Table of contents:
- 1 The Currency Market and its Unique Features
- 2 How Do You Trade Forex?
The Forex Market is widely acknowledgd to be the largest of all the financial markets, speaking of trading volume. A report by the Bank of International Settlement (BIS) in 2019 estimates that the daily trading volume of the currency market is about $6.6 trillion. This figure is expected to grow at an average of 8% year-to-year.
This size is not all there is to the forex market. It also possesses a number of unique features not found in other markets, and this draws an unending number of newcomers into forex trading every time.
The Currency Market and its Unique Features
Outlined below are some notable unique features of the forex market:
1. Largest Financial Market
One of the biggest strengths of the forex market is its size. It does around $6.6 trillion in average daily turnover. This trumps the largest of stock markets by a large margin. And in fact, other financial markets – commodities, cryptocurrencies, amongst others – don’t even come close at all.
Of course, one may ask, “what is the use of a large market that has no utility?” What the humongous size of the forex market brings about is liquidity. This means that there is almost always trading activity whenever the market is open. This liquidity is what traders hope for in all markets, because that is what makes the money. However, this also can work against a trader.
3. Accessibility and Flexibility
Unlike most financial markets, the forex market is open all through the working week, closing only for the weekends. As such no matter your schedule as a trader, there is always ample time to trade, as there are almost always trading opportunities, all week long. Another angle to this accessibility is the fact that the forex market surprisingly has a low entry barrier. To start trading other financial markets like the stock and commodities markets, you have to commit considerably large sums of capital. But as a result of the leverage it offers, forex traders can take large positions in the market by putting up just tiny percentages of them.
4. Profiting During Down Time:
In most markets – unless you are trading with derivatives – you only make money when prices go up. When prices go down, you lose money. But that is not the case with the forex market. You can make money both when a currency pair is on an uptrend (when on a “Buy” trade) and also when it is on a downtrend (by going for a “Sell” trade).
5. Potential for Unlimited Profits
As a result of its size, the forex market holds the potential for traders to make as much money as they can from the markets. A $6.6 trillion-per-day market means there is seemingly no end to how much you can make.
How Do You Trade Forex?
We have talked about the bountiful benefits that the forex market holds. Now, the obvious question should be: how do we go about profiting from this market? Traditionally, trading currencies simply means exchanging currencies. That is selling the currency you have with you and buying that of another country you find more desirable, using the exchange rate between both. For instance, you live in Belgium, which means you spend the Euro, but you need the United States Dollar. You simply approach an exchanger and pay the Euro amount equivalent to the amount of US Dollar you hope to own, and get your USD.
This traditional way is the most popular; and is basically used for purposes such as traveling, overseas shopping, and for facilitating foreign trade. It is less used for speculation or investment purposes, because in the face of more sophisticated methods, the returns are meagre. Even at that, trading forex was largely restricted to banks, large financial institutions, multinational corporations and high net-worth individuals.
However, the advent of technology combined with forward-thinking regulation has made it easy for retail traders to be able to trade using the internet. In the quest to make internet trading of the currency market available to retail traders, several methods have been developed, the most popular of which are outlined below:
1. Forex Futures
Forex Futures are agreements between certain parties to buy or sell a currency at a future date. Hence, why they are called “futures.” In essence, a forex futures agreement contains the price at which the currency will be bought or sold, and the particular date on which the exchange will be done. You profit from the market if your prediction of what the market will be at that particular date or period turns out accurate.
2. Forex ETFs
Just like stock ETFs, forex ETFs essentially follow the performance of the underlying currency it was designed for, and their value moves in correlation with the underlying currencies. So, an ETF that was designed to track the movement of the dollar will increase if the Dollar increases and fall when the Dollar falls.
3. Forex Spread betting
Forex spread betting essentially involves taking a bet on the direction of a currency pair. Your profit (or loss) from this depends on how the market moves in your favour, or against your trade.
4. Forex CFDs
Forex Contracts for Difference (CFDs) basically entail profiting from the difference that happens in prices of their underlying currency pairs. Here, what the trader is concerned about is the movement or change in price at a point in time.
5. Forex Binary Options
By far the fastest growing means to trade forex. One of the advantages Forex binary options give you is the ability to bet on the directional movements of a currency pair. If you believe that the price will go up, you choose a “Buy” or “Up” trade, and if you speculate it will go otherwise, you choose a “Sell” or “Down” trade. Binary options offer ample opportunities to make profits from the directional movements of currency pairs, as you will be given a fixed payout of as high as 90% or even more, for getting correctly the movement of the market, after a fixed amount oftime.
As you are already aware, to trade any financial market at all, you need a broker. To trade binary options is also no exception. One of the best binary options brokers you can find around is IQ Option.
Why Should you trade IQ Option Forex?
IQ Option offers one of the best platforms to make profits from the forex market, through the instrumentality of binary options. It offers an array of services designed to make your trading much easier. These services include:
- Mobile Trading Application: IQ Option’s mobile trading platform has bagged numerous awards for being trader-friendly and packed with valuable resources including trader Education. It is available both for Android and iOS devices.
- Regulation: IQ Option is registered with one of the most notable financial regulators in the world, the Cyprus Securities and Exchange Commission (CySEC).
- Trader Education: IQ Option gives you access to a structured trading course as well as well-prepared educational materials. This education is also put at your fingertips through the OlympTrade app.
- Customer Support: IQ Option offers 24/7 customer service channels that are accessible via phone, email and live chat on its website.
Types of IQ Option Forex Trading Accounts
Just like most binary options brokers, with IQ Option, you also have a variety of live account types to choose from. There are basically 2 types or “levels.” These are the Real account and the VIP account.
1. Real Account
Although it is not officially named so, the “Real” account is the basic live account that you get to open with IQ Options. The minimum deposit required to get started here is $10, and minimum trade size is $1. Perks that come with this live account include access to weekly trading tournaments where traders can win bonuses from IQ Option (however, they are only available to traders outside the EU). You also have access to 24/7 customer support.
2. VIP Account
For this account type, you need at least a deposit of $1900 into your trading account. Benefits that come with it include access to personal account managers, personal sessions with experts from IQ Option and extra educational resources. However, due to ESMA regulations, the VIP account is only open to traders outside the European Union.
There are several ways to profit from the movements in the prices of currency pairs of countries globally. One of such ways is through trading binary options. To, however, experience stress-free trading, you need a good binary options forex broker and IQ Option forex trading is arguably one of the best you can find.