According to a report made by IMARC Group, the forex trading market is expected to grow from the $702 billion made in 2021 to $1,066 billion in 2027. This brings around a 27% increase for only 5 years.
Forex trading is gaining in popularity. Whereas banks and brokers were the only investors a few years ago, today, the currency exchange market is booming among retail investors and those trading as a hobby.
Even amid current global crises, forex trading is not expected to slow down its rise. So what makes forex trading so appealing? This article will discuss the top 8 benefits that make the forex market a highly desired exchange.
Beginner-Friendly
Forex trading is perfect for beginners due to its accessibility and simplicity compared to other trading markets. Many free online courses can help you start off the right way. Plus, forex trading doesn’t require a big initial investment.
Another thing is that forex brokers offer demo accounts. You can find reliable forex traders on Brokersview that have this feature. This way, you can try trading for free without losing anything. You can try trading simulator apps if you don’t want to sign up for an account.
24 Hours Trading
Unlike the stock market, which has particular working hours, the forex exchange works 24 hours, from Monday till Friday. This is because currency trading is done over-the-counter (OTC). To put it simply, to exchange currencies, you don’t need a central exchange but can do it directly with the other side, through a broker.
Even though the market is closed to retail investors during the weekend, you should know that this doesn’t mean the volatility of the currency stops. The currencies keep on moving, so you may find new coin values each Monday.
High Liquidity Market
Liquidity refers to how easy you can trade with an asset while roughly keeping the same price. Considering that the forex market is working 24/5 and there’s a high traffic level, it’s no wonder this is the most liquid market today.
High liquidity means low risk. However, it also means low profit, so many consider that trading with currencies won’t generate much income. But if you use a good strategy, forex exchange can be a sure way to strengthen your active or passive earnings.
Volatility
The forex market is also highly volatile. This is because it can be influenced by many factors, such as shifts in the economy’s global or local stage, natural disasters, political or financial news, etc.
Profiting in these times is possible; however, you should note the high-risk chances. Volatility and liquidity are closely connected. The more liquid the currency, the harder it is to be volatile and vice versa. This is where a good risk strategy can help you avoid making a mistake and turn you toward profit-making.
Low Costs for Transactions
Aside from the low starting capital, forex trading also has very low costs. Simply put, many forex brokers cover all expenses that can occur during a trade, meaning you don’t have to pay any fees for withdrawals, deposits, exchanges, etc.
Brokers make their money from the spreads. Nonetheless, some brokers may ask for a commission, which can be flat or a percentage, so check this before choosing a broker for your forex trading journey.
Legally Regulated
Unlike the crypto trading market, for example, the forex trading exchange is regulated. Note that this can’t be done on a global level, considering its complexity. But, each country has independent bodies that take this task into their own hands.
For instance, Australia has the Australian Securities and Investment Commission (ASIC). In the US, there are several depending on the asset (NFA for futures, CFTC for commodities and futures, etc.); Singapore, one of Asia’s emerging trading economies, has the Monetary Authority of Singapore (MAS), and so on.
Wide Range of Coin Options
There are 162 official currencies in the world, so this means that you can trade with thousands of coin pairings. Today’s forex market’s major currency pairs are EUR/USD, USD/JPY, GBD/USD, and USD/CHF.
Isn’t Individually Controlled
Because of its liquidity, the forex market can’t be influenced by one single entity. Neither a bank nor a broker can determine or affect how the market fluctuates. This also refers to the market price for an extended period.
Final Words
Forex trading has many benefits, but that doesn’t mean it’s risk-free. Beginners can quickly adapt to this market, especially if they are new to the overall trading world.
Before committing to forex trading, research the market and find a good broker. Although it may require more patience than the stock market, for instance, when it comes to profit, trading with currencies is one of the best ways to secure your future income.
This article is for information and educational purposes only and does not form a recommendation to invest or otherwise. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.