8 reasons to trade forex
Great for short-term opportunities
As the forex market is so big and volatile, it’s constantly offering up new opportunities. In fact, most forex trades are held for just a few days.
It’s open 24/5
The different time zones of the forex trading centres (London, New York, Sydney and Tokyo) mean that at least one is always open e.g. when New York closes, Sydney opens.
A range of different markets
On FOREX.com, you have over 80 forex pairs to choose from including EUR/USD, EUR/GBP and AUD/USD.
No commissions
There are no commission fees when you trade forex. As your broker, we are compensated by the spread (the difference between the buy and sell price), and forex markets have some of the tightest spreads of any asset class.
Take long or short positions
You can buy and sell forex pairs. This means you can take advantage of both rising and falling markets.
Low risk of manipulation
Because the forex market is so vast, it’s next to impossible for any single actor to exploit it in any significant way.
Leverage
Leverage lowers the cost barriers to trade forex. It enables you to put up a fraction of the deposit to access a much larger trade size. Leverage can magnify your profits, but it can also magnify your losses. This is a critical trading concept to understand.
What affects the forex markets?
There’s a reason why forex traders are constantly analysing the news. Forex is influenced by a plethora of factors—both economic and political—which puts the prices constantly in flux.
Economic data
Economic data gives an indication of the health of an economy and therefore the national currency. Unemployment data, government debt, inflation and interest rates are all figures that forex traders should have on their radar.
Political stability
Major events such as elections, trade deals, conflicts, environmental disasters and pandemics can all have a profound effect on a currency. However, more minor events such as cabinet reshuffles or small policy changes can also have an impact.
Supply and demand
Supply and demand is one of the biggest factors that influence the forex market. If there’s a sudden spike in demand for euros, then this reduces supply and the price will consequently rise.
Hungry to know more? Read How to trade forex