Forex trading is slowly but surely gaining popularity in India. Trading in forex offers many opportunities for traders to gain profit if they do their in-depth research and trade wisely.
While choosing and trading currency pairs might seem easy for seasoned traders, what about beginners just venturing into online trading? With the upside potential of currency trading, many beginners are heading towards forex to generate an alternate source of income.
The question is is forex trading good for beginners? Should they dive into the market? Let’s find out in this article. However, before that, let’s get some basics clear.
What is Forex Trading?
Forex or foreign exchange is a place where traders can exchange one currency for another. It is the largest financial market in the world known for its accessibility and liquidity. The traders earn profit or bear loss from the variation in currency values.
For example, imagine you bought 100 US dollars today at an expense of Rs 8,286.55 for INR at the rate of Rs 82.87. If the value of USD reaches Rs 85 in two days, you stand to earn a profit of Rs 213.45. Rs 8500 (current value) – Rs 8286.55 (initial investment).
The chances of profit/loss are greater when exchanging popular currency pairs with bigger price movements. While a pro forex trader can sniff profitable opportunities easily, how welcoming is forex trading for beginners? Let’s find out.
Is Online Trading in Forex for Beginners?
If you have no problems putting in the time and research to trade currency pairs, then the answer is ‘yes’. To give you an overview, here are five benefits of forex for beginners.
1. Beginner Friendly
If you are a new trader looking to make small investments, you can start trading forex. Trading currency pairs for the first time? Don’t worry. Most reputed brokers offer demo account services where you can test your trading skills in a real-time market scenario.
2. Cost Effective
There is no minimum amount that you must trade in forex. Thus, beginners with a little capital on their hands can immediately start trading currency pairs. There are no high costs involved as the transaction cost is low. A trader need only pay the broker fee to start trading currency pairs.
3. Large & Global
Foreign exchange is spread internationally. Hence, a variety of currency pairs are available for traders to experiment with. Beginners can use this to their advantage and start their forex journey with currencies with lower value and movements. With experience, they can move to more popular and valuable currencies.
4. Margin Benefit
Do you want to trade currency pairs at a fraction of the cost and hedge your risk? As a beginner, you will be glad to know that popular broking platforms like Dhan provide the ability to trade currency futures. You can buy a futures contract with your broker by paying a margin and get leverage on the same to take a large trade with less capital.
5. Liquid market
Foreign exchange is a highly liquid market, owing to the large volume of trading that takes place round the clock globally. Liquidity allows a beginner to buy or sell currency pairs with little effect on their value, thus minimizing risk.
Conclusion
There are several benefits of forex trading for beginners. With a small capital and in-depth research, a trader stands to earn decent returns on trading currency pairs. You can use well-known online trading platforms like Dhan for a feature-rich trading experience with margin benefits for trading currencies.
