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What you stand to gain in forex trading

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Avatar for Macronald
Written by   749
1 year ago
Topics: Forex, Forex trading

We have dwelled a lot on cryptocurrency and crypto trading in this community, a little diversification won't hurt - if you play safe.

As an entrepreneur, it is a usual act for you to be in the quest for new innovations and ideas. In Fact you are always in search of businesses that will make you smile home at the end of the day.

The one thing in the pocket mind of every business man is to invest, or trade with huge returns as reward.

What makes you a good investor is not that you dive into any opportunity. Diving into any business without knowing the nitty gritty of it will only leave you at the risk of going from one level to zero level. This is not to discourage you from trying new opportunities. 

Of course, there are a lot of opportunities out there and this makes it even harder for you to make a wise decision on which to embark on.

In this article, I shall be straight forward to ask; Have you tried forex trading?

 But before you respond to the question, let me tell you this—

Forex is the flywheel of foreign currency and exchange.  By foreign exchange we mean, the process of changing one currency into another currency for a lot of reasons, usually for commercial, trading, and tourism activities.

As of 2019, a report from the bank of international settlements reveals that the daily trading volume for forex reached $6.6 trillion in April 2019.

What then is forex trading?

Forex trading is basically the buying and selling of foreign currencies. Forex trading isn't a hobby, it is a global business that a lot of people all over the world venture into. 

The meeting point point for this commerce is the Foreign exchange market.

The foreign exchange market is a global market where currencies are sold and bought. Availability of these currencies makes it easier for purchases of goods and services within and externally.

It is forex that makes international trade a reality. Forex is the biggest currency market over the world. The business is simple In nature because you do not need to cluster at a particular point for commerce as this market and its operation is completely decentralized.

The trading is purely digital and over the counter (OTC), meaning that transactions occur through digital networks between traders.

Currencies are bought and sold globally in the major financial centres of London, New York, Tokyo, Zurich, Frankfurt, Hongkong, Singapore,Paris, and Sydney–across the majority of the world at different time zones.

 If this market is as significant as it sounds, what do I stand to gain as a trader?

Benefits of forex trading

You are absolutely safe if you choose to trade on forex. Some reasons include but not limited to;

It is well managed

Since it takes place in an electronic enabled means, its regulations and management is in the hand of individuals. This makes it possible for trading to take place at any point in time without restrictions. It is the independent bodies that are responsible for regulations in different countries that take care of it. Like in uk, the body in charge is the financial conduct authority (FCA)

It is a vast world market

Forex is actually the world's largest financial market. You can see why the benefits can't be overemphasized. Its large scale nature accommodates billions of traders from different works of life.

Being the world's largest financial market, in excess of $4.4 trillion USD is exchanged on a daily basis. Isn't that great!!

Transaction costs are on the downside

When it comes to forex trading, there are usually low transaction costs. Yes we know that brokers make money from spreads. These spreads are calculated based on the 'point in percentage'(PIP) and is the unit of measurement used to show a change in one currency value against another.

Forex accommodates beginners

This large scale market accommodates everyone including beginners. Additionally, you do not need a huge sum of money to start trading .  As earlier said, the platform is friendly and easy to understand.

For further simplifications, the platform comes with a free demo account, giving you an opportunity to 'try before you buy' test.

While reading on this demo account, you gradually build up yourself. This is because the demo account helps you to familiarize yourself with market shifts and it also helps you to  develop a defense mechanism towards risk, all without investing any money.

It is a 24/7 trading service

The forex trading platform creates an enabling environment where you can trade " on the go". This is because, foreign exchange takes place over the counter (OTC). All transactions are made between the trading parties, powered by a forex agent.

Closing thoughts

Though forex comes with a lot of gains and returns. The fact that it can be risky sometimes cannot be downplayed.

Every form of trade and businesses have their ups and downs, and as such no one should embark on any venture that you have no knowledge about.

Embarking on any trading journey requires at least some level of skill or trying to know the nitty gritty of the business. Carry out research extensively, or possibly consult experts in your chosen trade.

In a subsequent article I will properly educate you on the common terms in forex trading and what they actually mean in normal business languages.

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Avatar for Macronald
Written by   749
1 year ago
Topics: Forex, Forex trading
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Comments

Looking forward to the next. this made me interested in forex trading. :)

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1 year ago

When I made my learning goals at the start of the year, I included forex in the list. But, when I started learning and earning cryptocurrency especially BCH, i realized there are so many things that I need to learn. So i had to put Forex on hold. But still, i want to start learning about it as soon as possible.

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1 year ago