More and more people are turning to forex trading as a way to diversify their portfolio or as a part-time venture. So what is it that attracts people to forex trading? Here are the top 7 reasons why people are starting to get involved in forex trading.
- The Forex market is open 24/5. This is because the forex market is a global market and there are four major time zones of the markets that trade forex. This is especially useful to part-time traders who have limited hours to trade, but will find markets open at any time of the day or night. It also means that forex trading can be done from anywhere in the world – as long as you have a laptop with Internet.
- The forex market is usually highly volatile. This means that there are greater opportunities to trade and with price moves of up to 100 pips on major pairs almost every day of the week, there is high earning potential.
- It is a huge and liquid market. Because forex is a huge global market, with an average daily trade volume of around $4 trillion per day, no one organization can corner or control the market. This makes trading accessible to everyone, even individuals.
- Forex is simpler. There are around 40,000 stocks listed across exchanges globally. However, while there are dozens of currencies that can be traded, there are only four major currency pairs and this provides a much narrower focus for analysis, making it simpler for traders to keep track of any changes in the market.
- Forex offers much higher leverage than what is available with stock trading and this is a big attraction for many traders.
- Traders can reduce their exposure to risk. When trading forex, a weakening market is not able to cause all currency interactions to fall and this means that with a rounded trading strategy, you can limit your exposure to risk.
- No hidden fees. There are no hidden fees or commissions and no stamp duty to pay on trading forex. Forex brokers usually charge a small percentage, but no commissions.