When one is looking to learn how to trade the markets, a great way to start is investing in the forex market. Getting started trading the markets does not have to take a ton of money. Successful traders will tell you to find what works for you and stick to it. Here are three solid reasons a beginner trader will enjoy starting in the currency (forex) market:
- Actively trade anytime
- Leverage
- Low Fees
These are the advantages one needs to be a successful investor and/or trader early on. Forex will allow one to learn many trading concepts, hands-on, at an accelerated rate. This allows the beginner to find a style of trading that is right for them and develop a routine or plan that will lead to success in other markets in the future. So, what is the forex market?
Quick Intro to the Forex Market
The forex market is where traders go to trade currencies. The word forex comes from combining the words foreign and exchange. The forex market is the most traded market in the world. In trading forex, one is buying one currency against another. For example, one may see that South Korea’s economy is going strong while Japan is showing weakness in its economy. They would want to buy the Korean won against the Japanese yen. Another trader may see some chart signs that the euro is losing strength against the US dollar. Thus, this trader will be buying the US dollar against the euro. These sets of currencies are known as pairs.
For many, the concepts of the Forex market can seem confusing. One must not be afraid of the markets, but allow themselves time to learn. This article is just the start of one’s journey into the forex market.
Actively Trading Anytime
The forex market is open 24 hours a day, from Sunday at 5:00 p.m. Eastern standard time, to Friday at 4:00 p.m. Eastern standard time. This allows traders to trade live on their time. This is good for the beginner as it allows a taste of day trading that other markets cannot provide due to the average workday.
Leverage
Leverage allows for more profits with less capital needed. Most major pairs have a margin of 50:1. To show what this means, if one has $100 to risk on a trade, with no margin they can control $100 of a currency. With a margin of 50:1 and the same $100, they can control $5000 of that same currency. As the price changes, margins give one a much better return on investment in the trade. One must learn to manage risk such as this.
Low Fees
Most brokers offer the ability to trade small accounts without getting bogged down with fees. The common advertised price for stocks, for example, is $9.95 a trade. Well, if one is trading a very small account actively, they will quickly find themselves running out of capital. Not because they traded poorly, but due to commissions eating up their capital. Forex trading offers much lower fees so traders can trade with much smaller accounts and stay in the game longer.
Great, Now What?
If you feel the forex market is right for you, then start learning more about it. Forex, with its advantages, can help the beginner trader find what works for them and they can carry it to other markets. One may find they like to only trade an hour a week, while another trader likes to trade an hour a day. One may find they like to actively trade minute by minute, while another trader likes to trade hour by hour.
Bottom line, there is no right way or wrong way to trade; it is more about what fits a particular person at a particular time. Often it is said that stupid is doing the same thing repeatedly expecting a different result. Forex will allow one to be able to try new things, to become a smart trader who is getting the desired results they are after. With all trading, one must determine whether it is good for them or not. One must keep learning. Then and only then can one create a solid plan and find success in the markets.
