For a lot of investors and day traders, the idea of the forex market just seems exhausting. Swapping currencies back and forth with an aim toward profits does, after all, feel a little like trading stocks without actual companies behind them. You’re basically dealing with raw values, trading one against the other, and while a stock value is impacted by a company’s performance, currency values shift due to a huge range of influential factors. In other words, if Apple’s coming out with a new smartphone, you can pretty much bet on the stock going one way or another. But it’s not like the entire continent of Europe is going to unleash a new product that sways the value of the Euro.
That’s a little bit of a dramatic example, but you get the idea. A lot of people think there’s just too much to keep track of when it comes to trading in forex markets. I beg to differ. Sure, there are more factors playing into currency values than your average stock, but that’s not necessarily a negative, and besides that there are a lot of convenient and beneficial aspects of the forex market.
The Size Of The Market Is A Good Thing
I talked above about the idea that with so many factors influencing currency values, it can begin to seem a little too complex. But it’s also more stable because of it, and that should matter to any investor. To illustrate the point, consider the sad news back in 2011 that Steve Jobs was resigning as Apple’s CEO due to health concerns that ultimately led to his death later that year. That day, Apple stock fell 5 percent. One of the most innovative and successful tech companies of all time took a 5 percent hit because of news about one man—news that wasn’t even very surprising to those in the know. This sort of shift simply doesn’t happen in the currency market. Similarly, having a market this size makes it more difficult for any single group to manipulate things. So many factors are at play that a piece of news about an individual or an initiative from a single group can’t sway things dramatically.
Your Account Can Be Small
One of the first rules of investing is that unless you’re lucky enough to get in on a major company on the ground floor, you have to put in money to make anything noteworthy in investments. But with forex, you can at least explore the markets with an account as small as $100 or $200 (or really, whatever you want) as opposed to the thousands (plus transaction fees) you need to start a stock exchange account with a professional broker. Forex trading can be done online, privately, with small amounts and at a moment’s notice. While you’ll still need to increase your deposits to make it likelier that you make significant gains, the flexibility is a positive for a lot of people.
The Number Of Options Is Small
The market size may be gigantic in terms of how much currency is traded and how many factors influence prices, but the number of actual options you have to trade is, relatively speaking, tiny. If you’re an investor and remember when you first started out, this is probably a pretty appealing concept to you. I remember starting out myself with a few companies in mind (naturally, I wanted a little bit of Apple and Google action) and just about going dizzy when I really started realizing how enormous a stock exchange is, and how much there is to consider. On the other hand, when it comes to forex, eight major currency pairs account for the majority of market volume. Eight! That’s like jumping into a stock exchange where your only options are Google, Apple, Amazon, Tesla, Yahoo, Microsoft, Samsung, and Dell—just eight options, and all in the same category. That doesn’t mean investing becomes easy, but it sure is simpler.
The Market Is Always Open
Particularly for those who are interested in forex as a means of side income or personal investment, it’s also worth acknowledging that this business runs for 24 hours. I mentioned before that you can make a deal at a moment’s notice—and that means any moment. Unlike stock exchanges that are open for a set number of hours each day, forex markets never close, which means you can make your trades on your own schedule. Again, the convenience is a bonus for many individuals.
As for whether or not it’s easy to make money in forex, I’d argue that like any other investment, it depends on very personal factors. No investment is easy or definite, and if you trade in the forex market you’ll need to do so with an effective strategy and disciplined approach. But the above reasons at least explain why the market is appealing to a lot of people.