Join the Conversation on Forex Trading

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Forex can be a good choice for active short-term traders. If you are interested in buy-and-hold, it's best to look elsewhere. The forex market offers:
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• Simplicity: Compared to most alternatives, Forex is easy to understand (and easier to backtest and program if you are a systematic trader).

 

• Low starting cost: You can begin with a small account because most brokers let you size your trades in micro-lots or even single currency units.

 

• High liquidity: If you stick to the majors, you should get in and out with little slippage, provided you avoid the major news.

 

• Scalability: High liquidity means you can realistically scale and make large profits if your system works.

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• Low costs: With a good broker, commissions are low compared to many other markets.

 

• Short-side trading: Unlike many markets, trading on the short side is just as profitable, increasing the profit opportunities.

 

• Volatility: Given that your broker will offer you leverage, there is usually enough movement in the market to enable short-term traders to profit.

 

• Market hours: Markets are open 24/5, so you can trade from anywhere in the world, and there are fewer risks with holding overnight positions.

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• Free backtesting data: Swiss broker Dukascopy has offered free tick-level data over the past ten years. In other markets, historical data at this level of detail can be very expensive.

Just remember that the market itself is not regulated, so you rely on the integrity of your broker. Stick to reputable brokers in well-regulated jurisdictions such as the US, the UK, Australia, and Switzerland. Avoid offshore brokers.