Money investment here, buy precious metal there, why actually forex? Why should the ordinary citizen invest his money in forex? This question is to be investigated in the following article. Prejudices are discussed and pros and cons are weighed against each other. Questions should be answered and the desire for foreign exchange trading to be aroused.
The trading day has 24 hours
Your Savings Bank Mach 18.00. In online banking, investors have to keep on trading hours. Even the investment adviser cannot ignore this. But on forex trading, the investor can trade around the clock foreign exchange and other leverage products from Sunday night to Friday 23 o’clock. When the trader wants to “work” as FX trader, he can do that around the clock, if he can. Theoretically, he doesn’t have to sit on the PC. The forex broker supports it with a software for AutoTrade. The trader can place orders and trade marks for closing trades.
Forex Trading – Everywhere
The trader only needs one device with mobile Internet access to trade on forex. The possibilities are seemingly unlimited. Even from a smartphone, trading is possible today. The professional can check his trader’s business in his breaks, can observe his trades and make decisions.
The foreign currency market is the liquid of the world. Unlike trading equities, for example, liquidity is huge in the forex market. The daily trading volume is more than 5 trillion US dollars. This can be expected to prevent price manipulation. The spreads between buying and selling prices are enormously small due to the large volume of trading: the more liquid the market, the more timely the trade for the trader. Trade decisions can usually be implemented immediately.
Unlike trading in shares and fund units, you do not pay any fees for the purchase and sale of foreign currencies. The difference between the buying and selling price, the spread must be generated in the trade. It is a small difference and it is usually less than 5 pips.
The leverage effect
By using leverage (leverage), the trader can generate large profits or, unfortunately, also losses with low stakes. The forex lever is usually between 1:50 and 1:400. A leverage of 1:400 means you can move with a euro 400 euros. Or with 1,000 euro an amount of 400,000 euros. The larger the leverage, the lower the price fluctuation, so that profit can be achieved, the lower the deposited margin (security). Here, however, caution is required. A too large lever can also quickly lead to total loss.
Earning money in falling and growing markets
If you buy a stock on the stock exchange, you are speculating that it will rise – this is the only way you can earn money. It is often very difficult to earn money with the purchase of shares. A lot of capital is tied over long periods of time. The forex market is completely different in this respect. The trader trades a currency pair and decides how the two currencies will evolve. If his prognosis is met, he has earned money. The trader may not care where the journey of the courses goes. He can always be the winner. The capital commitment is low and is readily available again.
There is only one prejudice of the matter. This is based on a high risk of loss. The trader can counteract this with a well-founded analysis, the setting of loss limits (stop loss) and a risk-conscious use of the levers. Old prejudices, which were also based on a complicated technical process of trade, have long since been dispelled by modern trading platforms. Why Forex? The answer is now hopefully found.