Gradually, the foreign exchange market is becoming more and more in demand. Sometimes traders from the futures and stock markets abandon their previous activities and start trading in Forex. What is the reason for such popularity and is the foreign exchange market really so good? Is it possible to make quick money in the forex market? Why has trading become one of the most popular professions recently? Let’s consider the main advantages and disadvantages of Forex.
No Strict Barriers
Perhaps one of the most important advantages is the ease of entry. Here, no one will require a diploma and proof of education and skills – absolutely anyone can start trading even with a small amount of money. Currently, most brokers, through which retail clients mainly trade, do not have minimum deposit requirements. To try your hand at the role of a speculator, even $1 is enough. In order to work on stock exchanges, you usually need a fairly impressive amount. If you want to trade in the futures market, then get ready to keep at least a few thousand dollars in your trading account.
With Forex everything is way simpler than it seems. A lot of novice traders start working on foreign exchange with $10. Of course, no one can guarantee that you will make thousands with such an amount of money, but it is a good way to start. You can find even more information on minimum deposits, foreign exchange market and various trading platforms here on a website dedicated to finances and people interested in FX trading.
Leverage
To work in the Forex market, the broker provides clients with leverage, that is, the ability to operate with amounts much higher than the actual deposit. Often the leverage ranges from 1:2 to 1:1000. With the leverage of 1:1000, you can have $10 on your personal account, and use $10,000 in trading. Leverage increases potential profits and losses. However, leverage is frequently a double-edged sword, meaning that it could harm a trader.
Convenience
Another convenience is an affordable account replenishment with minimal commissions. Most often, money can be transferred from bank accounts, platforms, e-wallets. The market works around the clock 5 days a week, that is, you can take part in the exchange process at any time, which becomes especially convenient for those who are busy with their main job. In addition, almost all forex brokers provide the opportunity to use trading platforms and study forex market analytics for free.
Having Forex as a side job is also a possibility and we have mentioned above, that people who are busy with their 9-5 job can also engage in trading.
Covid Pandemic Contributed a lot to Growing Popularity
One of the main reasons why trading has become so popular is the emergence of the coronavirus pandemic that significantly changed the whole financial structure and job requirements in the world. When people were forced to remain home, most of them started trading to earn additional money. Some people were really good at it and according to statistics, the number of people engaged in trading grew sharply.
The trend continues even now when the world has recovered a bit. It shows no signs of slowing down and FX trading is indeed one of the most popular professions nowadays.
Are There Negative Factors in FX?
There are also negative aspects to Forex trading. Firstly, unlike the stock exchanges, forex does not have a single center that would control the execution of transactions and deal with clearing. Secondly, retail brokers often do not bring their clients’ funds to the real market, all the money remains within the company. In this situation, the broker is always interested in the loss of traders, IT can specially insert pins into quotes in order to knock down stops, delay the withdrawal of earned funds, “interfere” with the most successful clients. With all this, traders will not be able to file a complaint with the main regulator, which simply does not exist in Forex, therefore all solutions to conflict situations depend only on a single broker and his integrity. Third, wide spreads and swaps reduce the likelihood of profitable trades.
The Popularity of Forex Will Not Go Away
In general, Forex trading has many of its distinctive features, among which there are both advantages and disadvantages. In addition, over time, many conditions for clients improve significantly: spreads are narrowing, trading accounts appear with the withdrawal of money to the real market. Some traders realized how promising this type of income is, managed to adapt to all conditions and began to profit from foreign exchange transactions.
The choice of a broker is very important in Forex. Without a decent education you will not be able to succeed – even if you are really good at it. As trading evolves and gains popularity more and more brokers emerge in the financial industry offering different services to customers.
