Trillions of dollars trade hands in foreign exchange (forex, FX) markets every day, yet few understand the intricacies of the largest and most fluid investment segments in the financial world. This creates great risks and opportunities for those willing to try their hand at trading in this competitive sector.
There’s no central market for trading and but the largest FX markets are found in Sydney, London, Singapore, Hong Kong, Tokyo, Frankfurt and New York. Australian investors are becoming more interested in currency trading than ever.
Reasons Forex Is a Great Investment
There are several reasons Forex is a great way to start trading:
- Always available. It doesn’t matter where or when you trade. If you have an internet connection, you can log into a computer and begin to trade, day or night.
- It’s scalable. Newcomers and experts can take advantage of mini lots, micro lots or standard lots. This provides greater control over capital exposure and helps limit risk.
- No commissions. Trades are not free, but there’s no commission. Instead, you pay in spread costs, based on the details of your trading transactions.
- Software and data are free. All you typically do is download the software from your broker’s website and
Tips for Starting Out
A low entry bar combined with the potential to make a lot of money can make it tough to exercise discipline. Here are a few tips to getting started wisely.
- Stop loss tools are designed to keep an individual from losing more than they specify at the beginning of a trading day.
- Stay current. No one can keep up with financial decisions that change on a moment by moment basis. However, staying generally informed is possible and gives you insight when to press the trigger to buy or sell particular FX securities.
- Practice, it’s free. Use risk-free practice accounts to trade without losing any money. There’s typically a demo and then a “funded” account you can trade on.
Just How Large Is the Forex Market?
The forex market represents a truly unique opportunity, thanks to its size, low entry barrier and constant change. In April 2016, foreign exchange markets averaged $5.1 trillion in daily trade, according to the Bank for International Settlements, owned by 60 central banks.
