Three Reasons Why Forex Trading Is Great
Learn about some specific advantages of forex trading in this article by Pablo. He points out interesting observations about the predictable cycles that many currency prices go through... Here's the article:
As a Forex trader you will always be attempting to make more profits than losses from the fluctuations of exchange rates between currencies in the forex market; in short, this is what is called forex trading. The good news is that nobody is going to ask you for a diploma, or somehow verify the amount of hours you've spent studying the foreign exchange market (FOREX). All you need is the proper training and the tools that will help you become a profitable trader. But this is not the only advantage you get when trading forex, compared to other ways of investment and speculation as stocks. You have a other great advantages that will make you decide for forex and forget about stocks and commodities.
1): There will Never be a Bear Market in FOREX.
You can have access to a mutually-inclusive (two-way) exchange of world currencies. In other words; currencies trade in "pairs"(for example, US dollar vs. yen or US dollar vs. Euro), one side of every currency pair is constantly moving (up or down) in relation to the other one. Thus, when you buy a particular currency, you are actually simultaneously selling the other currency in that particular pair. As the market moves, one of the currencies will increase in value while the other will decrease proportionally. It is up to you to choose the correct currency to be long or short. Since currency trading always involves buying one currency and selling another, it all means that you have equal potential for profits in both a rising or falling market.
2): Trade with High Leverage - up to 200:1 Leverage.
Every trader participating in the forex market is allowed to trade foreign currencies on a high leverage basis - up to 200 times your investment with some brokers. This is primarily attributed to the higher levels of liquidity within the currency markets. Standard 100,000-unit currency lots can be traded with as little as 1% margin, or $1,000, which is a pretty nice feature of forex. Mini Forex accounts are permitted to trade with just 0.5% margin -- in other words, just $50 allows you to control a 10,000-unit currency position. Futures traders, who are asked for margin requirements generally equal to 5%-8% of the total contract value, will immediately appreciate that the FOREX market provides much greater leverage; and stock traders, who must post at least 50% margin, may think they are dreaming.
3): Most Price Movements Are Highly Predictable.
Many times currency prices in the forex market may be volatile, but they have the great advantage that generally repeat themselves in relatively predictable cycles, creating trends. The strong trends that foreign currencies develop are a significant advantage for traders who use the "technical" methods and strategies.
Unlike stocks that sometimes seem to simple lay down in narrow price alleys, currencies rarely spend much time in tight trading ranges and have the tendency to develop strong trends. It is known that over 80% of the trading volume in forex is speculative in nature and, as a result, the market frequently overshoots and then corrects itself. As a technically-trained trader, you can easily identify new trends and breakouts, which provide for multiple opportunities to enter and exit trading positions.
More Forex Articles
Revealed - Million Dollar Forex Investing Mistakes
Anytime that you are investing in the Forex market, you are going into the Market blind. You dont know what point of the investing trend you are entering in at. You might be investing in a Forex stock...
Sending Signals For Trading In FOREX
Never heard of forex signals before, or never used them? Then in this case, heres a brief look at what happens with a forex signal service on a day to day basis with this article by Gary. He runs through...
All trading involves a high risk of financial loss, and the information on this site is for general information purposes only and is not financial advice in any form. See your own financial advice before taking any action.
All forms of trading involves risk of financial loss.
Note that this site may have paid advertising or commissions generated for referrals to products and services, and forex brokers made from this site.
See our disclaimer for further information.
Testimonials and trading results of products and services from some people or users of products, does not guarantee or indicate similar results from another user of that product or service.