Thread: Why should you trade forex market?

Simply said, no other trading instrument comes even closely to forex market when it
comes to liquidity, 24hr market environment and last but not the least, profit potential.
Forex (currency) market is the largest (most liquid) financial market in the world, with an
average daily volume of more than US$ 1.5 trillion, which is more than all of the global
equity markets combined.
Forex trading day starts in Wellington, New Zealand followed by Sydney, Australia,
Hong Kong and Singapore. Three hours later trading day begins in Dubai (UAE) and
other Middle Eastern countries. In couple of hours they are followed by Frankfurt, Zurich,
Paris, Rome… London is the last one to open in Europe and five hours later it is followed
by New York, Chicago and finally the West Coast. The busiest hours are early European
mornings because at that time major Asian exchanges are still open and European
afternoons because at that time major US markets are open at the same time as Europe.
Therefore, wherever you live and whatever your work hours are you can always find some time to participate in forex trading as opposed to stock market where you are
usually limited to the regular business hours.
Another property of forex market that makes it an excellent trading instrument is use of
leverage. Many beginning traders don’t fully understand the concept of leverage.
Basically, if you have a start up capital of $5,000 and if you trade on a 1:50 margin you
can effectively control a capital of $250,000. However, a two percent move against you
and your capital is completely wiped out. If you are a beginning trader you should not use
more than 1:20 margin until you get comfortable and profitable and then and only then
you can attempt to use higher margins. What does 1:20 margin mean? It means that with
your $5,000 you will control a capital of $100,000. Let’s say you are trading EUR/USD
and by using our entry strategy you have decided to enter the trade on a long side. That
means that you are betting that USD will depreciate against Euro. Let’s say current
EUR/USD rate is 1.305. Again, if your trading capital is $5,000 and you are using 1:20
leverage you will effectively be exchanging $100,000 to Euros. If the current rate is 1.305
you will receive 100,000/1.305 = 76,628 Euros. If the trade goes in your direction the
margin will work in your favour and 1% decline in USD will mean 20% increase in your
start up capital. So if EUR/USD rate moves from 1.305 to 1.318 you will be able to
exchange your 76,628 Euros back to $101,000 for a profit of $1,000. Since your start up
capital was $5,000 it is effectively a 20% increase in your account. However, if the trade
went against you and USD appreciated 1% vs. Euro your account would be reduced to
$4,000. That would not have happened as our strategy has built in hard stops to prevent
such outcome.
And the third and equally important property of forex market is the fact that trends in
forex market last longer and are more clearly defined than in any other trading instrument.

nice overview of forex trading. It is become more and more popular these days. Working from home is luring for many of us

Nice post to new comer in Forex trading. Yes, that we can work from home and don't take much time of us is benefits that Forex traders get. There is a fun but somehow right idea that you can quickly become rich

Yeah, Forex is the biggest financial industry by far because of the ability to trade online.. that's why the number of trader and investors are increasing.

i agree with you guys, Forex became one of the largest financial market in our world, in fact, me too was lured into this market.

That's why I really want to try forex trading..