The 4 Biggest Benefits of Forex Trading


Stock trading is only one type of trading Live Traders focuses on. Forex trading, or the exchange of foreign currencies, it another lucrative way for novice traders to learn how to make money using trading knowledge and psychology.

Many traders actually recommend the forex market to newbie trainers as a sort of trading training wheels. The benefits to forex trading are numerous, but we’ve selected the four biggest reasons you should look into beginning a journey to mastering the art of forex trading.

Low Barrier to Entry

What exactly is a “barrier to entry?” It’s a cost or obstacle that exists, either purposefully or culturally, in order to prevent new competition from entering an industry. There are known benefits to barriers to entry; namely that established industry members can’t be suddenly undercut by new blood. However, high or numerous barriers to entry also prevent innovation and growth, causing industries to go stagnant.

In forex trading, the barrier to entry is low. The competition isn’t cutthroat and there’s not a large sum of money needed to succeed. Thus, forex trading is perfect for novice trainers looking to get their feet wet.

Few Regulations

The stock market is one that is heavily regulated. There are opening and closing times with entire books filled with the laws on participating and how the market should be run. Forex trading, on the other hand, is extremely liquid and flexible. The more flexible the trading market, the harder it is to regulate.

Forex trading never really stops. The market trades 24/7/365, which means novice traders have any and every opportunity to jump in whenever they please. This type of market fluidity does come with some challenges, but the pros outweigh the cons for fledgeling traders. There are also fewer governing bodies when it comes to forex trading, like the NFA and the CFTC. Easier regulations also offer many automation possibilities which are not possible with Stock Trading.

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Trading Psychology and Speculation

One Benjamin

There’s an idea that in order for novice traders to succeed in trading, they have to come prepared with a substantially sized nest egg. Some traders recommend this sum of money be as low as $1k, while others say $5-$10k is more reasonable.

Want to try your hand at forex trading? All you need is $100. This small sum of money can quickly turn into four or five figures once a novice trader has a handle on the market and the knowledge to gain profits. Forex brokers also understand the potential for large returns via small sums, so novice traders can easily open accounts with them despite having very little capital.

Leverage Opportunities

Leverage in the context of investing means using financial instruments or borrowed capital in order to increase the potential ROI of a trade. Leverage ratios and margins depend on the specifications set forth by your individual stock broker, but here’s the long and short of it: while leverage is an important part of all trading forms, forex margin-based trading allows for a small amount of cash to lead to big returns with very little commitment. Most Stock Brokers offer 2:1 for overnight holds and 4:1 for daytrading, Even Prop Firms offer upto 30:1. However with Forex, you are able to legally obtain upto 50:1. Most offshore brokers, even offer 500:1.

Want to learn more about the benefits of forex trading and how you can begin your own lucrative journey to trading success? Live Traders has the tools and education you need to find your way to success in the world of forex trading.

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Why Some Traders Prefer FOREX