Why should You become a Forex Trader?
Trading forex is one of the most popular forms of online investments and with good reason.
Trading online has become one of the top methods for generating a secondary income, especially where forex trading is involved. Investing in currency pairs such as EUR/USD isnโt just a popular method, but itโs often considered a safe, long-term investment form. While you might be tempted to trade stocks and other high caliber assets right off the bat, this market has much to offer newbie traders.
Learn why you should take your first step into online trading through the forex market by reading our guide below.
The Advantages
Trading forex may sound like an intimidating concept when youโre new to trading, but itโs rather easy once you get the hang of it. Unlike some of the other more exotic assets, trading currency pairs have a few advantages such as:
- Forex trading is Simple to comprehend.
For you to become a competent stock trader, you will have to closely follow the news and the releases of quarterly and yearly reports, as well as decipher whether the company has what it takes to go the distance. Each report could have a serious impact on whether the stockโs market value will rise or fall. Stock trading is hardly something you can do short term, and you must be on top of it to be ready to make split-second decisions at times.
Forex trading, on the other hand, can be taken with greater ease. This isnโt to say that this practice is by any means easy, but itโs relatively simpler to maintain on a daily or weekly basis. While both indicators and potential political events impact currency pairs, you will find that itโs easier to stay up to date on any developments by simply watching the news, market reviews, or reading analysis made by market experts.
- Directly influenced by Major World Events.
As weโve mentioned in the previous section, the forex market can go either up or down according to political events and a variety of other similar factors. You have probably heard of the Brexit or the Sino-US trade war in connection to the Great British pound and the US dollar rising or slipping against other major currencies like the euro, respectively.
This principle is quite simple to understand. Letโs take the trade war between China and the United States, for example. If the USA will come out of the ongoing trade negotiations on top, we are likely to see the US dollar reach higher, while the Chinese yuan will dip lower.
Another event could be the data release of the unemployment rates in America, which are revealed on a monthly basis. If the American job market will tighten (fewer people will be employed in any given month), the USD is likely to drop, and then it would be wise of you to invest in the EUR or GBP against it.
As a forex trader, you could base your next trade on major national or international events, the first of which take place several times a month.
- Trading Opportunities are available on an almost Daily Basis.
The forex market is open 5 days a week, where you could trade on the American, European, or Asian sessions. While other assets such as indices and commodities may have one great opportunity a week if youโre lucky, that trading forex could find exciting opportunities nearly every day. Once again, if two of the worldโs biggest economies are going at each other, the end result could significantly affect forex trading if it goes in either direction.
Also, while you canโt count on wars alone to generate your profits, you should be able to read charts on a basic level. The Japanese candlestick charts are a great way of knowing whether you should buy, sell, or hold onto a certain asset. Ask your account manager to take you through the platform and the different chart types on it before you begin trading forex.
- The Possibilities are endless.
When you will enter any trading platform, whether itโs the MetaTrader4 or another one, you will see that there are many different currency pairs available. You could go for the majors, which include the pose the US dollar against currencies of some of the more prominent economies in the world such as the euro, Australian dollar, Great British pound, Swiss Franc, and Japanese yen among others. These are considered the most liquid (i.e. โ readily available to trade on the market), but you do have other options should you want them.
Minor currency pairs include the currencies above, but will not have the US dollar as a participant. They are further known as cross-currency pairs. For example, the New Zealand dollar vs. Japanese yen can serve as a minor currency pair.
Last but definitely not least are the exotic pairs, which include a major currency and one belonging to a developing country like the Japanese yen vs. the Norwegian Krone.
If youโre ready to start trading forex, open your account with us and enjoy free forex signals!
