Why Trade Forex?
Foreign exchange trading, or forex, is the exchange of funds in one currency for another.
I have dollars and I trade them for euros – that is a forex trade. If I take 10 dollars, and I exchange
them for 8 euros, and the euro becomes worth more in dollar terms, so that I exchange them back for 12
dollars, then I’ve made a profit by trading forex.
And that’s why people do it.
The value of currencies changes constantly, due to events in world politics, macroeconomics, and world
business. The common goal of forex traders is to profit from these changes in the value of one currency
against another by actively speculating on which way currency prices are likely to turn in
Trading forex has a lot of advantages:
- There is only one global forex market, and it’s open 24 hours a day from Sunday to Friday
(closed on Saturday). This means that you can trade anytime, in literally hundreds of different
currencies as well as in some commodities like silver, gold and platinum through special
- The market has deep pockets, with about $5 trillion traded every day. That means there is never any
lack of funds to buy what you are holding.
- Forex is less sensitive to the daily news, although certain events do affect it. However, most currencies
don’t plunge on a single economic announcement or make huge jump on growth figures. Forex trading
is much more orderly than stocks or bonds.
- You can trade from your laptop or smartphone whenever you choose to. And there are no complex rules to
learn – the basics are quite easy.
- You don’t need a fortune to get started.