Forex trading has become very popular across the world these days with daily turnover touching nearly $4 trillion. This is an amount that dwarfs the turnover of the stock markets and the gold bullion markets, two of the several investment markets which are widely available to large fund managers. Forex is a word that is made up by combining two words foreign and exchange and these two words embody the essence of Forex trading. The national currencies of the countries of the world are linked with each other and their values are best reflected by their rates in terms of some standard currencies, most notably the USD, Euro, Pound, Sterling etc. The value of a currency does not remain static and keeps on fluctuating, as it is affected by many external and internal factors. Investors have to anticipate the movement of a currency in terms of other currencies and place their bets to make profits in Forex trading.
The reason why Forex trading has become so popular is because of the spread and reach of high speed internet in homes across the world. The internet has enabled many individual traders to trade in Forex and also to do it at any time of the day, as per their convenience. Unlike stock markets, you can invest in Forex 24X7 because of the fact that the world is divided into different time zones. Even if it is night time in your country, one or more financial markets of the world will be open and you can trade in different currencies at different times of the day.
Another advantage of Forex trading lies in the high leverage provided by the brokers to invest in currency markets. You can book a potential profit of 100 times the money in your trading account, which makes this mode of investment very alluring for the investors. This means the leverage is 1:100 and even if you have $1000 in your account, you can earn hundreds of dollars every day from this business. There are many companies that allow investors to start trading with as little as $100 in their trading account. But with increased leverage comes increased risk so do spend time learning the ropes of Forex trading before plunging all of your hard earned savings into this.
It’s the ease with which one can invest in foreign currencies and the low (i.e. the pips spread) charged by companies that has made Forex trading so alluring for the common man.