5 REASONS YOU SHOULD TRADE FOREX
5 REASONS YOU SHOULD TRADE FOREX
#1 You like the idea of trading at any time you want
The Forex market is open around the clock, which allows you to trade whenever you want.
It provides great flexibility for traders and as there are no market opening or market closing times the opportunity for potential profits is 24 hours per day, 5 days per week!
Of course, trading volume varies depending on how many sessions overlap, and it often decreases when there are bank holidays in major sessions such as on Wall Street.
Forex trading can also be used if you want to buy as well as short-sell currencies. If you believe that in the short-term the EUR/USD is going to go down, then you’re able to make money from this downward movement thanks to sho=t selling.
#2 You like technical or fundamental analysis
Forex trading is often geared towards technical analysis, so if you have sound knowledge of price study, charting and technical patterns, Forex trading might be a good fit for you.
Forex trading is often geared towards technical analysis
While using technical analysis, you may find it useful to use economic calendars, such as the U.S Market economic calendar or the Global economic calendar.
The impact of news is also strong on the Forex market, as currencies quickly react to macroeconomic news, political events and economic data.
So, as a Forex trader, you should monitor the economic calendar to determine when currency pair prices might accelerate and break important levels thanks to higher volatility.
#3 You can deal with a high risk environment
As the Forex market can be a volatile market, you’ll need to be able to tolerate a certain level of risk. To better protect your trading capital, it’s important to have a sound risk and money management system with rules to follow.
… determine your stop-loss and take-profit levels before entering the market
For instance, you should always determine your stop-loss and take-profit levels before entering the market. In this way, you’ll already know how much you’re willing to lose and how much you can expect to earn from your position. This is called your “risk/reward” ratio.
Another example would be to adapt the size of your positions depending on the current trading conditions and the evolution of your trading capital. All these rules should be part of your trading plan and to be profitable, you should always stick to your plan!
#4 You are dedicated and patient enough to develop a trading plan and follow your investment method
Commitment, patience, and dedication are the most important ingredients in trading.
Staying focused by continual learning and practice is important
Having a trading plan to follow when trading is vital if you want to be successful, but most importantly you need to be committed to follow it, and patient to open/close your positions according to your set-ups.
You need to develop your investment strategy or trading system before investing real money on the FX market – if not, how do you know what you’re doing, and that what you’re doing is making money?
A trading plan is a description of your investment method:
- Trading style: scalping, day trading, position trading
- Currency pairs: majors, minors, exotics
- Timeframes: 5 min chart, 15 min chart, 4h chart
- Size of your positions
- Set-ups to follow to enter/exit the market
- Risk and money management rules: risk/reward ratio, stop-loss and take-profit orders
#5 You want to take advantage of a growing market with high liquidity, volatility and leverage
The Forex market has been a fast-growing market over the last 20 years.
According to the 2016 Triennial Central Bank Survey of FX and over-the-counter (OTC) Derivatives Markets from the BIS trading in foreign exchange markets averaged $5.1 trillion per day in April 2016.
This high trading volume increases the liquidity of the market, which means that it’s easy and fast for an investor to enter a trade and also reduces the risk of potential price manipulation from others.
Forex trading also uses leverage that can magnify your returns (as well as your losses) in a very short period of time. This leverage allows you to manage more money than you currently have in your trading account for potentially higher profits.
RULE OF THUMB
RULE OF THUMB
Deciding whether to trade or not to trade the Forex market is up to you, but remember that even if you’re one of the smallest actors on the Forex market, you can still profit from it.
… you should know who influences the market the most and why
Hedge funds, central banks, commercial banks, and international companies, among others, have a powerful impact on currency prices, so you should know who influences the market the most and why.
If you want to take advantage of Forex trading, it’s a good idea to use a demo account before investing real money in your trading account. for those outside the EU and US – offers a free demo account which can be linked either to CoreTrader or MetaTrader 4 – the world’s leading trading platform!
There is very little chance that you can be successful without trying out your broker’s trading platform first. This includes real time charts and trading tools, its trading conditions to test your own trading system.
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