Now more than ever, financial markets are becoming more accessible to people. Forex trading is also one of the best ways to secure your financial future. Simply put, forex trading comes with a host of benefits.

However, not as many people are confident about venturing into it and this is mainly because there is a lack of education and understanding about the same. How about then, we let you in on some of the benefits you are likely to enjoy by venturing into the financial market?

Here are the top reasons why you should begin forex trading.

Reasonable Start-up Capital

If you have tried other businesses, then you know that most of them require you to inject a significant amount of capital. While that is not necessarily a bad thing, it can be a hindrance for new investors who do not have large sums of money set aside for investment.

One of the best things about forex trading is that it does not require you to have a large amount to start. You can easily sign up for a trading account and begin trading with a fractional fee. With forex trading, you can start small and graduate over time with the help of forex associate programs.

Ultimately, the sky is the limit when it comes to this business. If you need proof, there are dozens of

The key lies in patience, consistency, and shrewdness.

Time Flexibility

Most businesses require you to be present all the time to handle stocks, customer service, and the like. Of course, that means that you have a fixed daily schedule otherwise the business will go down. With forex trading, however, you get to enjoy flexibility in terms of time.

Did you know that the forex market operates round the clock? As if that is not enough, it deals in universal global electronic currency exchange. As an investor, you will appreciate this because it means that you can enter and exit the market as you please.

You get to trade when you have the time and not when you have to. As you can see, forex is one of the few trades that allow you to transact at any time.

Attractive Returns

You have probably heard of a few success stories where people claimed that they rose from grass to grace just by trading in forex. Most of the time, such stories are true. Forex trading has the potential to turn you into a millionaire overnight. Of course, you only get to experience the same if you trade wisely.

When it comes to forex trading, the profitability rate is quite high when you win your trades. This is evidenced by the many people who started the business as part-time and ended up taking it up as their main source of income and even quitting their jobs.

What we are trying to say here is that forex has attractive returns. Nevertheless, to enjoy such returns, you need to invest more and decide wisely to enjoy winning trades.

High Liquidity

Perhaps you are not aware of this yet but the foreign exchange market is one of the most liquid in the world. Now, the number of sellers and buyers is what determines the liquidity of financial markets. That simply means that the forex market has many sellers and buyers who are matched within a short time.

What that does is to present investors with bigger opportunities to win a trade by leveraging a fair price when it comes to selling and buying currency pairs. This is what makes the forex market liquid. The high liquidity then translates to less likelihood of price control by the few big players in the market.

Suitable for all Investors

It is an unspoken rule that some businesses are reserved for a select group because of the experience and capital required but that is not the case with forex trading. You can venture into the business regardless of your knowledge, capital, or experience.

While knowing the financial market is an added experience, you can enter without the experience and learn over time. The same applies to capital. You can start small and grow with time.

Conclusion

With hard work and consistency, you can succeed in forex trading. The best part is that you do not need a lot of money to start and neither do you need to have prior knowledge of the business. This is one of the best ways to earn high returns without spending all your time working so you may want to try it.

It is not uncommon to hear newbie forex traders saying just how easy it is to make money when trading Forex. However, Forex trading requires patience, commitment, dedication, and time to have a success story in this trading.

A trader cannot open positions in a trading platform without first consulting your Forex broker. That way, you’ll be able to know the conditions they’ve set for trading. You’ll also get to know counterparty risks, liquidity, leverage and the market.

What’s more, you need to be conversant with techniques and tools you should apply to manage your risks and money safely. Failure to do these things will mean that you’re gambling rather than trading.

How to Manage Risks when trading Forex     

• Trade money that’s not needed.

This may sound like an obvious point, but it is an essential one to repeat. Newbies and experienced traders tend to overlook this point with the assumption that it will not happen. Just like gambling, traders shouldn’t put all their money in. Doing so is taking very unnecessary risks, which will result in emotional stress and pressure when trading. This pressure will only increase your chances of making mistakes as you trade.

• Make use of limit and stop-loss orders.

Orders are the trade instructions you get from your broker when a given level is attained in an underlying market. Stop-loss orders are in open positions to assist you in getting out of any trade should the market move in the opposite direction. Simply put, the order will stop your loss.

• Do you have risk tolerance?

Before trading begins, you should determine how much you can tolerate. Your determination should be based on:

• Your experience
• Your age
• Your FX trading knowledge
• The amount you can handle losing
• The investment goals you have set

Doing this assessment is not just so that you will sleep better at night or reduce your currency fluctuation stress. It is about having control of any situation because the amount you’re trading is the correct amount, vis-à-vis your current financial objectives in relation to your financial situation.

When trading is kept within a manageable risk, chances of successful trading increase.

• Set or have a 1:2 minimum risk ratio.

You need to be conversant with the RRR (risk/reward ratio) when trading Forex. Doing so increases the chances of long-run profitability. RRR compares and measures the distance between your take-profit and stop-loss orders and entry points.

If you are a day or scalper trader, keep your RRR at a minimum of 1:2 ratio. On the other hand, position and swing traders can have a wider minimum RRR ratio of 1:3.

• Risk control per trade.

Newbie traders should consider their risk per trade as a percentage of their trading capital, thus setting it to a conventional level. This is because inexperienced traders are more likely to make mistakes as compared to experienced traders.

Traders should risk only a fraction of the capital per trade. To start, consider risking about 1% of the capital per trade. If the RRR you are applying is a good one, it means you’ll be risking 1% for a possible 3% return.

• Be consistent with the risk.

You will be tempted to increase your positions’ size when you begin making a profit. This is an excellent example of a person wanting to wipe out their account. Always be consistent with your risk. Remember, making a few wins while trading does not guarantee that the next trade will also yield profit. Avoid being over-confident and not being risk-averse. This has seen many traders change their risk management rules and money without concrete reasons.

• Be conversant with leverage.

Using leverage products like spread bets, CFDs, and spot Forex mean that you can trade money that exceeds the initial deposit. Your broker will request that a portion of a position’s total value be put aside as collateral. While leverage can magnify your profits quickly, the opposite is also true. Hence the need to fully understand how margin and leverage trading works.

Conclusion

It is imperative that you learn about leverage risks and how they work. Once you actively manage them, you will be well on your way to being a good trader. Remember, you shouldn’t focus too much on making money; instead, protect your investments when trading Forex.

Technical analysis is the most common method of analysis in forex trading. Technical analysis involves the use of charts to investigate and predict the price movement of a currency pair. Many forex traders love to use technical analysis for the many benefits that they gain from this analysis technique.

Here are some of the benefits of technical analysis.

Provides Traders With Current Price Information

As a trader, when you chart a price chart for your currency pair of interest, it gives you all the information you require.

Depending on the formulae you use on your charts, you have historical data as back as you like and predict future prices.

This ensures that you can easily make your decision on what position you will take on your trade.

Another piece of information that you get from the technical analysis is the presence of a trend. A trend indicates that there the price is persistently moving in a particular direction.

As a trader, you can take advantage of the trend to profit. When you identify a trend, technical analysis will help you find the best point to enter and exit the trade profitably.

Helps Traders Identify Trends

Technical analysis charts help traders identify the presence of trends in the market. A trend could either be upward or downward.

An upward trend indicates that the price is rising. A downward trend indicates that the price is going down.

By using technical analysis, you can identify when markets are trending and you can take advantage of them.

When you have a trend, technical analysis provides you with support and resistance points. These are points at which the price of the currency pair will either be at the lowest or highest respectively.

With these points, you can pick a point at which to take a position on trade. You can easily predict the highest and lowest points of the price and can take your profit before your trade turns.

Helps Traders Identify Patterns

In addition to trends, technical analysis helps to identify patterns. This is because technical analysis also involves the use of historical data.

Thus, as a trader, you can go back a few hours, days, weeks, months, and even years to check how the currency pair performed.

With this historical information, you can see how the price of the currency pair moves at certain times.

You can compare that with the present to help you make up your mind and take a profitable position on your currency pair of interest.

Saves Traders Times

Technical analysis saves time for traders and allows them to trade with speed.

Unlike fundamental analysis, you don’t have to investigate the performance of the economy of a country before you take a position. Much of the information you need to decide on fundamental analysis takes time before you can get it.

All you need to do is press a button and you have a chart on your screen. If you have the right skill, the chart can tell you everything you need to know to make a profitable trade. You can now make your decision and take a position that you can expect to profit from.

The time saved by using technical analysis allows traders to enter into several trades in a given trading session.

Easily Available

When it comes to technical analysis, you don’t have to invest a lot of resources. Charting tools are easily available and freely provided on your trading platforms. If you know how to use them, you don’t need to pay for additional information or tools to help you make up your mind.

Best For Both Short And Long Term Trades

You can use technical analysis for as long or a short a period you want to hold your trade position.

You can use technical trading for both short and long-term trades. Based on your analysis, you can hold your position for a quick profit. Alternatively, you can hold it for longer to ensure that you make a larger profit.

Conclusion

Technical traders love their technical analysis. It provides information quickly and ensures that you can get into the market in the prevailing conditions. It is easy to do and is the best for traders who intend to make lots of trades in the trading session.

Successful forex traders know what, when, and how to trade currency pairs. Their experience lets them apply trading tricks that may seem abnormal to many forex traders.

The opposite is true for beginner traders. They easily blow accounts by making mistakes that you can easily avoid by reading and understanding this article.

Whether you are a beginner or intermediate forex trader, reading this article will equip you with tricks to enjoy reliable, and profitable trading. Find out more below.

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