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Why Has Forex Trading Become So Popular?

Aug 1, 2008
Forex trading has become extremely popular in recent years, thanks in so small part to the internet. Forex trading used to be conducted mainly by large banks but now many private traders can trade the markets using their own money. So why is forex trading so popular?

Well the main reason people are drawn to forex trading is because of the potential money that can be made. If you consistently win money from trading and increase your stakes as you go along, then your earning potential is unlimited. This is made easier by the fact that you can use leverage to trade. In other words you don't necessarily need a lot of capital to trade large positions because if a broker offers you 1:200 leverage, then you only need $500 to trade a position worth $100,000.

Of course if it was that easy to make money then we would all be millionaires, but the point is that it is possible to make a lot of money if you have a good strategy. It certainly beats traditional share dealing where you need to put up all the money if you want to buy shares in a company, and so the potential rewards are a lot smaller.

Another positive feature of forex trading is that the markets are open 24 hours a week during the working week so you can therefore still trade the markets even if you have a full-time job during the day. Liquidity isn't an issue either because even if you take a large position during the middle of the night, for example, you should have no problems getting filled as the currency markets are heavily traded all around the world and at all times of the day.

Another reason why many people are being drawn to forex trading is that there are now a lot of forex brokers advertising online. It is very easy to open an account and in a lot of cases you can start trading soon afterwards. Most brokers now offer a solid trading platform as well as useful extras such as free charting software to help you make trading decisions, and a free demo account so you can practice with pretend money before trading for real.

Indeed it is the fact that forex currency pairs conform extremely well to technical analysis that makes forex trading so popular. People all over the world are analysing charts and spotting the same trading patterns so it becomes a sort of self-fulfilling prophecy where the same trading patterns happen over and over again.

So overall it's easy to see the appeal of forex trading. There is potentially a lot of money to be made, and the great thing is that you don't necessarily need a lot of money to start off with. The use of leverage means your profits can multiply very quickly, but conversely you can also lose money quickly as well, so it's important that you adopt a solid trading strategy if you want to become a successful trader.
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