Why Currency Trading Became So Popular

The Forex market has a daily volume of over $4 trillion per day, dwarfing the volume of the equity and futures market combined. Thousands of people, worldwide are making tons of money currency trading online, and all you need is a computer and internet connection.

The Basics Of Forex

Forex is the trade of one currency for another, at a decided trade price. Currency trading is simultaneously purchasing one foreign currency whilst selling another. The objective of Forex traders is to make money from the changes in the value of one foreign currency against another by speculating on which way the exchange rates are likely to turn in the future. Currency rates are continuously rising and falling in value, providing numerous trading choices.

Controlling Your Losses

Stop loss is a widely used order aiming mainly at limiting the possible losses in case of negative market movements. Stop loss is used only with open positions. When the market conditions are not favorable for a trader, and the price has reached the level of the “stop loss” the deal is closed automatically. Therefore, stop loss helps traders to control losses and in case of failures, to keep safe at least part of the deposit.

If a trader does not use stop loss orders, the position is closed by the broker when the sum of losses is equal to the sum of the deposit. There are three types of Stop Loss orders;

Fixed Stop Loss; these are set while opening positions. They cannot be changed until the deal is closed.

Sliding Stop Loss; these can be modified at any time, depending on the price movement.

Trailing Stop Loss; these can be modified either manually or automatically, based on the trader’s settings.

With stop loss, you have your advocates and opponents. Some traders believe that it’s essential in trading to prevent the loss of the whole deposit, while opponents believe that this not only limits losses but profits as well. The decision to use a stop loss depends on the individual strategy and preferences of the individual trader.

Advantages Of Forex Over Other Investments

1. Simple to comprehend and master. You just deal with a pair of currencies.

2. Low minimum investment. Requires less capital to start trading than most other markets.

3. 24-hour market. Since it’s worldwide, trading is continuous as long as there is a market open somewhere in the world.

4. High liquidity. Liquidity is the ability of an asset to be converted into cash quickly, without any price discount. In Forex, very large sums of money can be moved into and out of the market.

5. No one can corner the market. Forex is huge, and there are so many participants that no single entity can control the market price for an extended period of time.

Despite the challenge of day-trading, it’s immensely popular among everyone, even newcomers and experienced traders. It allows for the opportunity to make a huge profit in a short time, and combining knowledge with technical analysis offers a big potential for millions in profits.