Trading Forex For A Living

Historically, the FX market was obtainable most to major banks, transnational companies and different participants WHO listed in giant group action sizes and volumes. Small-scale traders together with people such as you who trading forex for a living and that i, had very little access to the present marketplace for such a protracted time. currently with the appearance of the net and technology, FX commercialism is turning into associate more and more standard investment different for the overall public.

The benefits of commercialism the currency market:

It is open 24-hours and it closes solely on the weekends;

It is terribly liquid and efficient;

It is terribly volatile;

It has very low transaction costs;

You can use a high level of leverage (borrowed money) with ease; and

You can profit from a bull or a bear market.

Continuous, 24-Hour Trading

The currency exchange is a 24-hour market. You may decide to trade after you come home from work. Regardless of what time-frame you want to trade at whatever time of the day, there would be enough buyers and sellers to take the other side of your trade. This feature of the market gives you enough flexibility to manage your trading around your daily routine.

Liquidity And Efficiency

When there are a lot of buyers and a lot of sellers, you can expect to buy or sell at a price that is very close to the last market price. The currency market is the most liquid market in the world. Trading volume in the currency markets can be between 50 and 100 times larger than the New York Stock Exchange (Source: Oanda.)

When you are trading stocks, you may have experienced events where one piece of news accelerates or decelerates the price of the underlying stock you may have bought into. Perhaps a director has been kicked out by the shareholders of a company or the company has just released a new product and big investors are buying the shares of a particular company. Share prices can be drastically affected by the actions or inactions of one or a few individuals. So if you are relying on television reports and newspapers to get your news, most of the opportunities or warnings will have come too late for you to take advantage by the time you get them, that will hamper your trading forex for a living. 

The value of currencies on the other hand is affected by so many factors and so many participants that the likelihood of any one individual or group of individuals drastically affecting the value of a currency is minute. Because of its sheer size, the currency market is hard to manipulate. The ability for people to engage in 'insider trading' is virtually eliminated. As an average trader, you are less disadvantaged. You are likely to be playing on relatively equal ground along with all the other traders and investors whom you are competing against.

Note about price gaps:

For those those that have already listed different markets, you most likely comprehend worth 'gaps'. 'Gaps' occur once costs 'jump' from one indicate to a different while not having taken any progressive steps to induce there. as an example, you'll be commercialism a share that closes at $10 at the top of these days however attributable to some event that happens overnight; it opens tomorrow at $5 and continues to travel down for the remainder of the day.

Gaps bring on another degree of uncertainty that will step in a trader's strategy. in all probability one amongst the foremost worrying aspects of this can be once a monger uses stop-losses. during this case, if a monger puts a stop-loss at $7 as a result of he now not needs to be during a trade if the share worth hits $7, his trade can stay open nightlong and also the monger wakes up tomorrow with a loss larger than he might are ready for.

After staring at a few of forex charts, you may notice that there area unit very little worth 'gaps' or none in the least, particularly on the longer-term charts just like the 3-hour, 4-hour or the daily charts.

Volatility

Trading opportunities exist once costs fluctuate. If you get a share for $2 and it stays there, there's no chance to create a profit. The magnitude of level of this fluctuation and its frequency is spoken as volatility. As a monger, it's volatility that you just cash in on. giant volume transactions and high liquidity combined with fewer commercialism instruments generate bigger intra-day volatility within the currency market that may be exploited by day-traders. The high volatility of the currency market indicates that a monger will probably earn five times extra money from currency commercialism than commercialism the foremost liquid shares.

Volatility may be a live of most come back that a monger will generate with excellent foresight. Volatility for the foremost liquid stocks area unit between sixty to a hundred. Volatility for currency trading is 500. (Source: Oanda.)

In this respect, currencies make a better trading vehicle for day-traders than the equity markets.

Low Transaction Costs

A currency transaction typically incurs no commission or transaction fees. For a forex trader, the spread is the only cost he or she needs to cover in taking on a position. In addition, because of the currency market's efficiency, there is little or no 'slippage' costs.

'Slippage' is the cost involved when traders enter the market at a price worse than the level they wanted to get into. For example, a trader wants to buy a share at $2.00 but by the time, the order gets executed, his gets to buy the shares at $2.50. That fifty cents difference is his slippage cost. Slippage cost affects large-volume traders a lot. When they buy large quantities of a commodity, it oversupplies the market with buy orders. This applies a pressure for the price to go up. By the time they get to buy all the quantities they wanted, the average price they got their commodities would be higher than the price they intended to get them for. Conversely, when they sell large quantities of a commodity, they oversupply the market with sell orders. This applies a pressure for the price to go down. By the time they finish selling all their commodities, their average selling price is less than what they initially intended to sell them for.

Due to lower transaction costs, minimum slippage and strong intra-day volatility, individuals can trade frequently at small costs. As an approximate, you may only expect to have a spread of 0.03% of your position size. To give you an example, you can buy and sell 10,000 US Dollars and this will only incur a 3-point spread, equivalent to $3.

Leverage

There are not a lot of banks or people who would lend you money so that you can use it to trade shares. And if there area unit, it might be terribly onerous for you to persuade them to speculate in you and in your concept an explicit share goes to travel up or down. Therefore, most of the time, if you have got a $10,000 account, you'll solely extremely afford to shop for $10,000 price of stocks.

In currency commercialism but, as a result of you utilize 'borrowed money', you'll trade $10,000 of a currency and you simply would like anyplace between fifty (For a margin loaning quantitative relation of 200:1) to 2 hundred bucks ( For a margin loaning quantitative relation of 50:1) in your commercialism account. This makes it doable for a median monger with alittle commercialism account, under $10,000 to be ready to profit sufficiently from the movements of the currency exchange rates. this idea is explained additional within the Part-Time Currency monger.

Profit From A Bull And market

When you area unit commercialism shares, you'll solely profit once the worth of a stock goes up. once you suspect that it's getting ready to go down or that it's simply about to be moving sideways, then the sole issue you'll do is sell your shares and stand aside. one among the frustrations of commercialism shares is that a personal cannot profit once costs area unit taking place. In the currency market, it is easy for you to trade a currency downward so that you can profit when you think it is going to lose value. This is easy to do because currency trading simply involves buying one currency and selling another so anyone can trading forex for a living just need to ensure his or her trading skill, there is no structural bias that makes it difficult to trade 'downwards'. This is why the currency market has been occasionally referred to as the eternal bull market and limited number traders can trading forex for a living actually.