Why I Love Forex (and so should you)
01/01/2016 9:00 am EST
For those not interested in the lofty goals of wealth or personal freedom but in the real driving force behind a currency trader’s passion, Yael Warman, of Leverate, offers six reasons why someone might fall in love—and stick with—trading forex.
Working in your pajamas from the comfort of your home or a remote beach in Tahiti (provided there is WiFi) creating extreme wealth, has to be amongst the top reason why people would want to make a career out of trading forex, but as appealing as this reason may sound, it is not necessarily the best reason.
So if money and freedom are not the main reasons for someone to fall in love with trading forex, what are they?
Low Entry Cost:
Because forex has a tight spread in terms of pips, the initial capital needed to begin trading forex is small. A lot of brokers nowadays offer accounts with minimum deposits as low as 100 EUR and allow traders to determine the lots size they want to trade, making it extremely accessible to individuals who do not have a large start-up trading capital available. The cherry on top, is the fact that forex trading comes with the ability to trade on margin with a high leverage factor, in some cases as much as 50:1.
No or Low Commissions:
While some brokers do charge a commission based on a percentage of the spread, most brokers make money on the spread between currencies, charging either a fixed or a variable spread. This no commission option as well as the tight spreads of the market make forex trading costs much lower than those of any other trading market.
Because the forex market is massively big in terms of number of traders and volume (daily activity often exceeds $4 trillion USD), it is extremely liquid. This means that even large orders are instantaneously filled at the click of a mouse without significant price deviations, allowing for tighter spreads and more efficient pricing.
Variety of Trading Instruments:
Based on timing, volatility patterns or economic developments, traders can choose from a variety of instruments involving eight major currencies which yield seven different major currency pairs. This makes forex trading much easier to follow than other markets in which traders must follow thousands of stocks to find the best value. In forex trading, traders just need to keep up with the economic and political news of eight countries and switch from one currency pair to another based on their preference.
Open 24 hours:
That’s right, the forex market is the only market truly open 24 hours a day. From the opening of the Australian market on Monday morning to the closing bell of the New York market on Friday afternoon, the forex market never sleeps. As one market in the western hemisphere closes, another one in the east opens, making it possible for traders with day time jobs or busy schedules to take advantage of the different time zones and trade at any time during the day or night.
By Yael Warman, Content Manager, Leverate