There is no denying that the Forex market is growing in popularity. An increasing number of investors are embracing Forex with the motive of acquiring higher returns and diversifying their portfolios. With that being said, read on to discover some compelling reasons to learn to trade Forex…
- Easier to manage – Forex trading is easier to manage than the likes of NASDAQ and LSE because there is less choice available. This means that you do not need to do as much research, and thus you can keep track of market changes with relative ease.
- 24-hour worldwide access – There are no restrictions on when you can trade Forex, as the market is open 24-hours a day, from Sunday at 5 pm until Friday at 5 pm, and thus you have the ability to capitalise on different time zones.
- It’s the biggest global market – Of all equities markets, the Forex market is the most liquid and the biggest. The average trade volume on a daily basis is four trillion dollars.
- Make money no matter how the market is moving – One of the reasons why you should learn how to trade Forex is because you can make money when the market is going up as well as down and contribute to family expenses. This is because you are selling and buying a currency at the same time, which means you can capitalise on both falling and rising markets.
- There is less risk involved – Last but not least, one of the main reasons why trading Forex appeals to so many people is because there is less exposure to risk. As one currency falls, another will rise. Therefore, in Forex, a weakening market sentiment does not mean that all interactions of currency will fall. The same cannot be said for shares and such like.
Sounds good, right? If you decide to go ahead with trading Forex, though, you do need to be cautious. Everyone has to start somewhere, and if you are new to trading Forex, you are bound to make a few mistakes. Even the most experienced traders get it wrong sometimes. However, what you need to do is avoid the obvious errors. So, let’s reveal some of the most common mistakes made by new traders so you can avoid them…
- Being unaware of data events and news – You need to dedicate part of your weekly / daily trading routine to reading market data and news. There are always unscheduled developments and curveballs, and you will need to factor them into your plan.
- Trading without a plan – This leads onto the next part perfectly. If you read the previous error, and thought ‘what plan?’ you need to start strategizing. You cannot open up a trade without having a solid plan and effective Forex trading strategies in place. This is something experts like CMC markets can assist with. You will need to know what you are going to do if the market moves in your favour or against you.
- Cutting winners and running losers – This is undoubtedly one of the biggest mistakes people make when they first learn to trade Forex. Getting your timing right is everything. A lot of beginners take a profit on winning trades too soon or they hold onto losing positions for too long. Again, you are not going to be right all of the time, but a risk-aware trading plan will help you minimise the times when you’re wrong.
- Being unrealistic with expectations – Finally, it is crucial to be realistic. You can turn over a nice profit, but you are not going to retire and live the life of luxury off just one trade. Look at average trading ranges and recent market reactions to ensure you are setting realistic parameters.
As you can see, there are many reasons why Forex is a good place to start if you are interested in trading. However, as is the case with any type of trading, it is not without its risks, and so you do need to be cautious. Take note of the common errors that have been mentioned above so that you can avoid making the rookie mistakes that most people make. Good luck with your new venture!