Many investors that trade in the traditional stock market have discovered Forex trading and become very active Forex traders in recent years. The Forex market offers many advantages over traditional stocks that these investors like and the Forex market continues to gain popularity as more people understand its financial advantages.
The first major advantage of trading Forex is that the market is active far longer than the traditional stock market. Because this trading happens with currency pairs that are based on countries all over the world, trading can take place 24 hours a day for most of the week. This provides traders with the opportunity to trade for longer periods of time to find their profits. Also, because these currencies can be automatically traded using software, you’ll have a better chance of finding the exact pricing patterns you’re search for more often with these longer trading hours. It also allows investors that don’t have time during a busy workday to trade in the evenings when they can make the right trades for their investment goals.
Forex Trading is Simpler
Forex trading is based on the simple financial relationship between two currencies. Unlike traditional stock investing, you won’t have to watch an entire market of hundreds of companies to find profitable opportunities. You’ll simply need to analyze a set of currencies and determine the perfect time to invest. This analysis can be done manually using historical charts of past pricing or through automated analysis software that can predict the perfect entry and exit points for a trade on a particular pair. Many new Forex traders use this software to help them identify what and when to trade.
Use Leverage To Magnify Your Profits
Leverage is another important advantage that Forex trading offers an investor. Most brokers you use will offer you a certain level of leverage that allows you to control a larger amount of the currency pair than your financial investment alone would allow. This is critical in profiting from the Forex market since the movement in the price of these currency pairs is typically very small and you’ll need a large position to generate a substantial profit. By allow you to have control over a larger amount of the stock, this leverage can deliver a substantially higher profit from these small movements in the price. The amount of leverage offered can vary considerably between brokers, so it’s always a good idea to shop around to find the one offering the account that best matches your investing needs. Most Forex brokers will also increase the amount of leverage they offer you as you develop a history of investing with them to allow you to generate even higher profits from this amazing investing opportunity.
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CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.