How Easy is it to Start Trading Forex Today?

by Andrew McGuinness     jul. 16, 2019

Far too many potentially great investors limit themselves to the stock market and equity trading because they are intimidated by the Forex market. However, the truth is that Forex trading is simply trading currencies of markets outside of the United States and earning money as the differences in the values of currencies favors the ones held. Once limited to access only by major hedge fund managers and international banks, the Forex market has never been simpler and easier for a new investor to access. Read on for a beginner's crash course in how Forex trading works, and a few key tips that you need to know to be successful on the Forex market.

Transactions on the Forex market rely on trading currency pairs. Forex trading is simply the process of exchanging one currency for another, watching that currency rise in value (if everything goes according to plan), then performing the opposite transaction. The smartest Forex traders know that a keen understanding of history and world news is crucial to anticipating which currencies will rise and fall in value. If you're looking to get into Forex trading and become a successful trader, try starting your day by watching the international news, or take a history course to better understand how currencies interact with one another.

The Forex market is open 24/7. One of the most common rookie mistakes that traders new to the Forex market make is assuming that the Forex market is operating on the same schedule as the equity market, more commonly known as the American stock exchange. Instead of a standard 9-to-5, the Forex market is open 24 hours a day and 7 days a week- meaning that you can trade in your pajamas after a late-night movie screening if you really want to. When you think about the logic behind this, it does make sense; while the American market has no need to be open when most investors are sleeping, the time difference means that midnight in the United States is equal to lunchtime in Japan.

The Forex market is simple to enter- even for a new investor. While many traders may be hesitant to enter the Forex market due to intimidation, the truth is that the market already has a much higher turnover rate than the equity market; current estimates state that the Forex turnover rate is close to $1.2 trillion a day, meaning that hundreds of thousands of investors are entering and exiting every single day. Because there is so much money already invested in the Forex market, you will be able to enter and exit smoothly- especially when compared to the American stock exchange, which is prone to rapid fluctuations.

There's no reason to be intimidated by the prospect of trading on the foreign market- in fact, if you've ever been on an international vacation and traded some currency at the airport, you've already entered it! With a little research, planning, and homework, anyone can enter the Forex market and begin trading currencies like a professional. The key to investing in currency markets is an understanding of how different countries and currencies interact with each other, and utilizing this information to make smart conversion decisions. The next time you think about trading on the American market, give the Forex market a chance- you might be surprised by how simple this once exclusive market really is!

Get unlimited access to our Learning Center,
Broker Insights and Exclusive Promotions for Free!