If you’re looking to make money on the side, trading foreign exchange online could be right for you. The Forex market is one of the most dynamic and exciting markets out there – it’s open 24 hours a day, 5 days a week and enjoys deep liquidity.
Until recently, the Forex market was the preserve of large financial institutions, major corporations, central banks, hedge funds and high net worth individuals. The rise of online Forex brokers has changed everything, and it is now possible for the man (or woman) on the street to buy and sell currencies online with the click of a button.
To make money through Forex trading, you need to buy when the price is low and sell when it is high. Daily fluctuations of currencies are generally very low. Most currency pairs vary by only a penny per day, representing a variation of less than 1% of the value of the currency. This makes Forex one of the least volatile financial markets of the world.
This is one of the reasons why Forex traders leverage their trades. Leverage, another name for borrowing, magnifies the impact that changes in prices have on your bottom line. It isn’t uncommon to find brokers with leverage ratios up to 1:500. This means that they will lend you $499 for every $1 you invest.
Deep market liquidity and leverage have fuelled rapid growth in Forex trading volumes, making this asset class a favorite with traders. You can open and close positions in minutes, a trading strategy called ‘day trading’, or you can keep them open for months – the choice is yours. Exchange rates are primarly driven by changes in supply and demand which prevents market manipulation from other traders. In fact, even large players such as central banks can find it hard to move exchange rates one way or another.
If you’re keen to start trading when are unsure where to start, compare Forex brokers on ForexBrokersAZ.com. You can search and compare brokers according to your trading preferences and experience to find the best broker for you. With Forex trading accounts from $5 to $50,000 we’re confident you’ll find one that meets your budget.
Matt Taylor writes for ForexBrokersAZ.com, an independent comparison service for Forex brokers. Search and compare Forex brokers in the UK, Canada, Australia or South East Asia. ForexBrokersAZ.com is avaialble across 12 countries and features established brokers such as eToro, FXCM and Alpari alongside regional players.
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