You are reading this article because you are interested in online forex trading. You've heard about the enormous profits that have been made in the forex market... and you want a piece of the pie.
You've also probably heard that online forex trading is a risky endevour and you are therefore cautious to get involved.
So the question remains... Why Should You Trade the Forex?
Firstly, Let's understand what "Forex" means. "Forex" comes from the term FOReign EXchange and the forex market is where foreign currencies (Yen, Pound Sterling, US Dollar, etc.) are exchanged or traded.
You may be more familiar with the stock market, where the basic principle for profit is buy a stock at a certain price and if the price of the stock goes up, you can sell it at that higher price and make a profit. Well the principle for profit in forex trading is essentially the same.
However, in recent years, the forex market has become increasingly popular. But why is this so and why should you even bother to get involved in the forex market? The following highlights the advantages of the forex market and how they can of tremendous benefit to you.
1 - Unlike the stock market, which allows trading to take place basically during the usual business hours, the forex market is open 24 hours, 6 days per week (Saturday to saturday). This gives you more flexibility if you are going to being trading the forex on a part-time basis.Trade from anywhere in the world once you have internet access.
2 - The stock market has thousands of stocks to choose from. Wading through these stocks and choosing the potential winning stocks can be a daunting task. Activity in the forex market is mainly focused around 8 major currencies - U.S. Dollar, British Pound, Euro, Japanese Yen, Hong Kong Dollar, Canadian Dollar, Australian Dollar, Swiss Franc
3 - Forex allows the individual trader the ability to use the power of leverage. This means that you can make a trade worth $10,000 even if you don't have $10,000 in your trading account.
4 - The Forex Market is considered to have the lowest overall commissions relative to trade size compared with other financial markets.
5 - There is high liquidity in forex trading. High liquidity means that there will always be someone to buy or sell any currency you want. In the stock exchange market, if you want to sell a stock, you may have to wait a relatively longer period until someone is available that wants to by the stock from you.
6 - The forex market is the largest financial market. In fact, with trillions of dollars traded per day, the forex market is larger than all other financial markets combined. Because it is so large, no one entity can affect significant changes. This means that you don't have to worry about any one person or any one company "cornering the market" and causing drastic changes to their benefit, as can occur in the stock market.
7 - The forex market is recession proof. Recession is often defined as a contraction in the economic activity for a sustained period of time. However, although there is reduced activity, there still has to be the exchange of currencies because of export and import. Therefore, even in a recession, you can trade on the forex market profitably.
8 - The start up cost for online forex trading is very little compared with trading on the stock market. You can open an online forex account with as little as $50. You can even open a free forex demo account, to practice trading and gain experience without risking your own money.
9 - Forex trading allows you to profit in an up market as well as a down market.
10 - You can make a substantial income with online forex trading, working only a few hours a day in the comfort of your home.
