Is Forex Trading Just a Fad? Detractors think so. Yet, the incredible spread it has encountered in recent years would not be explained. The truth is that Forex Trading is one of the best investment activities around, if not the best ever. It boasts specificities that, for those who demonstrate value, easily become opportunities. It is driven by dynamics that make it very appealing and, above all, profitable.
The statistics that you read around (and which are true anyway), such as those that speak of 85% of Forex traders ending the year at a loss, should not scare. Firstly, because this percentage also includes beginners and those who take trading as a game or not seriously. Secondly, because if it is true that 85% are losers, then it is also true that 15% earn a lot of money. If this reasoning has not convinced you, here are
some reasons why Forex Trading is better than any other online trading activity (or is among the best).
Size
Forex is the largest market in the world, from a liquidity point of view. It means that a really high amount of money circulates. We are talking about a figure exceeding 5 trillion dollars, which corresponds to 6,000 billion euros.... Per day! In short, daily, Forex moves a volume almost equal to triple the Italian public debt (which, let's remember, is the third highest in the world).
Of course, not all segments are equally liquid. From this point of view, the euro-dollar pair stands out, which
alone moves 50% of the total liquidity. This should not surprise, since the euro and the dollar are respectively the currency of the second and first economies worldwide.
Variety
Forex Trading may seem at first glance a boring activity. After all, there is only one asset to trade: currency. Yet, there is a huge variety. This variety derives from the specific differences of each currency, which in turn derives from the heterogeneity that characterizes the various national economies. Not only euro and dollar, then: incredible opportunities are also appreciated in the less known pairs, which refer to so-called exotic currencies. These are interesting because they are less liquid, it is true, but very volatile.
Hours
Forex is open 24 hours a day, 5 days a week. From this point of view, there is a huge difference with other markets, which are only open 8 hours a day. You can always trade (except on weekends), so you can seize many more occasions. Of course, you should always act with reference to traditional markets, since a good part of the signals come from there. So, pay attention to the opening hours of the following markets.
- Sydney Market: From 11 PM to 8 AM
- Tokyo Market: From 1 AM to 8 AM
- London Market: From 9 AM to 6 PM
- New York Market: From 2 PM to 11 PM
Possibility to Go Short
One of the possibilities that Forex Trading grants, and that many other markets instead refuse, is that of going short. This means that the market is theoretically profitable even when things go wrong. This is a very important opportunity, as it gives rise to very large profit opportunities, practically non-stop. Obviously, it's not all rosy: "surfing" the market is rather difficult.
Very Low Barriers to Entry
One of the reasons why Forex Trading has spread like wildfire consists of extremely low entry barriers. The credit goes to brokers, who have opted for very accommodating economic conditions. For example, some brokers require a
minimum deposit of at least 200 euros, which is a very low figure and within everyone's reach. No other market is so easy, quick and immediate to attend (for non-professionals).
Scalability
This is another important aspect, although a bit technical and concerning strategies. Well, strategies are proposable (in most cases) regardless of the volume of investments. A trading system, in fact, can work with 100,000 euros of capital as well as with only 1,000. This opens the doors for the "growth of the small", who can then take as a reference the best and most performing traders.
Information
The Forex market is the subject of analysis, evaluations, interest from experts. This produces such a wealth of information that it represents an invaluable source of guidance for traders. The abundance of information is obviously not its exclusive feature, but it is still a characteristic to be taken into consideration and appreciated.
