It’s only understandable that, once a given trader gets the hang of working the market, he’d develop an interest in expanding his portfolio. If that sounds like something you relate to at this point in your career, then you’re not alone. You’ve learned the basics. You’ve developed some instincts. Now you’re ready to explore new territory. You’re also almost certain you’d like that territory to be forex, because of all the buzz you’ve heard about it.
However, it’s important to understand that forex is not a pursuit for the faint of heart. Even if you’re familiar with the basics of successful day trading, forex comes alongside a learning curve of its own. It should also be noted that financial trading on the forex market can be slow if you’re only willing and able to invest small amounts into your picks. Let’s take a closer look at the benefits of trading forex and discuss some ways you can increase your chances of everything going smoothly.
One of the biggest and most often noted perks of trading on the forex market is the fact that it’s a market that operates around the clock. The market opens for the week at 3:00 p.m. EST on Sunday once New Zealand officially begins operations. It closes when San Francisco shuts down operations at 5:00 p.m. EST on Friday evenings. During that span of time, transactions are going on continuously all over the globe.
This set-up doesn’t just offer traders a selection of options that literally covers the entire globe. It allows individual operators, brokers, and traders to have a greater degree of control over the hours they spend working, as well. With forex, you truly can set your own schedule.
If there’s one thing that can be said to be the crowning advantage of the forex market, it’s definitely its liquidity. (Liquidity is, of course, the ability with which a given asset can be converted to cash without a loss.)
Experienced forex traders are able to convert large sums of money into a variety of different world currencies with little to no fluctuation in value. This makes forex an excellent option for traders that like the idea of working in the world’s largest financial market and enjoying a high number of options. Forex traders also enjoy the incredible freedom that comes with being able to liquidate assets quickly and easily.
When you trade on the forex market, you have the ability to use something called leverage. Leverage refers to the ability to trade more money across the market than you may have in your trader’s account at a given time. This means that if you decided to trade an option at 25:1 leverage, you have the choice of leveraging $25 over the market for every $1 that you have in your account at the time.
Naturally, leverage comes with both advantages and drawbacks. The major advantage would obviously be the opportunity to enjoy a much higher percentage of gains in comparison to what you have in your account. However, the drawback is that the potential losses are just as high. Trades made using leverage should always be made with care.
Another aspect of forex trading that appeals to freedom-loving traders is the market’s lack of restrictions on directional trading. If you happen to think that a given currency pairing is likely to increase in value, then you can choose to either buy it or go long. The same goes for those you think are likely to do the opposite. You can sell it or go short. This allows forex traders the potential to turn a profit just because a given option is either rising or falling in price.
Go into Forex Informed
Even if you’ve been trading stocks long enough to have gotten the hang of how the stock market works, forex is a whole different ball game. That said, it’s important to go into forex trading prepared instead of simply jumping in feet first.
For instance, choosing the right broker is definitely something you need to do in order to ensure your future success on the market. You also need working knowledge as far as which account type would be the best fit for you, how to understand forex market trends, and how to use leverage to your advantage. Educational resources, classes, courses, and mentorship programs can help you determine the best way to approach all of those things, and more.