What Is Forex Trading And Why Is It Becoming So Popular?
Trading on the forex market has been slowly gaining popularity over the last 5 years. You can discern the increasing popularity by the fact that forex traders have snowballed up to 10 million over the last five years.
The chances are that you have recently stumbled upon forex trading and have become obsessed with it. Or you know a few people who boast about how much money they are making through forex trading.
So, let’s talk about what is forex trading and what makes is so popular.
What Is Forex Trading?
Forex trading or FX trading is the trade involving the conversion of one currency into another. As we know that some currencies are higher in value than other, forex trading exploits this value difference and the traders earn profit from the difference between the entry and exit points of currency in the foreign exchange market.
The daily volume of the forex trading market is a whopping $5 trillion. This market is made up of different governments, banks, businesses, and shareholders.
Why Is Forex Trading Becoming So Popular?
Ease of Access
First and foremost, what makes forex trading popular is because of its online presence. Forex trading can be done by anyone who owns a computer and an internet connection, which makes it nearly accessible to anyone who wants to do it.
Forex Market Hours
As forex trading is done internationally, it is open 24 hours a day, unlike a stock market. You can always find someone to trade with any time of the day, which makes forex trading a very profitable. You can also make forex trading a side business as most people do. After your day job, you can come home to an ever busy forex market and earn a little extra.
The most attractive feature of forex trading is the opportunities of profit it provides. In Forex trading, you can sell assets without owning them. For example, if you have $10,000 in your account, and you want to trade EUR/JPY currency pair. You can profit from this currency pair by simply going short on this pair and sell Yen for Euros, while your actual account balance is in dollars.
On top of this, there are different strategies that you can apply, such as leverage. Forex brokers allow traders access to different currency pairs and forex leveraging. Before forex traders, people who wanted to trade in foreign currency needed to have a substantial amount of money in their bank accounts. In forex leveraging, a broker gives you access to control a larger sum of money in the market than what you have in your bank account. This increases your chances of huge profits.
The way forex trading works is straightforward. You acquire an asset, hold onto it until it reaches a favorable price and when it does; you get rid of it. A market that is highly volatile increases the chances of potential gain if trading is done the right way, and that is why so many people are going for it.
Forex trading is a very profitable side business and can amount to a considerable increment in your monthly earnings. However, you need to have a clear understanding of how the market works, and there are equal chances of loss as there are chances of success.