7 Reasons to Trade the Forex Market

Published: 04th June 2013
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When choosing whether to trade in domestic stocks or in foreign exchange, it is important to weigh the pros and cons of each. There are some reasons why some investors would prefer to invest in the stock market, but there are also many reasons why investors are increasingly choosing to trade in the foreign exchange market. Here are seven reasons why you want to trade in the Forex market.

It lets you invest in other currencies. In recent years, there has been a lot of anxiety in the United States and Europe about the financial crisis. It has seemed that no stocks are completely safe from loss, when banks and companies that were supposed to be too big to fail failed anyway. In Forex, you can trade in any currency in the world. This means that if the Dollar or the Euro are weak, you can put your money in a currency that is strong. This has allowed many investors to accomplish wealth creation even when everyone else who was using their native currency was suffering financial losses.

It is always open. Some Forex investors trade while everyone else is at work, or they trade at work and do their own wealth creation in between working for their ordinary paycheck. Other Forex investors trade after the kids go to bed in the evening, and some traders like to trade in markets on the other side of the globe when it is the middle of the night where they are. Foreign exchange markets are global, which means that somewhere in the world a market is always open. For a Forex trader, insomnia is just an opportunity to engage in a bit of wealth creation.

It has gigantic liquidity. The Forex market combines investments from all over the world, and therefore it has money from all over the world passing through it. While trading on the New York Stock Exchange can allow you to access a portion of the money that is in the United States at the moment, trading on Forex allows you to trade within a market that represents enormous amounts of money from all over the world.

You won't get stuck in trades. Making a trade always depends on someone else on the other side being willing to take the trade. In the stock market, it is frequently possible to place a buy or sell bid only to have it sit untaken. In foreign exchange, however, there are simply so many people in the market from all over the world that most of your trades will be accepted automatically, and it is highly unusual for an investor ever to get stuck in a trade.

It has enormous leverage. On the stock market, brokers are often cautious about letting you trade on margin. In Forex, you are allowed to trade with enormous amounts of leverage. What this means is that if you have 50:1 leverage, you can make trades that are 50 times larger than the cash in your account. For every $1 you own, you can trade $50. This can generate huge amounts of wealth creation but must be used carefully, because it can also cause large losses.

There is a low barrier to entry. While many brokers on the stock market require minimum deposits of $500, all you need to begin trading in Forex is $25. There are limited opportunities for wealth creation with such small investments, but nevertheless, the small requirements to enter the market allow investors without large amounts of wealth to be able to trade as well.

There are few fees. While many brokers on the stock exchange charge separate fees for every transaction completed, the fees on Forex transactions depend on the spread (difference in price) of the transaction, and are much smaller. This means that investors can make more money with less overhead and can afford to make many more trades in the day. Foreign exchange markets allow for large amounts of quick wealth creation in a fast-paced and exciting environment.


Darren Page is a professional trader, investor, entrepreneur and founder and CEO of Zappy Wealth. He is highly regarded among his peers and is a regular contributor on many trading related article sites. Darren runs regular webinars and education workshops and is RG146 qualified in Foreign Exchange. Check out the website and receive access to some great free content on trading.


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