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Lesson 2: Advantages of Trading Forex

You Don’t need a Million Rand to Start Forex Trading

Unlike share trading where you need a decent amount of money to invest, Forex trading allows you to start with as little as nothing. I say nothing because some Forex Brokers such as AvaTrade will give you R400 just to open an account and you can start trading immediately. We don’t suggest trading with the bare minimum is a good thing but you get my point.

Leverage for Massive Profits

In Forex trading you have an option of leverage. If you select a leverage of 100:1 with your broker it means that if you open a $100 trade you are in fact buying or selling $10 000 worth of currency. Just remember that leverage is a double-edged sword and will increases your risk as well as reward. Most brokers offer leverage up to 500:1 and the good thing is that the choice to make use of leverage remains yours.

The Forex Market Never Sleeps – Choose your Trading Style

The Forex market is open 24hrs a day 5 days a week. (22:00 GMT Sunday – 22:00 GMT Friday). This means you can place trades whenever you are online. This is especially great if you’d like to trade full-time or on a part-time basis.

Trade from Anywhere in the World

You don’t need anything but a laptop and internet connection to trade on the go. Whether you are on a holiday in the Bahamas or sitting by your pool, trading Forex is very convenient. Don’t have your laptop with you, no worries! You can open and close trades on your telephone too.

The Forex Market is Massive with High Liquidity

With a trading volume of over $4 trillion a day the Forex market is 53 times bigger than the New York stock Exchange. You will always have instant access to the market to buy and sell currency at a fair market value.

No one can Corner the Forex Market

No hedge funds, banks, analysts or brokers can influence the market for an extended period of time. Not only is Forex open to everyone, but it also applies the same rules to all investors, no matter how big they are.

Constant Trading Opportunities

Unlike with the stock market where you invest money and hope for the share price to go up, the Forex market allows traders to buy or sell. If the price of the Dollar strengthening you can buy, if it goes down, you sell.  With such a massive, volatile market there are constant high-probability trading opportunities to profit from.

No Middleman Means Low Costs

Forex is traded OTC (over the counter) and the market is decentralized. When you trade Forex you the trade happens directly between the buyer and seller. This means there is no middle man. The only fees that are paid is what we call the spread. The spread is the difference between the buy price and the sell price. Spreads vary from broker to broker but are minimal in comparison to the stock market which have clearing fees, exchange fees and brokerage fees. Forex brokers tend to have very low spreads, typically less than 0.02%

Lots of Free Stuff

Brokers love new traders, from beginners to advanced. When you sign up to your preferred broker you will have access to so many free resources. Free training and learning resources, free trading webinars and free daily market analysis are to name just a few. More importantly most Forex brokers will offer you a free demo trading account so you can practice and hone your trading skills prior to opening a live account. What is not to love about Forex trading!

In the next chapter of your training we look at the best times to trade the Forex market.

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