Whether you are a new trader or a seasoned veteran, there are multiple benefits of trading forex that you may not know about. Forex has emerged as one of the most popular trading options due to its simplicity and the enormous size of the market.
If you want to start your forex trading journey this year but still need the push to get started, here are ten benefits of trading forex in 2022.
Brilliant for Beginners
Forex is one of the most accessible trading sectors to get into due to the varying strategies you can use and how easy trades are. The concept of trading forex is also simple to understand as it is buying one currency with another.
Next to crypto, forex is one of the most talked-about kinds of trading out there, meaning it will only take a couple of minutes to find a video explanation of something you may not understand.
Budget-Friendly
You can buy and trade forex with as little as $10 or as much as millions if you want. The entry to the market is however much it costs to buy 1 unit of another currency using your own. This means forex is excellent for those on small budgets.
It also means that there is a lot of room to practice and make mistakes. If you are a beginner, it’s hard to know exactly what you’re doing, and knowing that a mistake won’t cost you more than a dollar or two is a great safety net.
Leverage
Most forex brokers offer something known as leverage, which is there to help people with small budgets make large profits. In simple terms, if a broker offers 50x leverage, your $100 investment is turned into $5000.
Considering forex profits are usually only a tiny percentage of each trade, the more money you trade with, the bigger the profits.
Range of Trading Options
There are multiple trading options for you to choose from, depending on how much time you can put into trading or how involved you want to be. Two of the most popular methods are scalping and day trading.
Scalping is making multiple trades over a few hours and taking tiny profits of a few cents; your profits will grow when this is done regularly. Day trading leaves trades for a day or a week and plays the “long game” in essence. This is great for people who can’t spend hours of their day on the markets.
24-Hour Markets
There is no opening or closing of markets in the world of forex. There are forex offices all across the globe in different time zones that are operating all the time; this means there is no time when you can’t trade.
The stock market limits you as you can’t buy or sell if the market isn’t open; this can sometimes lead to a massive loss if something drastic happens overnight. In forex, you can take advantage of changes any time you want.
No Market Cornering
Considering how vast the forex market is, with billions of dollars being traded every day, it is incredibly difficult for an individual to corner one market and create a monopoly. This means that everyone is somewhat “equal” in forex.
Considering how quickly the market levels itself, no one has the ability to manipulate prices, and since trades have no middlemen either, there is even less chance of price manipulation.
Liquidity
Forex is appealing due to traders never being locked into any trade. You can buy and sell whenever you want, put your money in, and get profits out at any time. High liquidity also means trades have little effect on the value of the currency.
While you may want the value to change a lot to make a profit, these minimal changes lower the risk of trades as you know what you are trading can hold its value.
Risk Management
Forex trading has multiple risk management tools and strategies in place to ensure you aren’t left in the dust. For example, most trading platforms will have built-in stop-loss tools, which will ensure your balance doesn’t fall below a certain level if there is a crash.
Trade Anytime & Anywhere
The decentralized nature of forex markets means you can trade from and to anywhere in the world. There are three main markets in Asia, Europe, and North America, and traders can use any of these markets at any time.
Combine this with the 24-hour trading aspect, and you have a market that never sleeps and is always on the move.
Low Transaction Costs
Finally, forex markets and trades have very low transaction costs due to there being no middlemen and trades happening directly between parties. The difference between the bid and asking price in forex is known as the spread.
Many brokers will offer lower spreads, the actual trading cost, which will not only encourage buyers to purchase their trade but also maximize the buyer’s profits.
