What are the advantages of forex trading compared to other trades? So, can I get rich from forex?

There are various reasons why many people now look at forex trading as a source of additional income and main work. Some of the advantages in online forex trading compared to trading or other investments are:

1. Forex Trading Presents Two-ways Profit Opportunities.

Forex trading is done in currency pairs. For example in EUR/USD pairs: "buy" transactions mean buying Euros while selling US Dollars, while "sell" transactions mean selling Euros while buying US Dollars.

When you expect the Euro to weaken and the USD to strengthen, traders will open "sell" trading positions. Conversely, when estimating the Euro will strengthen with a weakening USD, the trader will open a "buy" trading position.

Thus, forex trading players can benefit, both when a currency weakens and strengthens. Even if the position is losing money, you can hedge to lock your losses. Hedging itself is a locking strategy, which means that if the price moves in the opposite direction to our prediction, then we will immediately open a new position opposite to the initial position, without closing the transaction that we did before. With this Hedging system, the losses during transactions can be minimized.

In addition, the advantages of other forex trading can be done in various currencies throughout the world, so we will not run out of profit opportunities.

Although, in general, traders trade only seven major currency pairs, namely:

  • EUR / USD (Euro/US Dollar),
  • USD / JPY (US Dollar/Japanese Yen),
  • GBP / USD (Pound Sterling/US Dollar),
  • NZD / USD (NZ Dollar/US Dollar),
  • USD / CHF (US Dollar/Swiss Franc),
  • AUD / USD (Australian Dollar/US Dollar),
  • USD / CAD (US Dollar/Canadian Dollar).

2. Forex trading can be limited to capital at a low cost.

In forex trading, there is a system of margins and leverage. This system allows brokers to lend funds proportionally with guaranteed funds provided by traders. The margin and leverage system allow forex brokers to "lend funds" in proportion to the guaranteed funds provided by traders.

For example, with a leverage of 1:200, traders only need to provide a deposit for a margin of 100 USD so that they can trade with the power of funds of 20,000 USD (of 100 multiplied by 200). This margin and leverage make forex trading does not require large capital.

We used to know that to be able to trade forex, a minimum capital of tens of thousands of dollars needed funds. But not anymore. Even with 10 USD capitals, we can already trade forex. There are even brokers who provide free capital for trading such as FBS brokers, XM brokers, Agea brokers and FXOpen brokers.

Lately, more and more brokers are competing to provide deposit bonuses to new traders and also provide cent/micro account facilities. Business competition between brokers makes trading commission fees that traders must pay to be lower and more competitive.

Technological advancements give us the freedom to choose the forex broker with the lowest trading costs and the most sophisticated trading software facilities as our link with the forex market.

Apart from leverage, there is another factor that makes forex a suitable instrument for investors with limited capital. Business competition between brokers also makes trading commission costs lower and more competitive.

3.Relatively Low Transaction Costs.

Generally the fees charged by forex brokers are spreads. This spread is the difference between the bid and the price of the request.

In fact, spread on the forex market itself also tend to be far less or more stringent than the spreads applied to stocks. This makes forex trading an effective investment method.

With the internet, we also have the freedom to choose a forex broker with the lowest trading costs or spreads with the most sophisticated trading software facilities as our link with the forex market. Interesting right?

4. Traders can Buy and Sell anytime.

According to Bank for International Settlements (BIS) data, an institution that houses world banks, the forex market has very high liquidity (availability of funds) to reach an average of $5.3 trillion per day.

This makes the forex market the largest market in the world, even when compared to the well-known stock exchanges in the United States.

Because of the large availability of funds in the forex market, whenever you want to sell, there will always be buyers. Vice versa, whenever you want to buy, there will always be sellers.

There is no queuing system like in stock trading which often requires sellers/buyers to wait several hours to days so that someone agrees on the price first.

5. Forex market open 24 hours without stop and open five days a week.

Other financial markets such as stocks usually only open according to normal working hours between Monday and Friday. However, the forex market is open 24 hours a day, only Saturday and Sunday the market closes.

That is, as a forex trader. You will be able to set your own trading hours. If you prefer to work in the morning because you have another main job; it doesn't matter, you can trade forex at night. Or vice versa.

You can trade forex during the day when you have a busy work at night. Or if you want to specialize only trading at the most profitable times, then you can look at the best time and hours of forex trading.

6. Learn and practice Forex trading for free on the Internet, although some are paid.

Forex brokers generally provide trading facilities in the form of a demo trading account. With this system, anyone can learn and practice exactly like real forex trading, but regardless of the risk of loss.

How come? Yes it is clear, because the funds used are virtual or toys only and this facility is also provided free of charge by forex brokers. So if you lose you don't, need to change money, even if you win it can't be cashed.

This demo account is intended for beginners who want to practice and study first before plunging into the world of forex trading.

7. Forex trading can be done anywhere.

Today's forex transactions can be done online, with computers, laptops, tablets, or smart phones, just by clicking on the trading software provided by the broker. Plus the speed and cost of the internet that is getting cheaper and cheaper, overall the cost of being able to trade forex online is very small and affordable.

This is the advantage of forex trading which is the most prominent compared to other types of trading.

Those are some of the advantages of forex trading compared to other types of trading according to my mind. 

Then, can I be rich because of forex? The answer depends on yourself whether you can take advantage of these forex advantages to reap dollars from the market. 

But behind the beauty of forex, forex also has a big risk, what are the risks? Next time, let's discuss it. :)