So, why trade Forex? Once the reasons become clear, many are eager to jump on the bandwagon. Why trade Forex? To make money, of course, would have to be one of the main reasons! In this lesson, we will show the difference between trading Foorex and other exchange-based markets, and why trading Forex through a broker can be very profitable.
ADDITIONAL READING ABOUT MORE REASONS TO TRADE FOREX
There is one more reason why Forex is so popular of late: it has low start up requirements and relatively inexpensive account costs.
Trading starts with as little as a few hundred dollars, sometimes less.
Forex brokers typically provide free full-featured trading platforms and data feeds, and the better brokers offer extensive archives of free training materials and market analysis. With online stock brokers, traders typically need to maintain significant minimum balances or minimum average monthly trading volumes to get similar service.
Brokers typically provide full-featured practice or demo accounts that allow smart beginners to simulate most of the trading experience and practice with play money until they feel ready to risk their capital.
Most Forex brokers charge no fees, commissions, or hidden charges. They earn their money on the difference, called the spread, between the buy and sell price, typically a few ten-thousandths, called pips, of the price. Depending on the lot sizes traded, a typical two-pip spread to open and close a position can cost anywhere from $0.20 to $20. In general transaction costs are very competitive compared to those of online stock brokers.
In most stock markets, the specialist is a single entity that serves as buyer and seller of last resort and controls the spread, which is the difference between the buy and sell price for a given stock. Though in theory they are regulated and supervised to prevent their abusing that power to manipulate prices at the expense of the trading public, specialists are experts at knowing when they can get away with a degree of this and force you to buy higher or sell lower.
With Forex trading, no single specialist regulates prices of individual currency pairs. Rather, multiple exchanges and brokers are competing for your business. Another reason for trading Forex is that there is high liquidity and decentralized markets which means less slippage.
Slippage is the difference between the stated price on your screen and the actual price you pay or receive. The less liquid the market, the more often slippage happens because fewer traders are present to take the other side of your trade.
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“i enjoyed coming to TM Academy because it thought me the right things to do regarding trading”
“It was the best class by far... The professor was vary knowledgeable, was like a tutor . wish we would have more days to practice our trades with the teacher.”
“This is my second Forex class and I had been struggling with understanding how the news correlated to the Forex market and Scot helped tie all of that together for me as well as walking us through how to apply it to our trading routine and style.”