People have different misconceptions in regards to forex trading. Some think that it is con game. Others think it is a get-rich-quick scheme while others think it is a preserve for people with good connections. Some go into the venture without understanding the basics and the risks involved. Others go into it with fear and grid, which later leads to poor trading habits. Overall, forex trading is real and it is gaining popularity all over the world.
To do away with the misconceptions, you need to talk to real traders that will give you all the inside trading tricks. You also need to have good connections with the best forex brokerage firms that will trade on your behalf for the best positive results. Relying on hearsay will leave you confused and lost which may lead to making bad decisions. One of the questions you need to ask yourself is this, if forex trading is a gamble, why is it so popular?
Why forex trading is popular
There have to be good reasons why the popularity of forex trading is on the rise with people all over the world. Singapore is currently the third largest forex trading country in the world behind USA and Great Britain. This is mainly due to its widely diversified financial centre internationally. The leading trading currencies in SG are the euro, us dollar, Australian dollar, Singapore dollar and the Japanese yen. The reasons for the popularity are:
Liquidity is one of the major reasons for the popularity of forex trading. Global forex trading amounts to over 5 billion US dollars daily that are the highest as compared to other trading markets. Being the most liquid market however does not mean that the industry does not come with its lows and highs. To understand more about liquid and its volatility, your agent can walk you through the chaos and smooth moves in the market.
Regardless of the day or time, the forex trading market is always open. This allows you to trade at any time of your convenience and from anywhere you deem fit. Why the forex market can stay open 24/7, is because of over the counter (OTC) trading. OTC does not require one central trading location.
Traders use electronic communication networks (ECN) to trade from different locations all around the globe. Trading 24/7 also helps traders to learn the trading strategies even better enabling them to increase their chances of making gains.
Lack of monopoly
Not relying on monopoly is another important factor that makes forex trading popular. Despite the forex market being one of the largest and involving different kinds of entities from all over the world, not a single entity or the central bank can claim to control the market. Decentralisation of forex market trading allows traders to carry out their trades from any part of the world as only market and economic conditions dictate the currency prices.
Lower trading rates
Another factor that makes forex trading an attractive venture is the ability to start trading with low cash investment amounts. Compared to stock trading, which requires large deposits in order to delve into the trading market, FX is very flexible to investors. One of the reasons for this is the large number of brokers in the market that offer very competitive rates to their clients in order to cash in on as much gains as they possibly could.
Leverage is also another factor that makes forex trading easily accessible because anyone can start trading with amounts that are even below $500.
Wrapping it up
The above are some of the benefits that make forex trading a very popular and lucrative venture. However, with all the advantages that come with the trading, you must be very careful about the risks that come with the venture. You can only learn about the risks the market poses by learning from the best firms such as Saxo Singapore. When everything is sad and done, the buck stops with you.