The foreign exchange market, commonly referred to as the Forex market, is the largest financial market in the world with an average daily volume of over $5 trillion. This market enables traders to buy and sell different currencies directly or through a broker. Due to its large size, massive trading volume, and global presence, traders can take advantage of opportunities when buying or selling different currencies.
At first glance, trading forex may not be / have been something that you would want to invest your time in. After all, it’s not exactly like investing in stocks where the potential for significant gains are available, yet comes at a cost of long-term holds. What if you could make money without requiring a ton of capital to start? What if you only needed to focus on developing a skill set that is straightforward and repeatable? That’s what makes trading forex so appealing… and that’s what we’ll be going over in this article – our top 5 reasons why you should start trading forex today.
Very Little Capital Is Required To Get Started
When you start looking at Forex, you should be aware that you don’t need a large amount of capital to get started. This makes it a lot easier for you to open a trading account and get started. You can even start out with as little as $100 if you want to practice with a demo account. You’re not going to need 5, 6, 7 figures to get started as many assume. All you need is a few hundred dollars to get started trading in a demo account. You can then practice and experiment on a smaller scale before you decide to invest a large amount of money. This will allow you to get your feet wet and get used to trading before you invest a large amount of money.
Aside from this, modern day prop firms allow consistently profitable traders to get access to 5, 6, 7 figures in funding simply by proving that they can generate a return consistently. You hone the skill and then you approach prop firms like that of ftmo, myforex funds, e8 funding, and you attempt to pass one of their various forms of funding challenges. These challenges test you and have you prove to the prop firm that you can do as you say you can and generate a return on capital consistently.
Upon passing one of these challenges, you will be rewarded with an account size from as little to as large as you pretty well want. The barrier to entry for newbie traders has never been lower. This is a huge opportunity for those wanting to learn as you can very quickly make trading a full-time gig with the income that can be generated with these large capital accounts.
Unlimited Upside On The Income You Can Generate
There truly is no cap on how much you can earn trading the markets. You can go as far as you decide you’d like to go. Of course, there is risk and so it’s not all to be gained. Proper risk management is required to keep the capital you have so that you can continue scaling it. There are traders in the space doing 100s of dollars in returns per month and all the same, there are traders doing 7-8 figures per month trading the markets. When your skill level reaches that of the top 1%, the sky’s the limit as to how much you can earn.
Risk Is Limited To What You Decide To Invest
There is risk involved when trading forex, but it is limited to the amount of money that you decide to invest per position. Most trading communities and programs will start with you by teaching you about the importance of risk management. We are not in this game to take $100 and turn it into $1,000,000. We are here to take large capital account sizes and compound them over time at small position sizes. Never will you see a properly risk managed trader trading in position sizes of greater than 1% per position. We need to protect our capital if we’re to remain in the game for the long term.
You Don’t Have To Hold Positions Long Term
Typically, when you buy stocks, you hold the position for long periods of time. You hold the position for an extended period of time because you are hoping that the value of the stock goes up. If you trade forex, you don’t have to hold the position for an extended period of time. Most FX communities day trade on the intraday time frames. This allows us to be in and out of positions the same day. Being able to trade more frequently like this allows us to get into more positions over the course of the month and be exposed to more opportunities.
You Can Use Simple And Repeatable Strategies
When you trade forex, you’ll want to model after a simple, repeatable and proven strategy. You can use technical analysis to determine when to buy or sell different currency pairs. You can also use fundamental analysis to determine the different currency pairs that you want to buy or sell. Most trading communities / programs will touch on both. Make sure that you vet the community you decide on prior to joining. You’ll want to make sure that the program you’re looking into is consistently generating student results and that feedback is mostly positive. It’s important that you learn from someone who has once been where you are in your trading journey and who is now where you’d like to be at some point in the future.
When you find a strategy that you can see working for you, commit to it for the long term and make mastery of that chosen strategy your focus. Only those who stick at it for the long term will get to experience consistency.
Don’t make it harder on yourself than it needs to be. Find a proven mentor and strategy and learn the ins and outs of it. Put it to use! Before you know it, trading will be second nature to you. You simply need to start.
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FX Trader & Analyst
Writer & Editor
Rob is a funded trader from Toronto, Canada, and has been trading currencies, commodities, stocks, and cryptocurrencies for over 7 years. Outside of trading, he enjoys making music, boxing, and riding motorcycles.