged currencies, then you’d have participated in Forex. The same applies to remittances to family members living abroad.
The Forex market is a decentralised, over-the-counter market for currency trading. It operates at all hours of the day, giving traders the freedom to trade anytime and earn passively from wherever they are. How does it work? Quite simply, you buy a currency at a low price and sell it at a higher price, with the difference being the profit you earn. As more and more individuals turn to this dynamic market, we give you five reasons why you should consider trading Forex.
1. High Liquidity
Each day, a large number of participants yield high transactions in the Forex market, the largest financial market in the world. With high demands and large trading volumes, huge price fluctuations are less likely to happen. A liquid market also allows for easier reading of crowd sentiment, and prediction of market direction and price action.
2. Accessibility
Buying and selling of currencies are done electronically. All you need is a reliable internet connection, a mobile device or computer, and an account with a Forex broker, and you’re good to go! Opting for a demo account is a good way to get a feel of trading in the real market, but without the real money! Experience with a demo account will come in useful.
3. Low investment
Most brokers allow you to make a deposit as low as $100 before you can begin trading, so you can look to start with a comfortable, low-risk amount. It’s always good to have a plan that will help you manage and grow your investments. Educating yourself on the risks involved is key!
4. Leverage
Forex brokers offer traders various leverages. This means you can trade much more than what is available in your account. With leverage, you can make profits while keeping risks low. Remember that while leverages multiply your profits, they also multiply your losses – again, manage your investments wisely (i.e. invest amounts you can afford to lose).
5. Profitability
Look to earn when currencies rise or fall. Identify the market direction or the price trend of the currency pair(s) that you are trading and determine a trading strategy that works best for the pair in a given market. Rely on a sound trading strategy and understand the simple rules to successful trading to make even more consistent profits!
