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Forex trading, also known as, FX or Forex is one of the globally widespread marketplaces, which allows people to trade with currencies. Traders are allowed to exchange one currency for another and get profit from the following processes.
We can say, that FX trading is the world’s largest and most liquid market. In this article, you’ll get information what are the main characteristics of Forex trading, what’s the minimum amount to start Forex trading, how can you get money earnings from it, and so on.
Forex Trading – How does it work?
As we already mentioned above, Forex trading refers to currency pairs exchanging one into another. We should say, that currencies are always traded in pairs and each currency in a pair is represented by a unique three-letter code. People who trade with currencies usually are using trading platforms, which provides them with several features and helps them to easily coordinate in the marketplace.
Traders, usually start to buy currencies when they believe that a certain currency has a high potential of winnings. What’s more, they open a long position, if they think, that a concrete currency’s value will go up.
People are selling currencies as well. In general, experienced ones starting to sell their currencies or open short positions when from their point of view there’s a high probability of decreasing a certain currency’s value.
Forex trading profit per day is one of the things, which is offered by the mentioned marketplace. It’s open for 24 hours trading and 5 days a week. So, people can trade with currencies at any time and make a profit, except on the weekends.
Besides, trading on FX can be conducted during the defined GMT and EST trading times. Trading sessions are according to Greenwich Mean Time. For example, European traders can start trading at 7:00 am and finish it at 4:00 pm, Americans can start trading at 1:00 pm and finish it at 10:00 pm, Asians can start it at midnight and finish FX trading at 9 am, and so on. Apart from that, trading is conducted through Eastern Standard Time too.
How Can You Start Trading in FX?
For starting Forex trading, you need to take several steps. Firstly, you need to connect a device to the internet. You can use your smartphone or go through the web on a certain trading platform. For success, it’s better to have a good connection to the internet, as in Forex trading every second has a crucial meaning. After having the internet-connected device, you can choose your preferred online Forex broker. All of the trading brokers are offering customers several types of opportunities and features, that can be beneficial while trading.
First of all, while choosing the broker, you have to see whether it’s regulated or not. Mostly, those brokers who aren’t regulated and aren’t licensed are scammers and are oriented to make you lose your money.
After completing the second step, you need to create an account. For creating an account, in most cases, you need to deposit a certain amount of money. Frequently, the minimum deposit to start Forex trading and making an account is miserably small. While trading in FX brokers allow you to make deposits and withdrawals through numerous payment methods. You can start depositing either with traditional ways and e-wallet.
After the mentioned steps, you need to choose a forex trading platform. There are several types of FX trading platforms, which are offering their users numerous profits. You can choose one among them and start trading. While starting to trade and making a live account, you can get a demo account as well and test all the services you’ll be provided.
The minimum amount of money for trading
As we already mentioned you can start trading in the FX market with a small amount of money. However, while making a certain deposit, you can get information about the amount of FX leverage. FX leverage is the use of borrowed funds to increase one’s trading position and traders are frequently using leverage to profit. Besides, leverage can define the amount of money you’re risking for earning money. In most cases, traders who deposit a small amount of money are seeking high leverage, for example, 1:500, to maximize their profit. However, leverage defines not only profit but also losses. If the trading process goes unsuccessful, you’ll lose a specific amount o money.
You can start Forex trading with 1 USD. There are various brokerages, which allow traders to deposit, for example, 1 USD and start trading. By the mentioned value, you can increase your gains. Through the minimum amount of money, you can test whether the broker or trading platform services are profitable and high-quality or not. If you’ll be satisfied with the companies’ services, you can continue trading through them with increased money.
Apart from that, there are some Forex brokers with no minimum deposit too.
Furthermore, the real money to start FX trading, in some cases, is defined as 10 USD. Through the mentioned miserable amount of money, traders can make a profit and get plenty of opportunities to raise their money earnings. As we already mentioned, the Forex market is among the largest markets around the world, so, that means it furnishes you with numerous opportunities, it helps you to get benefits, provides numerous, and various features. Through each feature and all the characteristics or positive effects, you can consider and define by yourself whether it is worth it to start trading Forex and how much money do you need to trade Forex. It’s all up to you and your preferences.
What are the Advantages of Trading Forex?
One of the significant advantages of the FX market is its high liquidity. Liquidity can be defined as the ability of an asset to be quickly converted into cash. In Forex trading traders are allowed to make fast and instant exchanges, transactions and get profit easily. In most cases, time isn’t extended and people can get their deserved money in a few time. Besides, while trading in FX you can profit from flexible spreads.
What’s more, as we already mentioned the market is open for 24 hours, which means you can be involved in the trading process whenever and wherever you want, as long as you have access to the internet and it’s not weekends.
One of the advantages is the low transaction costs. Regularly, Forex brokers provide customers with flexible and beneficial features, including low commission fees, which help you save your money and invest in FX trading. Regularly, even though, those transaction fees are low, there are some little differences among them, as well. So, while defining how much money do you need for Forex trading, you should take into account the mentioned costs, as well.
Some people think, that they can’t get a profit from an unstable and volatile market, however, that’s not true. Market volatility gives traders a chance to raise their profits. If they are thinking that a certain currency’s value is going to increase soon they’re starting to buy it (or go long) and after its value gets higher sell them. On the second hand, if the price is most supposedly to decrease, traders are selling a specific currency or just go short. Besides, the Forex market has a crucial advantage over the stock market. In the stock market, firstly, you need to borrow shares to sell short, while that’s not the case in the FX market. In Forex trading selling a currency is an instant and simple process and you just need to place a sell order.
Depending on the information given above, there can be a question for those who are interested in FX trading: how much do Forex traders make a day? On average Forex traders can make more than $81 000 annually, which is almost $7000 monthly and daily, we can say, that their profit is up above $200. However, if you are experienced enough, you can earn more than $125 000, as top earners do.
What Are the Disadvantages of Forex Trading?
As we know, nothing is perfect and everything has its own pros and cons, either do Forex Trading. In this section, you’ll get information about Forex trading disadvantages.
Firstly, one of the main disadvantages of Forex trading is counterparty risks. As we discussed above, it’s vital to see whether the broker is regulated and licensed or not. counterparty risks mean, that some of the brokers may take an illegal advantage and make you lose money. The fact, that the FX market isn’t centralized and regulated by authorities increases the chance to come across scammers. Even though, that there can be a contract between two sides, one side may don’t have an intention to honor the contracts and make you lose your funds.
Also, one of the disadvantages of Forex trading is leverage risks. Leverage can be both beneficial and unprofitable. Through the high amount of FX leverage, you may lose a lot of money. However, it’s all up to you whether you are a risk-holder or not.
Even though, that there are some risks while trading in Forex, there are plenty of opportunities that compensate for the above-mentioned risks and allows you to get a great profit.
How Much Money Do You Need to Day Trade Forex?
There cannot be one answer to the above-mentioned question. Some people like to risk their funds and gain more money through jeopardizing activities and there are people, who prefer the sense of insurance. However, traders most likely, while opening an account are depositing at least $2000, which allows them to see much higher profits. Besides, those who are depositing the mentioned amount of money, are those who want a decent income stream.
How much money do you need to trade Forex for a living? Experienced traders in most cases are depositing a minimum of $5000. It’s also significant to take into account the number of risky pips per trade. If you are risking about 10 pips per trade, you can raise your income and make roughly as high as $250 daily.
To conclude, traders can start trading in FX with a minimum amount of money and raise their gains significantly. FX market allows traders to get involved in the world’s largest marketplace and generate their individual strategy, which is the key to successful trading. By allowing the stop losses feature, traders can limit their risks and control their losses, which has a crucial effect on deposit size. So, investors can get a large profit through operating in the FX market, which is a simple and quick opportunity to raise your earnings.