Here’s an interesting data point to consider. According to the Bank for International Settlements, in 2022, global currency trading volume hit a record high of USD 7.5 trillion per day, outstripping the previous record of USD 6.6 trillion in 2019 by 14%. ^[1] 

Clearly, forex trading continues to gain in popularity, and you may be wondering what the buzz is all about. Well, read on to find out what makes forex trading attractive, and how even complete beginners can make their first forex trades in just five simple steps. 

Why you might want to trade the forex market

24-hour trading available

Unlike the stock market, the forex markets are open for trading 24 hours a day. There is no cut-off time during the trading week, so forex traders can trade on their own schedule. Note that the forex markets are closed on the weekends. 

Why forex trading is possible round the clock is because currency trading is carried out across several forex centres around the world, located in different time zones. Some notable forex trading centres in the world include London, New York, Singapore, Japan, Hong Kong, Germany, and France. ^[2] 

Largest, most liquid market in the world 

The forex markets are by far the largest and most liquid in the world, with several trillion dollars in daily trading volume, as mentioned earlier. In comparison, the global stock market is estimated at USD 109 trillion in 2023. ^[3]

Arguably, the larger a market is, the more resilient it is to tampering or manipulation, as it becomes more difficult for any one party or group to influence prices. Hence, one oft-cited benefit of forex trading is that retail investors are better protected against market manipulation. 

Suitable for a wide variety of trading styles

Forex trading is also highly flexible, not only in trading hours but also in trading styles and time horizons.

You can trade forex via a brokerage account for direct participation in the forex market. Alternatively, you can also use derivatives such as Contracts-for-Difference (CFDs) to gain exposure to potential opportunities arising from the interplay between currency pairs.

Given the market’s dynamic nature, forex trading is suited to both long- and short-term trading. Forex investors may hold positions for a few minutes, hours, days, or weeks, depending on the investment thesis they are pursuing. 

Forex traders may find success with a wide variety of strategies, such as low-profit, high-volume trading or focusing on higher total profits with fewer trades.

Low barrier to entry with low capital requirement 

Unlike, say, trading in blue-chip stocks, forex trading can be started with a low initial capital. This makes forex a more friendly option for those looking to get started in investing on their own. 

Also, leverage is often available in forex trading, allowing you to amplify your gains from a winning trade.

Take heed that in a losing trade, leverage will increase your losses to a commensurate degree, so it’s important to learn how and when to use leverage during forex trading.

Types of forex markets 

The forex markets may be classified into four types. Each differs depending on how currencies are traded.

The spot market

In the spot market, currencies are traded immediately at the current, or spot, price. This also means that monetary transactions are the quickest here, with settlements usually taking at least a day or two. 

The futures market 

Forex futures are traded under an agreement between the buyer and seller to exchange currencies at a specified price on a predetermined future date. To settle the trade, the exchange of actual currencies is not required, only the outstanding value. Forex futures are commonly used to hedge against expected currency-value fluctuations. 

The forward market 

Trades conducted on forex forward markets are similarly structured to those in the futures market. However, forward contracts may be executed off-exchange, which means they are unregulated and carry a higher level of risk. Similar to futures, forex forward contracts can be used to hedge against price changes of currency pairs.

The option market  

Forex options are financial derivatives based on the prices of underlying currency pairs. Like equity options, forex options allow for a wide variety of strategies as traders may choose from a variety of prices and expiration dates. 

Forex options also allow traders to avoid fulfilling their obligations at expiration; in futures contracts, the terms must be met. 

How to trade the forex market with Vantage – five steps

Step 1: Register for a live trading account with Vantage.

Step 2: Once your account has been approved, log in to Vantage RAW ECN to learn more about the forex trades available to you. You can access over 40 of the most popular currencies in the world and enjoy low spreads from 0.0 pips.

Step 3: Build a trading plan. This will entail developing your budget, strategy, and timeline, as well as determining which analysis tools and methods you will use. You should also learn proper position sizing and other risk control methods. 

Step 4: Choose your forex trading platform. We offer several ways to trade, ranging from desktop software to web-based platforms and our proprietary Vantage mobile app. 

Step 5: Make your first trade. Once you’re ready to make your first trade, go right ahead. Log in to your account and select the currency pair you want to trade. Tap “Buy” to open a long position, and “Sell” to open a short position. You can also set stop-loss or take-profit levels. 

Once you’re ready to close your position, simply make the opposite trade. 

Trade popular currencies with Vantage 

Vantage offers top forex pairs, low fees and robust features catered to forex traders of all experience levels. Start trading with a minimum initial deposit of just USD 50, and finely control your exposure with leverage up to 1000:1. 
Benefit from transparent access to global forex markets with no dealing desk intervention, and enjoy peace of mind with secure, regulated and segregated funds at one of the top 20 safest banks worldwide. Sign up today.

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