Among the many investment opportunities on the market, forex trading is still considered the most exciting. The foreign exchange market is very volatile at times, which means there are more than enough money-making opportunities for investors.
The big question for many, especially new and potential investors in the forex market, is whether forex trading can really help you make money. We are going to answer that question in this article.
Ups and Downs
One of the biggest opportunity presented by the forex market is the ability to profit regardless of the way the market is going. You can choose to go Long (open a Buy transaction) or Short (open a Sell transaction) at any point depending on how you think the market will move next.
Let’s say the EURUSD is trading at 1.16004. For every pip (point in forex trading) of movement, you stand to earn $10/lot. If the market for EURUSD moves to 1.16254 after you buy 1 lot, you’re looking at $250 in profit from that transaction alone.
The movement from 1.16004 to 1.16254 can happen in a matter of minutes. This is why a lot of forex traders choose to be a day-trader, with smaller transactions spanning across shorter periods of time. There is a lot of money to be made on the market indeed.
Leverage Your Investment
When you first open a forex trading account, you are given the option to choose the leverage you want to use. Leverage is exactly what it is; it is a ratio to which your money is invested. Investing $1,000 with a 100:1 leverage means you can make up to $100,000 worth of transactions on the market, as long as you maintain a sufficient amount of margin in the account.
Leverage is a two-edged sword. Use it right, and you can multiply the value of your investments. You bank all the profits without actually investing more money into the account. Use it recklessly, however, and you’ll get margin called before you know it.
Nevertheless, the use of leverage makes forex trading an even more interesting investment opportunity. Unlike the stock market, you don’t need a fortune to start making healthy profits trading foreign exchange pairs.
The one thing to keep in mind about forex trading is that it isn’t a get-rich-quick scheme. There have been a lot of traders who made a fortune overnight – some even do incredible things like doing a complete credit fix using profits from forex trading – but that’s not the mindset you want to be in upon entering the forex market.
You still have to put in the hard work to stay profitable. This means keeping up with the latest news and developments, learning how to execute transactions properly, and developing your own trading strategies. Strategies are at the heart of the excitement. Once you have a good set of strategies that matches your trading style perfectly, forex trading can be very rewarding.
So, can forex trading really help you make money? The answer to this question is a solid YES. There are plenty of opportunities to grab and profits to bank, so start with an account today and explore the exciting world of forex trading.