Don’t you ever wonder why so many people continuously prefer trading in the forex market? What are the core reasons behind this? If you are still unaware of the advantages of forex trading, then this piece of content will help you understand the 17 benefits of forex trading and why you should trade forex.
Why you should trade forex
Let’s discuss why you should choose the forex market over the stock market, futures market, and crypto market.
Forex market is a twenty-four hour market
We all know that the forex market is a 24 hours market, so you don’t need to wait for the daily market opening time to start your trading. From Monday morning to Friday afternoon, the forex market is always open. So if you live in Asia, you could trade on Asian sessions, or those who live in the US and Europe could manage their time for trading. Moreover, if You are a job holder and wish to take trading as your part-time profession, you can choose your convenient time from 24 hours as this largest market is always open.
You can trade without commission
As spread is the primary earning medium for forex brokers, most retail forex brokers don’t charge extra fees from individual investors. Here in the forex market, you don’t need to pay any fees to the government either. So any retail trader trades relaxed without thinking about clearing fees, government fees, brokerage fees, and other inevitable fees in other markets.
Benefits of leverage
Leverage is a crucial factor in forex trading. Many times you may hear that currency traders can open larger contracts with a small amount of capital. This happens, and this thing is possible for leverage. Forex leverage makes the way easy for traders to gain massive profits, even risking initial investment to the minimum level.
Too many resources regarding forex trading
There are many websites, ebooks, and youtube videos online regarding forex education. In addition, many paid forex trading courses are also available. If you study them, you will understand the forex market properly, even if you search for rock-solid techniques and strategies to beat the market you could find online.
Nowadays, almost all forex brokers have a portion named education. In this education part, you could be able to educate yourself about the forex trade.
If you want to practice trading without investing real money, it is also possible as all brokerages offer demo trading style. In addition, free stuff of forex trading is available out there on the internet. Just open your eyes, and you will be able to find it.
Trade with a small amount of money and no limitations of entry on any trade
Now online forex brokerages offer different accounts such as micro accounts, mini accounts, nano accounts. If you are a struggling forex dealer and have little money, then the forex market would be a perfect choice for you as in this market, you can trade with as little as even 50 dollars! Which is not possible in any other market like the stock market or futures markets.
Extremely liquidated market
As this market is a trillion-dollar market, liquidity is also huge here, and you don’t need to be stuck with any trade. As here, liquidity is huge, so that you can buy or sell foreign currencies anytime with just a click of your finger on the mouse. The stock and crypto market is also liquid markets but forex market is the most liquid.
Trade without fixed lot system
In the forex market, traders determine the lot size, not the forex broker company. In the future markets, you can not fix the lot size; rather, contract sizes are fixed by the exchange house.
Transaction cost is very low in forex
In the forex market, you need only to pay the spread as your transaction cost. No extra charges are applied here. and this spread is even less than 0.1%
No one can control the market
Many entities manipulate other markets, but as the forex market is so huge and a trillion-dollar market, no one can control the market. Retail traders can take benefit from this.
Forex for speculation
Economic strength or weakness, supply, and demand, interest rates decisions, geographical factors create huge volatility in the financial market. This volatility creates an opportunity to make money within a short period of time. That is why most of the speculators like the forex market most. I am giving you an example of how speculators make money from this market.
Suppose any speculators expect the value of USD will rise compared to the kiwi dollar or NZD. And the exchange rate of NZD/USD is 0.68. here it means that the speculator needs $0.68 to buy 1 NZD. The following new hour’s interest of USD is announced, and the higher interest rates increase the demand for USD. Now the NZD/USD pair will fall drastically. If the speculator shorted the pair NZD/USD, then he would make a considerable profit within only a few hours! That’s why most of the speculators of the financial market love the forex market.
Go long or short both ways.
You can take short or long any position in the forex market. Some choose both positions. This means some speculators open trade on both short positions and long positions. And make profits on both positions. Isn’t it fantastic? Yes. As currency price moves every second, no matter you are taking which position, if your analysis is correct, the chance is higher that both positions can make a profit! If you are a stock market trader, you can’t go short and long positions. In the stock market, you need to wait for the price to fall first, then you will open a buy position, and when the market rises, your stock goes into profit you make money. But here forex market, the scenario is different!
High liquidity is available in the forex market
You won’t find such volatility anywhere in the financial market. The stock market is not as much volatile as like forex market. The crypto market gets volatile sometimes, but in most cases, it gets choppy. But if you trade on the forex market, then you will get plenty of opportunities due to high liquidity. This characteristic of this market makes it the most favorable market for millions of traders. And this is one of the major reasons why you should trade forex.
A wide range of currency pairs are available here.
You can trade
- major currency pairs like GBP/USD (GBP is the base currency, USD is quote currency)
- minor currency pairs like EUR/CAD ( EUR is the base currency, CAD is quote currency)
- exotic currency pairs like USD/MXN (USD is the base currency, MXN is quote currency)
- emerging currency pairs like USD/CNH (USD is the base currency, CHN is quote currency)
There are plenty of forex pairs you can place trade every day. You don’t need to get tensed about the availability of instruments here for trading, which is not possible in any other market. However, I recommend you to trade EUR/USD currency pair as a beginner. Or stick to only 28 top traded major forex pairs if you wish to make consistent profit from this market. As a beginner, don’t choose an exotic pair or emerging pair.
Forex market for hedging, why you should trade forex
If you are a hedger and love to hedge to grow your capital decreasing trading risk, then the forex market is for you. Suppose if you open a buy order in USD/JPY for gaining 100 pips. You set a stop-loss target at 50 pips. Then you can open another sell position on USD/JPY, fixing a profit target of 200 pips. If your buy trade makes a loss and hits stop loss for 50 pips, that means USD/JPY is in sell mode. Then when it falls, your sell trade can make 200 pips gain, which means you lost 50 pips and gained 200 pips. Your nit profit would be 150 pips.
Many professional traders like to hedge in an advanced way. Like if you open a buy trade on USD/JPY, Then you can open another sell trade on USD/CHF. If USD gets stronger, then close your USD/CHF trade and run USD/JPy trade only this way you can maximize your profit by cutting losses quickly and holding profitable trade.
So many tools here available in the forex market
There are plenty of tools that could help you improve your trading. Like if you wish to run your mt4 or mt5 whole day and whole night 24 hours, then there are many customized EA. Suppose you want to close all the trades at a second, which is impossible manually. Then you can take the help of any EXpert advisors or robot. Robotic trading is available in forex. Many customized indicator like non-repaint indicator is available. Signals service companies are waiting to help your majority of forex trading. Don’t you think that custom indicators, expert advisors, signal services, robots, news apps, and some other sophisticated tools are available in any market like forex?
Charts used in forex trading
There are three types of charts in forex trading
- Candlestick charts
- Line charts
- Bar charts
Any trader can choose any type of chart here. Sometimes some advanced level analysts take a look at all three charts to get a different view of the market.
Availability of powerful Forex trading strategies
From basic to advanced, all types of strategies are available in this market. If you wish to trade using default indicators like Bollinger bands or RSI or stochastic, then plenty of strategies are made with these default indicators. If you are a more advanced trader and like to trade using customized indicators, then forex trading is for you. Because there are plenty of sophisticated customized indicators which could boost up your trading, just pick up your favorable trading strategy and trade with it. It doesn’t matter whether you are a day trader or swing trader, or scalper; the forex market always has options for you.
Why you should trade forex? There are plenty of reasons. But I have only described here the top 17 reasons. The forex market is open for hedgers, speculators, scalpers, day traders, swing traders, position traders, and all types of retail and institutional investors.
The list of highest win rate trading strategy
- 20 pips a day forex strategy for 2022
- Best 5 minute scalping strategy for 2022
- Why 5 pips a day strategy had been so popular in 2022
- 5 min forex trading system for 2022
- 20 pips a day
- 10 pips a day
- 2 doji candles in a row strategy for 2022
- Automatic support and resistance indicator mt4
- 4 hour forex simple system
- 34 ema wave strategy for 2022