Willie Sutton was an infamous bank robber in the 1930’s. When asked why he robbed banks he responded:
“Because that’s where the money is.”
Terry Rogers, a Forex Trading Expert, uses the same answer when asked why he trades Forex-
That’s where the money is…
What is Forex??
To understand why trading Forex can be such an effective way of making money, you first need to understand what it is.
Forex, or the Foreign Exchange Market, is essentially trading one countries currency against another.
Trading happens across the globe in the major financial centers of London, New York, Tokyo, Zurich, Frankfurt, Hong Kong, Singapore, Paris and Sydney.
As a result, when trading stops in one time zone it’ll be open in the other.
You just can’t catch this market snoozing!
Due to the incongruity and constant fluctuation of currency values, companies are at risk doing business in other countries. Trading Forex can hedge this risk through different trading strategies.
One example of this strategy is directly trading currency pairs.
So if you think the value of the United States Dollar (USD) is going to increase in correlation to the type of other currency you’re trading, then you would be ‘long’ USD.
Alternatively, if you thought the value of the USD was going to depreciate in value- you would be ‘short‘ the USD and sell it.
Advantages to Forex
First off, there is more than 5 trillion dollars traded per day on the foreign exchange markets. Not billions my friends, that is indeed a T.
Forex has more than all the stock markets in the world…combined!
Did I mention that it’s also the most liquid market in the world? Liquidity is SO important as a retail trader. Instant in, instant out.
Not only that, but the market is open 24 hours a day, 5 days a week. There’s no waiting.
Here’s a surprising plus: you’ll actually be able to take off work over the weekend.
Additionally, no single trader or institution can control the market. You trade directly with other traders, no middle man. FX tracks the world economy and fluctuates accordingly.
A recent article I was reading continued to pointed out that FX offers you a huge amount of leverage! Basically, you can control larger amounts of capital than you actually have in your account.
Not only that, but the simplicity allows everyone to take their chance. You really can tap into the opportunities Forex has to offer.
Yes, you!
While reading an article from TheBalance I was reminded that anyone really can do it:
“Unlike in the stock market, where you first borrow shares to sell short, in the forex market, selling a currency you don’t own is a very simple process in which you just place a sell order.”
Conclusion
There are so many reasons to trade Forex but I won’t bother you teaching everything you need to know about it right now.
If you do have more questions- go ask Terry.
He recently said in an interview I had with him:
“It’s the biggest market in the world…most people don’t realize the there’s this massive trading market out there that they can tap into.”
It really can be that simple ladies and gents!
And as a part of my online course, Terry and I actually go in depth with our students to teach them how to trade FX for themselves. Thanks for the read!
All the best,
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DISCLAIMER: This content is for educational and informational purposes only. It is not to be taken as tax, financial, or legal advice. You should always consult a legal professional before taking action. Furthermore, this is not a recommendation to buy or sell any security. The content is solely just the opinion of the authors.