Investing has been around for a long time, but in the last decade or so Forex (abbreviation for Foreign Exchange) trading has been growing in popularity, especially online. Forex refers to currency trading or, more specifically, trading one country' currency against another. People are always talking about the "value of the dollar" and how it is going up or down against the Euro or the Yen or whatever other currency. That is exactly what Forex trading seeks to profit from.
So why has Forex become so popular recently? There are a few reasons, so let's take a look at some.
The Internet - The internet has made just about anything accessible to anyone, and investing is no exception. It's not like there is a Forex broker in your neighborhood you can just drive over to, but you can pull up a browser on your computer and visit a broker's website. The internet has also given people the knowledge of Forex; most people didn't know what it was 10 years ago.
Furthermore, since the currency markets are open 24 hours a day (except on the weekends), anyone can trade from anywhere at any time. The internet allows for around the clock access to an around the clock market.
The internet has also allowed for investing to become cheaper. In the past, if you wanted to invest, you had to pay a higher commission to your broker who you probably had to go see in person (or at least give a phone call to). Now that you can do everything yourself online, the commissions are minimal. Lower commissions means that it's not as cost prohibitive anymore to start investing.
Scalability - Some investment markets force you to use a certain size when you trade. For example, if you are trading futures contracts, the smallest size you can trade is 1 contract, but even the movement on 1 contract may be too much for your risk tolerance. If you are trading S&P 500 futures (this contract is called the "ES"), one point of movement is $50. So if the S&P moves against you by 5 points (which can happen in less than a minute under the right circumstances), that means that even with 1 contract you've lost $250. That may be more money than you feel comfortable losing, especially if you only have a small account to begin with.
With Forex you can trade whatever size you want. You can set it up so that the smallest amount of movement in a currency (called a "pip") only causes your account to go up or down by $0.01. This means even if a currency makes a huge move and goes 100 pips, your account will only change in value by $1.00. Of course, if you have more money you can trade as large as you want, too.
Because the internet has made it accessible to everyone, and the scalability factor means that you can trade comfortably at any account size, Forex continues to experience an increase in popularity as more people are drawn to it.
To learn more about becoming a forex trader please visit this link!
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