There is one type of trading that is accessible to almost everyone on the planet. Since it is open twenty-four hours a day and known as an over the counter (OTC) market, it is very user friendly for every trader. This makes the Forex very different to the regular commodities or stock market. Another great advantage when trading Forex is that only a small amount of money is required. This is very different to the big guys where a large amount of cash is needed to take advantage of an investment opportunity. All one needs is $1 to trade a “micro account”.
How the Forex Works
When a trader enters the market with as little as a $1 micro account, that in turn allows the trader to open positions of 1,000 units. 1,000 units of currency will be equal to 1 contract in micro account. Each “tick”, which is the smallest currency rate movement down or up is worth $0.10 profit or loss. Therefore, a Forex mini account will give the trader control over 10,000 units of currency, where one tick is worth $1.00. Another benefit in Forex is that with a little amount of money a trader can use leverage or margin trading to control bigger market positions.
Bullish or Bearish Markets
One of the big differences between stock market traders and Forex traders is that; to make a profit, stock market traders need the stock prices to rise because there are strict guidelines within stock exchanges. Forex traders, on the other hand, can make a profit with either uptrends or downtrends. Forex trading is not for the feint hearted as it is considered a risky form of trading. However, with the correct management skills, a good level of self-discipline and a reliable trading system to follow, Forex trading can be much less risky with the emphasis on profitability.
Around the Clock Market
The Forex market may be traded anywhere and at any time. The trader just needs access to a computer and the internet to get started. Of course, it is necessary also to have the ability to trade the Forex market. Before starting to trade currencies, it is important to practice with fake money or paper money. At ETX Capital it is possible to sign up for a demo account where a trading platform may be downloaded and the trader can practice in real-time but with fake or virtual money. Practising in this way gives the trader a great advantage before starting to trade with real and hard earned money.
Benefits of Trading the Forex Market
In the past small time traders such as individuals had hardly any access to the Forex market. It was available only to multinational corporations, major banks and others who traded in large transaction volume and size. Since the arrival of the internet and technology, FX trading has become increasingly popular for the general public.
- The FX market is open 24 hours and only closes at weekends
- It is very efficient and liquid.
- It is highly volatile
- It has very cheap transaction costs
- There are profits to be made from a bull or a bear market.
For the ultimate source of financial markets news, Bloomberg is the number one provider of everything the trader will ever need to know.