Why is Forex Making the News?

In the last few years, global events seem to be happening faster than we can track. The economic/finance sector is included in this. You must have heard different economic news and listened to expert opinions about their impacts. One of the popular items in the news these days is how people trade forex. Forex trading is a popular way of trading the financial markets. It involves the buying and selling or exchange of fiat currencies. Forex trading is possible because of the differences in the value of currencies. But why forex? What is the importance of forex trading in the news today?

What is the Importance of the Forex Market

Some history is necessary to understand the importance of the forex market and forex trading. Foreign exchange trading can be traced back over 500 years since the first currency market opened in Amsterdam, Netherlands. Later in the early 1900s, currency trading was regulated to follow the Brenton wood standard, which lasted for three decades. By 1970, following a prolonged spell of economic difficulties, currency trading was modernized and gradually established following the floating rates system.

Initially, this form of trading was only open to large financial institutions such as banks, insurance companies, and investment corporations. Still, as computers and the internet penetrated the industry, they became available to retail traders (individuals with smaller capital). Today, practically anyone with a smartphone or computer can comfortably trade the forex market anywhere. FX has steadily gained popularity since the late 1990s, and today, all major news channels dedicate some time to reporting events concerning currency trading and the exchange rates of the major currencies.

So, why forex trading?

Advantages of Forex Trading

There are several reasons to trade forex; making profits, learning more about financial systems, and diversifying your portfolio. However, the major advantage of forex trading is making profits. But those are on a personal level. On the global level, the benefits of trading forex in life facilitate trade and commerce, regulating currencies and their value, providing stability, and facilitating the global economic system. For example, consumers in one country may want to buy a product from another. But they have unique currencies with different values. Through forex trading, the two parties can agree on the quantity of one currency that matches the value of the other. FX makes international trades easier and helps countries maintain their currency’s value.

It benefits every sector where goods and services are exchanged. It also benefits anyone looking for another source of income. You, too, can leverage the internet to start trading the forex market. Being a forex trader can help you improve your financial portfolio and give you that extra leverage to hit your goals. The advantages of the forex market are not limited to any country.

What’s Happening in the Forex Market?

Global events have varying degrees of impact on the forex market. Traders react to events by trading in the direction of the predicted impact or waiting for the market to absorb the news impact before trading. The strength of a currency improves when economic conditions favor the country. Recently, the US Dollar and Euro became equal in value. The impact of certain political events led to that. Yet, the forex market is as active as ever, with trading going undisturbed. As the global economy struggles to shake off some financial difficulties, forex traders seek trading opportunities to leverage the price differences of currencies.

Why is Forex Popular for Trading

The forex market has a 24hr trading volume of over $6 trillion. It is the biggest market by sheet size and participation, having traders from over 200 countries. But that’s not the only reason why forex is popular for trading. Here are some other reasons:

• It is an inclusive market. The global forex market is inclusive and not reserved for only certain people. Anyone with internet access and the right tools can trade forex from anywhere in the world.
• The volatility is relatively smaller. Forex volatility is smaller than in other markets, such as the crypto market.
• Forex trading is licensed and regulated. Every country regulates forex trading, providing a global regulation for the world’s biggest financial market.
• There’s a low start-up barrier. Anyone can trade forex easily without getting a personal trading license.
• There’s a potential for growing profits providing traders with a way to grow their portfolios. The global forex market has a huge turnover.
• Forex awareness has increased in the last three decades. Education on the topic is available online, where interested persons can get free access. Instructors have simplified information over the years to make it easy for an average person to understand, hence the increased interest and trading. For example, Forbes offers basic guides to help beginners to start trading.

FX is no doubt popular and important. It is also not reserved for large financial institutions, anyone can start trading the market. If you are interested, your path will look like this:

• Start learning the basics and work your way up.
• Get a reliable broker. Choose a broker with the best trading conditions and a trader-friendly trading platform.
• Practice on a demo account and hone your trading skills.
• Fund your trading account and start trading.