In 2021, Forex is still a buzzword. Millions of people engage in trading through the Internet. It is a feasible way to make money — essentially, they monetize their analytical acumen. But how exactly does this work, and why are so many of us fascinated with this market? Why trade in Forex?
The term stands for foreign exchange. It describes the process when traders purchase or sell currencies and the largest financial market where it happens. Since the 1990s, it was only open to large institutions like banks and hedge funds. Now, everyone can access it with a registered account. Let’s find out why people trade Forex.
But first, how do people trade Forex? Retail brokerages make it amazingly accessible. They register accounts and provide the necessary software — multifaceted platforms for analysis and trading action. A live account is your gateway into the global foreign exchange, where trillions of dollars (5+ trillion!) circulate daily. Institutional transactions account for its biggest chunk. However, the profit potential for individuals is immense. Even considering how many people trade Forex globally.
Why Do People Trade on Forex?
Why do people trade on the Forex? Obviously, to make money! But is Forex trading profitable in reality? It definitely is — check our guide for exact figures. Traders may be self-employed, and the industry has 9 to 5 jobs as well. As your own boss, you do not have to send reports or sit at boring meetings. There is no boss breathing down your neck. The financial result depends on your own talents and the market dynamics. All these benefits have caused millions to flock to Forex since the 1990s. This answers the question “Why do people trade on Forex?” The next one is:
How Many People Trade Forex?
It is difficult to calculate how many people trade in the Forex market. Many brokers operate globally. Currencies are traded 24 hours a day five full days a week, from Tokyo to New York. It is estimated that over 13 million traders work online, including self-employed people that trade Forex.
Why Is Forex Suddenly Popular
This popularity has been spurred by the spread of digital and mobile technologies over the past decade. In 2021, national economies are still grappling with the effects of the pandemic. Conventional employment systems have been shattered. As jobs are vanishing, alternative remote opportunities are essential. Forex allows cheap entry — you may even start with $19.
Why is Forex suddenly popular? Education is free, and there are a plethora of online resources. Even a degree in finance is not required — people who trade Forex come from all walks of life. There are guides on the most lucrative strategies, articles about Forex trading mistakes, and even video tutorials on YouTube. This is why Forex is so easy to earn. But where can normal people trade Forex?
Where Can Normal People Trade Forex?
The first step to trading is choosing a broker. This company will work as an intermediary between you and the gigantic financial market. Pay close attention to licensing, as it guarantees compliance with regulations. Brokers may be registered in different jurisdictions at the same time.
1. Choosing a Broker
Institutions like the Financial Commission or the FCA in the United Kingdom issue licenses to reputable service providers. Their full registration details are usually posted on the official website in the footer. Check review sites and customer feedback to compare competing operators.
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Brokers may work as market makers or ECNs. This determines how your costs will be structured. ECNs charge a fixed commission per trade, while market makers include costs in the spreads. Big brokers offer both types of accounts.
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2. Installing the Software
Every broker recommends a particular platform, which may be a desktop system, a web-based terminal, or a mobile app (often, all three). Companies keep up with the times, allowing clients to work from any device they find convenient. Popular systems may be used on any Windows or Mac computer, as well as mobile OS (Android and iOS).
A powerful terminal is your one-stop-shop for trading. It is a versatile environment that helps you at every step, from market analysis to execution to withdrawals. Top platforms are packed with analytical features like candlestick charts, adjustable time frames, Forex robots, strategy testing tools, live news, etc. They facilitate both technical and fundamental analysis.
3. Trading in the Demo
This is the first type of account you should register. Demos are free and unlimited. They will unlock your trading software as a simulator. It will imitate real market conditions, allowing you to explore all the features and tools. The theory is useless without practice. Apply popular strategies to virtual trades and choose the most suitable approach considering your goals, resources, and personal style. Once you gain enough confidence, transition to a live account and take action in the real market!
Keys to Success
Currency rates are permanently fluid due to the impact of multiple factors, both economic and political. Risk is an inherent part of the game, and its management is also central. Fundamental market forces are beyond any individual’s control. Your goal is to foresee them, which means that losses are always possible. However, they can and should be limited through smart risk management strategies.
Trading is limited to analyzing information and placing trades. The most successful players follow rigorous strategies and utilize the full spectrum of risk management tools. Now, the largest financial market is at your fingertips, but it does not tolerate recklessness. Learn as much as possible about effective strategies and start small — this way, you will see real profits much sooner.