As more people look for ways to make money online, forex trading often comes up in the conversation. However, like other financial market niches, it is notoriously difficult to navigate. Is it worth the hassle?
There are many reasons why forex trading is worth the hassle. The market is bigger than most of the popular stock exchanges around the world and holds more opportunities for the average participant. It also has a really low entry bar and offers a level of flexibility that most people will love.
The rest of this article will take a closer look at eight reasons why forex trading is worth your time and energy.
IMPORTANT SIDENOTE: I surveyed 1500+ traders to understand how social trading impacted their trading outcomes. The results shocked my belief system! Read my latest article: ‘Exploring Social Trading: Community, Profit, and Collaboration’ for my in-depth findings through the data collected from this survey!
Table of Contents
What Is Forex Trading?
Forex trading involves becoming a participant in the decentralized online currency trading market. Traders try to predict the micro-movements of currency pairs, metals, and commodities to make money.
All transactions are carried out on a broker platform. The best (regulated) brokers stream prices from the interbank market and make money off the spread or small commissions.
Why Is Forex Trading Worth It?
There are many reasons why forex trading is worth it. 8 most prominent of these reasons are covered below:
Self-Learning Is Possible
Many forex traders today started learning how to trade by reading a few articles and watching some tutorials on YouTube. They start putting the lessons to practice by taking advantage of the free practice accounts offered by the bulk of the brokers in the industry.
Over time, this creates a completely self-taught trader. So, forex trading is worth it if you’re looking for a profitable niche where you can learn without enrolling in any special classes.
The Entry Barrier Is Low
In forex trading, the transaction cost is very low. You don’t have to worry about brokerage fees, exchange fees, clearing fees, or other such overheads. As we mentioned earlier, brokers make money off the spread on any instrument traded. Some of them also charge commissions for special accounts, but this amounts to a very tiny fraction of your trade size.
In addition to the low transaction costs, most brokers can allow you to open a live trading account with $100 or less. This is mostly possible thanks to the leverage they offer, which allows you to control up to 3000 times your trading capital. This means that you can throw their coffee money into a live trading account and start making real profits (if you know what you are doing and have a solid strategy).
Again, you don’t have to worry about fixed transaction sizes, as the only limit is the margin requirement in relation to your trading account. So, you can open small or big positions within the confines of what your trading account can allow.
These factors combine to make the entry barrier low for anyone interested in the market.
It Offers Flexibility
One reason many people start looking at ways to earn money online is the freedom and flexibility that comes with it. Forex trading encapsulates this a great deal. The market is mostly open round the clock, from Monday to Friday—thanks to the seamless transition from one trading time zone to another.
This means you can combine your trading with other activities by using strategies that allow you to do other things you love. If you’d rather trade all day, there’s also nothing holding you back.
You don’t have to wait for any opening bells every day or rush your trading decisions before the closing bell. You get to trade anyhow you want all through the week, starting from Monday morning open in Australia to the close of business on Friday in New York.
The Market Is Highly Liquid
If you’ve been a victim of pump and dump schemes in other sectors such as cryptocurrency or penny stocks, you’ll appreciate trading in the decentralized and highly liquid forex market. It is worth $5 trillion, and retail contributes to just around 5% of that sum. This means that there’s no chance of an individual cornering the market.
Government economic policies and socio-political events influence the bulk of the major market movements. The minor movements are also far less erratic compared to what you’ll get from other smaller markets. The high liquidity is also why even large orders are processed in seconds.
You are never tied to any trade for a second longer than you want. With pending orders, you can also set your online platform to enter trades, close profits, or take a loss even when you’re far away from your computer.
The Profit Potential Is Huge
A quick search online will show you dozens of examples of forex traders that turned a few hundred dollars to six and seven-figure sums. These are outliers (often involving taking huge risks and trading round the clock), but you should be happy to know that there’s always a chance of making money in the market if you have the right skills.
While it’s possible to make 10,000% a year taking huge risks, the market is one of those where you can conservatively aim for 30-100% of your capital every year—a return on investment you won’t get from any high-street bank or pension managers.
You Can Use Expert Advisors
We talked about trading platforms allowing you to set pending orders that can take certain actions on your behalf above. The technology that allows that also makes it possible to set up trading robots known as Expert Advisors (EAs) that can open and close trades in line with your trading strategy.
Many traders often code their strategy into EAs to free up time and avoid making emotional decisions in their trading. Creating EAs requires some programming knowledge, so if you already have this, you can create strategies that can make money for you while you spend time on other things you love.
You Can Become Part of a Huge Community
There are dozens of popular online forex communities teeming with enthusiasts, newbies, and experts. Trading forex allows you to become a part of the group. If you become a successful trader, the community can serve as a launching pad to your own forex-related business.
For example, if you show consistency in making 100% of your capital every year, you can scale up your trading by offering your strategy for sale or taking on investments by joining social trading platforms. The strength of the community combined with your trading knowledge can take your trading to new heights.
Brokers Are Closely Monitored
If you choose to trade forex with a broker regulated in a tough jurisdiction like the US, UK, or Australia, you can rest safe in the knowledge that your money is in good hands. You don’t have to worry about the broker disappearing with your funds.
If for some reason, they go under, you can claim your money from the regulators or the broker’s insurers. Some brokers have insurance that protects up to $1M of a client’s money.
Author’s Recommendations: Top Trading and Investment Resources To Consider
Before concluding this article, I wanted to share few trading and investment resources that I have vetted, with the help of 50+ consistently profitable traders, for you. I am confident that you will greatly benefit in your trading journey by considering one or more of these resources.
- Roadmap to Becoming a Consistently Profitable Trader: I surveyed 5000+ traders (and interviewed 50+ profitable traders) to create the best possible step by step trading guide for you. Read my article: ‘7 Proven Steps To Profitable Trading’ to learn about my findings from surveying 5000+ traders, and to learn how these learnings can be leveraged to your advantage.
- Best Broker For Trading Success: I reviewed 15+ brokers and discussed my findings with 50+ consistently profitable traders. Post all that assessment, the best all round broker that our collective minds picked was M1 Finance. If you are looking to open a brokerage account, choose M1 Finance. You just cannot go wrong with it! Click Here To Sign Up for M1 Finance Today!
- Best Trading Courses You Can Take For Free (or at extremely low cost): I reviewed 30+ trading courses to recommend you the best resource, and found Trading Strategies in Emerging Markets Specialization on Coursera to beat every other course on the market. Plus, if you complete this course within 7 days, it will cost you nothing and will be absolutely free! Click Here To Sign Up Today! (If you don’t find this course valuable, you can cancel anytime within the 7 days trial period and pay nothing.)
- Best Passive Investment Platform For Exponential (Potentially) Returns: By enabling passive investments into a Bitcoin ETF, Acorns gives you the best opportunity to make exponential returns on your passive investments. Plus, Acorns is currently offering a $15 bonus for simply singing up to their platform – so that is one opportunity you don’t want to miss! (assuming you are interested in this platform). Click Here To Get $15 Bonus By Signing Up For Acorns Today! (It will take you less than 5 mins to sign up, and it is totally worth it.)
Conclusion
Forex trading holds a lot of opportunities for traders. It’s a highly liquid market with a low entry barrier. Anyone with the right knowledge and skill can become a success in the market.
Deciding whether the market is for you will come down to your personal preferences, but you should be happy with the knowledge that even the smallest traders in the market can make money in forex trading.
When you choose to get started, acquire all the knowledge you need and learn the ropes using a practice account.
BEFORE YOU GO: Don’t forget to check out my latest article – ‘Exploring Social Trading: Community, Profit, and Collaboration’. I surveyed 1500+ traders to identify the impact social trading can have on your trading performance, and shared all my findings in this article. No matter where you are in your trading journey today, I am confident that you will find this article helpful!
Affiliate Disclosure: We participate in several affiliate programs and may be compensated if you make a purchase using our referral link, at no additional cost to you. You can, however, trust the integrity of our recommendation. Affiliate programs exist even for products that we are not recommending. We only choose to recommend you the products that we actually believe in.
