Forex Trading - What Makes it so Popular?
We all know that Forex market is one of the largest markets. This fact alone makes it so attractive to many people to join trading currencies. The same fact makes brokers to advertise it everywhere to attract more and more clients. There are number of other reasons why people come to Forex.
Promise of High Profitability
First of all what makes Forex market so popular is the promise of high return on smaller investment. Nowadays brokers offer people to trade with leverage. That allows people to fund their trading accounts with small amount of money and contronl large lots.
Many brokers will give you up to 100 leverage. Therefore having only $100 the leverage will allow you to control a mini lot of 10,000 units of currency pair. Do you see now how powerful this concept is. Tiny amount of money have a potential of big return.
Large Daily Volume of Money Exchanged in Forex
As I said before the first reason is the daily volume that is being traded. The daily amount of trades is close $4 trillion. Even though Forex does not have the central exchange there are banks and financial institutions that play major role in exchange. There are three major centers with such institutions: New York, London and Tokyo. Currencies of these three countries (US, Britain and Japan) are being traded the most.
Quick Execution of Trades
If you are already involved in Forex then you know that orders are filled almost instantly. That is still because of the high volume that results in high liquidity. Therefore you will not get stuck with your position.
Forex Involves Traders Around the World
Another unique feature of Forex it involves currencies of different countries by definition. That makes it a global market. Therefore if you are not sure in economic situation of one country you can switch to trading currency pair of other countries. For example I personally like to trade AUD/NZD since the economies of Australia and New Zealand are related and you dont see very large moves. It makes it less profitable but it reduces the risk also.
Continuously Open Around the Week
Many countries around the world are involved in trading Forex. That's the reason that makes Forex to be open 24 hours a day and 5 days a week except weekends. This fact makes it convenient for traders to chose their own time to work on their trading and chose the appropriate volatility of the pairs. Some currency pairs have higher volatility than others at specific period of time during the day.
Promise of High Profitability
First of all what makes Forex market so popular is the promise of high return on smaller investment. Nowadays brokers offer people to trade with leverage. That allows people to fund their trading accounts with small amount of money and contronl large lots.
Many brokers will give you up to 100 leverage. Therefore having only $100 the leverage will allow you to control a mini lot of 10,000 units of currency pair. Do you see now how powerful this concept is. Tiny amount of money have a potential of big return.
Large Daily Volume of Money Exchanged in Forex
As I said before the first reason is the daily volume that is being traded. The daily amount of trades is close $4 trillion. Even though Forex does not have the central exchange there are banks and financial institutions that play major role in exchange. There are three major centers with such institutions: New York, London and Tokyo. Currencies of these three countries (US, Britain and Japan) are being traded the most.
Quick Execution of Trades
If you are already involved in Forex then you know that orders are filled almost instantly. That is still because of the high volume that results in high liquidity. Therefore you will not get stuck with your position.
Forex Involves Traders Around the World
Another unique feature of Forex it involves currencies of different countries by definition. That makes it a global market. Therefore if you are not sure in economic situation of one country you can switch to trading currency pair of other countries. For example I personally like to trade AUD/NZD since the economies of Australia and New Zealand are related and you dont see very large moves. It makes it less profitable but it reduces the risk also.
Continuously Open Around the Week
Many countries around the world are involved in trading Forex. That's the reason that makes Forex to be open 24 hours a day and 5 days a week except weekends. This fact makes it convenient for traders to chose their own time to work on their trading and chose the appropriate volatility of the pairs. Some currency pairs have higher volatility than others at specific period of time during the day.
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