When it comes to trading or investment, there are a few ways to go about it. One way is by Forex trading. Other ways include trading in stocks, futures and options. Each of them has their own advantages and disadvantages.
One advantage of trading Forex is that you can trade Forex 24 hours a day, 5 days a week, from Monday to Friday. It just means that the market opens on Monday morning and stays open till Friday evening. When you enter a trade, you do not have to worry about not being able to exit your trade as long as it is before market close on Friday evening. With these long hours, it allows investors and traders alike, to trade during their free time or after their working hours. This is one of the reasons why a lot of traders prefer and choose Forex trading. It is due to Forex trading having one of the longest trading hours.
Another advantage of Forex trading is that it is very liquid. There is always strong demand and supply from both the buyers and the sellers on either side of the trade. Central banks, domestic banks and funds are in the Forex market as well. This ensures that you are able to get in or out of your trade at any given time.
If you like volatile markets, this market is one of the most volatile markets you can find. Within hours, it can go up or down a few pips to a few hundred pips. And this is very normal in Forex trading. Due to its volatile nature, many traders like Forex trading. The reason behind this is simple. The Forex trader can enter a trade at any given time and expect to profit from his or her trade within hours if not minutes.
In Forex trading, high leverage is always the case for all Forex traders. And this is why most traders like about Forex trading. The amount of leverage usually depends on the Forex broker or brokerage. Usually, it ranges from a leverage of 10 times to 100 times. And sometimes even more. And because of the high leverage, a small amount of capital is use. This is to yield very high returns. You can easily find a brokerage or broker that is willing to accept a minimum of $100 to $2000 to start your trading account.
Last but not least, brokerages offer mini or even micro contracts. This allows those with very low capital to trade in this market. Typically, for a mini contract, 1 pip is around $1, and for micro contracts, 1 pip is $0.10. Meaning let say if you buy a micro contract, and it goes 100 pips against you and you decide to exit and take the losses, you will only lose $10.
Whether you are into Forex trading or not, finding the winning formula or system with the right trading plan is always on every trader’s mind. Like other markets, it is possible to use fundamental or technical analysis (or both) to trade Forex and still profit from it.