How Can Private Investors Make Money by Forex Trading?

It is a true fact that large international and national banks and other major financial institutions have dominated forex market for a long time; however, within recent years the paradigm as well as the nature and type of investing have undergone significant changes. According to the expert assessments, currently there are over 7 million online investment accounts compared to 2 million in 1998. As a result, start-up companies now compete directly with financial institutions in rendering FX services to investors in a new technology-oriented economical environment; and the winner is the customer. The competition between the companies servicing customers traditionally, in their offices, and the Internet companies servicing customers online has considerably reduced the cost of investing and gave individual investors a possibility to control their own investment strategy in forex trading.

In the past the foreign exchange market was available only to large banks and institutional traders but recent achievements of modern technology have given private traders a chance to benefit from online forex trading. Over recent years online trading has made a revolution in the currency markets by opening them to small and medium-size investors.

The foreign exchange market is the largest financial market in the world with a daily turnover of approximately 2 trillion dollars. Forex trading goes on round the clock, it knows no holidays or weekends.

Foreign exchange means simultaneous purchase of one currency and sale of another. The world currencies have a floating exchange rate and are always traded in pairs, e.g. EUR/USD or USD/JPY or USD/INR, etc.

Investors enjoy multiple advantages of the Forex market over stock markets, futures markets and other types of trading. Today most traders choose forex trading in the disfavor of stock trading. Just compare: there are approximately 4,500 securities registered on the New York Stock Exchange, another 3,500 are registered on the NASDAQ. Forex trading gives the customers access to the 4 major markets, 24 hours a day, 5 days a week. Some forex traders prefer to trade exotic currencies, as there are about 3 dozens of second-tier currencies available for testing new strategies and potential big wins.

Forex trading is much more convenient in terms of time management, as it can be done at any time convenient for a trader and even in combination with other activities. Stock exchange trading has little in common with this.

Investing into the Forex market is not only an accessible, easy and less costly business opportunity but a much more efficient one in terms of commission and operational fees. As a rule, commissions for stock traders range from $8 – $30 per trade with online brokers to over $100 per trade with traditional brokers. Generally, commissions on stock markets are directly related to the level of services offered by the broker. First-rate traditional brokers offer access to research, recommendations of stock analysts, etc. In contrast to them, forex brokers charge much lower commission and operational fees.

Related Forex Articles