You’ve seen it on television. You’ve heard it from your neighbor. Most likely, you just read about one while you were online. The foreign exchange market or forex is a global market for trading different currencies. This is big business. How big? Imagine $3.98 trillion worth of currency passing hands in the span of just one day. As a matter of fact, trading goes on for 24 hours on weekdays. The amount of money involved surpasses the combined total daily turnover of all world stock and bond markets.
The mere fact that a lot of people are putting their money on forex trading would mean that it has become a growing and lucrative enterprise. Due to its superior liquidity, forex markets are less prone to manipulation and influence by dominant players, making the playing field more even. More and more people are switching over to currency trading from stock and bond markets due to its stability and potential for profit.
Forex traders have identified several advantages of the forex market:
Affordable initial investment capital – a forex broker can accept initial margin deposits for as low as $100. In the hands of a well-trained individual, this amount can earn a profit of $10-$20 on a daily basis. On the downside, having a small margin deposit limits the maximum lot size allowed for trading.
High liquidity – the forex market boasts an average daily trading volume of almost $4 trillion, making it the most liquid market in the world. This enables a trader to go in and out of the market without any negative effect.
24-hour market – since one market opens as another closes, traders can go about their business anytime of the day. Traders are able to respond to news anytime because there are no trading hours to limit them
Market cannot be cornered – due to its vast number of participants, forex markets are immune to manipulation of large players.
Insider trading immunity – due to its size and non-centralized characteristics, forex markets are immune to the negative effects of insider trading.
Online access – the power of the Internet has allowed forex firms such as Juno Markets to offer their services online, reaching out to a bigger source of clients. On the investor side, it allows them to manage, track, and make deals online. For beginner traders, a forex practice account allows them to simulate trade without losing money. Most forex firms and Juno Markets also offer a forex demo account to allow traders to try out their trading platforms.
Limited regulation – since there is no centralized location or exchange, the government can only exert a very limited amount of influence on the forex market.
Less volatile – since forex are less likely to become unstable than stock or bond markets, trends can be harnessed to gain profit.
Opportunity to diversify – since forex deals with different currencies, it presents an opportunity to create a more diversified portfolio for investors. This comes particularly handy when faced with a bearish stock market.
More predictable – the behavior of currencies follow a strict pattern that allows traders to predict opportunities for profit more effectively.
However, just like any business venture, forex trading also carry a significant amount of risk. For instance, UK’s Brexit is really shaking the economy globally and there will be a lot of changes in forex trading at the moment and brokers around the world are taking Brexit risk management strategies and so is the Juno markets and you can read Juno markets opinions on Brexit online. Therefore, anyone who wants to engage in currency trading must be fully prepared in terms of education and training. In addition, traders must attain a certain level of proficiency in order to effectively manage investments. Forex trading may not be for the weak of heart, but the rewards are great.