Last Updated on July 14, 2024 by Asfa Rasheed
Table of Contents
Why Forex Market Is Easy To Navigate? Unveiling Top 10 Reasons
Even though there are a lot of asset classes that you can choose for online trading, the popularity of currency trading is unmatched. Those who are familiar with the forex market will be aware of the reasons that made it the largest trading market on a global level. But beginners might not know about the unique features of the forex market that make it easy to navigate for all. In fact, even novice traders get a fair chance to make profits and attain long-term success if they stay committed to their goals and make consistent efforts.
If you are planning to get started with forex trading, then this article can give you some valuable insights about the forex market and why it is considered to be the most favourable place for first-time traders.
Easy To Enter
Entering the forex market as a trader has become easier than ever due to the technological revolution that took the world by storm. You just have to open a trading account with a trusted broker and that account is your gateway to step into the decentralised market. You will be able to access the real-time market data and place orders for buying and selling different currency pairs that are available for trading on the chosen broker’s platform. Moreover, the forex market is open 24/5 and the market hours are divided into 4 trading sessions. Hence, you can trade at any time irrespective of your location and time zone.
Online Trading Platforms
Beginner-friendly trading platforms like MetaTrader 4 simplify the trading process to a great extent as you can download it for free and find all the tools that you will need for in-depth analysis of the market situation. You can even download the mobile trader app version of MT4 for trading on the go. Due to its intuitive features, MT4 is the most used forex trading platform among newbies and seasoned traders alike. Hence, you can easily execute your strategy without any confusion. Those who want additional tools and options can also check out the advanced MT5 platform.
Low Trading Cost
The cost of trading in the forex market is lower than in any other market as there are no typical brokerage fees when you are trading with the currency pairs. This is because there is no centralised exchange and you can find a lot of cost-effective brokers with transparent pricing when it comes to spreads, commission and swap fees. You can even find specific types of accounts like zero-commission accounts, raw spread accounts and swap-free accounts to get ideal trading conditions. So, choose a broker offering tight spreads and low commissions to cut down on the trading cost.
Regulatory Framework
The risk of losses cannot be overlooked when you are trading in the volatile forex market. But you can always feel at ease when it comes to the safety of your funds as long as you are trading with a regulated broker. The regulatory framework of the forex market is different for different jurisdictions and you need to consider the top-tier regulations of your region for a secure trading experience. The regulators monitor the functioning of a broker to ensure that they are complying with the standards.
Educational Resources
In this internet age, you can easily get a lot of online study material to gain market knowledge and even video tutorials to learn about forex trading. There are a lot of websites and forex forums that you can join to educate yourself about the fundamentals and technicalities of currency trading. Besides the free education resources, you can even find courses from expert traders. But you should only join legit platforms and avoid those who make exaggerated claims about profits.
Free Demo Account
Just reading the theories and memorising the forex terms is not enough to do well when you start trading for real. Having some practical knowledge is essential to minimise the risk and the forex market offers a perfect tool for practical learning. Before you start trading with real money on a live account, you can easily open a free demo account to practise and refine your skills in a risk-free environment. This is a simulation closely similar to an actual account and you will be trading with virtual money to test your strategies.
Leverage & Margin Trading
Margin trading can be done in all financial markets as the broker allows you to trade with borrowed funds which is referred to as leverage in forex. This leverage is an amplifier as the trade size gets multiplied depending on the leverage ratio you choose. You just have to meet the margin requirement specified by the broker and you can magnify the potential profits of a trade. Hence, you get to open bigger trade positions with a smaller amount of capital which gives you an opportunity to grow your account. However, risk management is crucial while trading with leverage.
Flexible Trade Sizes
The most common trade size in the forex market is the standard lot which consists of 1,00,000 units of base currency. But if you want to trade with a smaller amount of money, you can choose a mini lot which is 10,000 units of currency. The smallest lot size in the forex market is the micro lot which consists of 1000 units of base currency. The minimum deposit requirement depends on the broker you choose but the forex market is accessible to everyone who has a modest risk appetite. You can even open micro accounts to trade with a smaller amount of capital and flexible trade sizes.
Diverse Market Participants
The forex market is very dynamic and ever-changing. But it has a promising future and it will continue to grow despite all the ups and downs in currency values. Because retail traders are not the only people contributing towards the trading volume in trillions. There are a lot of top-tier banks, financial institutions, hedge funds, corporates and even government authorities actively involved in foreign exchange trading. They can be liquidity providers and market makers and they ensure the smooth functioning of the forex market.
Information Availability
Last but not least, all the information that is required to accelerate your growth as a forex trader is easily available. There is a lot of transparency in the forex market and you can find both historical price data and real-time market data on the trading platform. The historical data can be used for backtesting your strategy and the real-time price quotes are essential to execute successful trades. Since the forex market is often influenced by economic and geopolitical events, tools like economic calendars are also there to keep you updated about the same.
Bottom Line
To conclude, the forex market has become a place full of opportunities and the high profit potential makes it an attractive avenue for everyone. Those who are not ready to trade on their own also have a chance to make money by using innovative trading solutions like managed forex account services. Those who want to trade themselves can start learning right away by utilising the forex education resources and information that are freely available and accessible to all.
