Trading has been an age-old process and, there is no doubt that its evolution is one of the best! The diversification in trade with stock markets, commodity buys and, forex exchanges say why trading is the most opted income generation technique. Today, when you trade currencies, it is the ultimate global and everlasting domain. The forex market is the world’s largest financial market. Sydney is the first major market in the global forex trading schedule. The Sydney market is so remarkably influential that its opening strikes for the commencement of trading hours in the US.
Why forex trading?
Amidst several trading options, forex trading has been branded the best trade opening for beginners. It’s because of the optimal conditions that prevail in a linear pattern with a probability of minimal profit. For people who’d like to take up trading as a hobby, currency trading is a welcoming market. Many trading experts believe that success in trading currencies requires lesser investments and basic knowledge of risk management techniques! Here are four reasons why currency trading can be your first take,
- You are into liquid trade
Firstly, forex trading is legal in Australia, making it safe in the first place. Forex trading involves an exchange of a currency (usually fiat currencies) for other national currencies of equal value. In forex trading, one deals with currency pairs. For instance, a seller might offer you a currency pair, quoting a bid. The difference of value between the pair determines your profit, out of which you might have to share with your broker.
Currencies are highly liquid, which means that they are assets that can promptly get converted into physical cash (any currency). With that said, the forex market is undoubtedly vast and, there is a ransom amount of money moving in and out of the market. So, once you invest in currencies, you can enjoy the benefits of a liquid trade, which means buying and selling can happen within seconds.
- Long and short trades
It is quite natural to feel uncertain about making the first move, especially if you are a first-time trader. But when you trade currencies, you have the freedom to go short-term or long-term. Though most beginners pick to go with short-term investments, several currency pairs can yield a high-profit margin in the long run.
Once you learn about various flips and soars in the trend line, it becomes easy to distinguish between short and long ends. The fact that you can buy or sell off a currency pair whenever you predict a deviation keeps you in a bomb shelter.
- Leverage profits
If you would like to have a domino effect on your trading journey, forex trading is the best bet. As a beginner, it is always sensible to invest small amounts. However, several exchange brokers offer amateur traders to borrow a small portion of the entire capital so that they can open a high position.
On the bottom line, you get to invest only a stipulated segment of the whole currency pair’s value and the initial value is the margin amount. When it’s time for the returns, you receive a significantly large profit (concerning leverage ratios) with a relatively small investment.
- Enjoy the benefits of hedges
No doubt that the currency market involves the risk of volatility. Even though you try being aware of fluctuations, there might be some point at which you lose a significant segment of your bet. Luckily, forex trading allows you to hedge your investment. Hedging is a process where you invest, intending to minimise related price fluctuations. There are several strategies with forex hedging, while primarily choosing multiple currency pairs is the typical way to hedge your currency buy.