|Forex market features
When people think of trading, they imagine that all traders are making profit and the trend of the market is always in favor of the trader and they always get the best results. One thing you should know about forex is that it’s always volatile. In fact, traders try to make money in volatile conditions. Next thing you should know is that forex traders invest their time in addition to their money. A trader may practice trading for several years to reach the proper level of experience and knowledge. However, a professional trader can make money both in a bullish and a bearish market.
Forex is the largest market with the largest amount of liquidity. An interesting fact about forex is that no retail trader was able to take part in this market before 1990. Retail traders started to trade as online brokers were founded in 90s. In fact, forex was mainly focused on major traders such as large financial institutions, banks and exchanges rather than retail investors. The share of retail investors in forex is about 250 billion U.S Dollars per day, which is about 5% of the total daily turnover in this market.
Why people invest in forex
There are so many reasons why people invest their money and time in forex. The following reasons are the most important ones. We are going to discuss them one by one.
How do traders make money from price movements? A trader is always selling and buying in order to make money. If you want to trade in forex, the first thing you should do is to choose a forex trading strategy. A trading strategy determines when and where you have the opportunity to make profit. Making money from trading in forex, is in fact making money from price volatility in this market. Another difference between trading in forex and trading in other markets is that you don’t have to keep your investment for long to be able to make money. In fact, there are numerous trading strategies in forex. In some of these strategies, positions are kept opened for several seconds or minutes. Price volatility is a great opportunity that could make it possible for traders to make money in this market.
In addition to volatility, which is the most essential factor that makes it possible for traders to make profit in this market, accessibility plays an important role in forex. High level of accessibility distinguishes forex from other financial market. This flexibility is offered in two ways. First, you can easily start trading at any time during the day via your smartphone or laptop. Second, you don’t need a ridiculous amount of money. However, these aren’t the only advantages of forex. If you are a beginner trader and want to improve your knowledge in this area, you can always create a demo account and start practicing without risking your real assets.
The advancements in software technology has made a lot of tasks easier than it was before. You can easily transfer funds between several accounts thanks to the advancement of technology. This is the case with trading. Every year, new trading platforms are released with additional features which bring convenience to traders. To sum up, software technology plays an important role in forex trading, and as it evolves so does the process of trading. In fact, 5% retail traders who actively trade in forex are the result of such advancements. However, trading platforms are not exclusively profitable for forex market. The companies which developed such software are also benefiting.
Let’s get back to the essence of trading. When an asset is bought or sold, the owner of that asset is in fact changing. Trading in its most basic form involves physically transferring an asset from one owner to another. In case of forex trading on the other hand, you don’t need to own anything to be able to sell it. For example, imagine that you have 10,000 Euros in your trading account and you want to trade USD/JPY. The interesting thing is that you don’t have anything to do with USD or JPY. The only currency you have in your trading account is Euro and that’s enough for trading any currency pair such as USD/JPY. There is also another way to trade in forex. Some brokers offer CFDs (Contract For Difference) which allows traders to trade anything without physically transferring it. Another tool that makes forex trading so appealing is leverage. Leverage allows you to trade more than your balance.
Any business needs to be properly regulated and certified to be able to offer services to clients. Forex brokers are also not different. Forex brokers must be properly regulated based on their location in order to be able to offer transparent services to traders.
Trading on demo accountWhen warriors try to prepare for the battle, they practice in a practice ground rather than the real battle ground. They practice in this practice ground until they are ready to enter the real war. This is also the case with forex trading. A trader who has just finished his/her trading course can not enter the real market. The best thing to do in this situation is to practice in a demo account. In a demo account, the trader can practice trading without risking his/her real assets.
Bottom lineIf you intend to start a career as a forex trader, you would probably want to choose a forex broker first. Finding a reliable and trustworthy online broker might seem a little easier said than done. Therefore, always do your homework before signing up to a broker. Aron Groups Broker offers extensive services in several financial markets such as forex, energy, commodity, stocks, indexes, metals, cryptocurrencies, etc. This broker emphasizes on its customer support service and competitive spread rates for top trading symbols. You can start evaluating your trading strategy in Aron Groups Broker demo account completely free of charge, before starting to trade in the real market. This way you can protect your assets at the beginning of your trading journey.
Written by: Mohsen Mohseni (Aron Groups).