If you’ve ever dreamed of being your own boss and working on your own schedule, trading currencies full-time may be the right career choice for you.
Here are some of the reasons why you may want to consider a career as a Forex trader:
• The bar to entry is very low. You don’t need to have a lot of money in order to start trading forex, compared with other markets like stocks and options. And forex traders are usually entitled to use leverage of as much as 50-to-1 to trade on margin. This means that you can trade as much as $50,000 with just $1,000 in your trading account. Of course, the risks are magnified but so is the potential to make profits with limited capital.
• It is relatively more affordable compared with other types of trading. Forex brokers, unlike other types of brokers, do not charge commissions and brokerage fees on your trades. Instead, they make money from the spreads between the different currencies. Hence you don’t need to take these costs into account in your trading expenses.
• Forex trading suits different trading styles. Since the markets run 24 hours a day, a trader can usually find an open trade no matter what time of day it is. This is beneficial for short-term day traders who take positions that last for short periods (from several minutes to a few hours), But the market is also appropriate for those who want to adopt longer-term trading strategies in which they hold positions that last from several days to a few weeks.
• The forex market has high liquidity due to having the biggest number of participants. This means that there is less opportunity for price manipulation as well as pricing anomalies. Thus, traders don’t need to be concerned about high volatility resulting in wild price swings when the market opens and closes as well as stagnant prices during afternoon trading.
• Forex markets don’t have a central exchange. Unlike stocks which are traded through major exchanges such as the New York Stock Exchange, there is no comparable exchange for currency trading. This means that the possibility of big price changes due to sudden developments is minimized. And since there are no insiders, the possibility of fraud through insider trading is virtually eliminated.
Reference: Mr. Zahir from MTrading Malaysia contributed in this post.