Investment is one of the best forms of preserving the available financial means and multiplying their value. Among all the types of financial investment, the Forex market is the one that stands out due to its profitability and flexibility.
What is Forex, and what makes it so popular among the traders? Let’s explore the advantages together.
What Is Forex?
Apa itu Forex? Forex is a global financial market, which is based on foreign currency turnover; with more than $6.6 trillion in daily trading volume, it is the biggest and most liquid market in global terms.
The Forex market is active 24/5, closing down only for a weekend. It is a fully digitalized market, with no central authorities.
The market is propelled by sell/buy operations with currencies, depending on the change in their value. The most popular currencies to trade are the US and Australian Dollars, Japanese Yens, Swiss Francs, Euros, and British Pounds. The traders study the movements of the currencies on a global scale, analyze price charts, and economic and political situations, and make predictions regarding future price movements.
The market is continuously changing, and the situation can change dramatically depending on the current events. If the traders anticipate the movements of currencies correctly, they strike a profit, if the prediction doesn’t live up to reality, there can be significant losses. Although Forex is risky and profitable in equal measures, it is one of the best tools to use to preserve and multiply your financial assets.
The Advantages of Forex Trade
Forex is active 24 hours during workdays, closing down only for a weekend when the bank system doesn’t work. As long as it is a global market, there are always trades being performed at any time of the day.
Overall, there are three trading sessions – the USA, the European (London), and the Asian. When one session closes down, another one starts, keeping the market continuously functioning.
Skillfulness in trading comes with experience; however, experience may cost a fortune. Yet, this is not the case with Forex. When you choose a Forex broker, they typically offer a demo version, to let the traders ‘feel’ the atmosphere, see how everything works, and try their hand at operations. The traders-to-be can actually practice with a few brokers, honing their skills while choosing a suitable broker.
Such a user-friendly option lets the traders relax, as initially, their mistakes will have no detrimental effect on their savings.
Knowledgeability in global terms
Forex is based on knowledge – a profound layer of awareness regarding the functioning of Forex and current world affairs.
The most successful Forex traders are well aware of the way global politics and economy work and influence each other. They are quite observant and perceptive, noticing how the slightest changes in a certain country may influence big market players, and thus, anticipate the currency fluctuations.
High liquidity of the market is provided by a large volume of trade in the market. It is easier for traders to enter the trade and significantly reduces the risk of potential losses. Moreover, the prices are relatively stable (if there are no dramatic changes in the geopolitical landscape), and the possibility of manipulations is relatively low. Yet, it is vital to keep your trading spree under control, and only trade at a favorable time.
Low entrance budget
One of the biggest advantages of Forex is the ability to start with even $50 and grow your funds by performing trades. Although starting with a small capital will somehow limit your initial trades, it will keep you on a relatively safe side, while you are gaining experience.
Leverage is like a loan in Forex terms. It allows traders to go big, even when the initial funds are small. The ratio of leverage depends on the broker, it starts from 1:1, which fits the new traders most, and can go up to 1:1000, which can only be used by seasoned traders, who are well aware of the way the market works, and are sure in their predictions.
Leverage is a brilliant opportunity for those who have limited funds, yet, it should only be used when there is a great deal of self-control, otherwise, it may lead to significant losses.
The Bottom Line
Forex is a global financial market of currencies, which is considered one of the best investments of our time. Although it may be risky, it is proven to strengthen the financial prosperity of traders, letting them use money for good, and multiplying their initial funds.
Forex allows clients to ensure the safety of their financial belongings. It is definitely a better option than just keeping money sealed under the bed.