Forex Trading Is Popular

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Forex or Currency trading is different than trading in stocks however the rewards and risks are similar and you will find many other similarities like trends and technical analysis.

The Forex market is different from the stock markets largely because the price behavior of the Forex pairs is different and entails abrupt and often large price moves. As a trader then you must use trading methods that differ from those of stock trading methods. By doing this you can realize the full potential for profits that Forex trading is popular for. By trading with the right method you will also be reducing your overall risk level.

When it comes to trends and repeatable patterns and price Forex is popular because it has longer trends that may last for years. Much like stocks these trends and patterns can be enormously profitable trading opportunities for traders with good trading methods, strong discipline, the right mindset, and great money management systems.

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Forex trading is popular because of many reasons and one of the most popular is the amount of leverage you can trade with and this obviously allows a trader to take much bigger positions with a smaller account. With large leverage you can dramatically increase the profit you make on a winning trade. Of course the reverse is true also, you can have larger losses with inappropriate use of leverage.

Margin on stocks is typically 50% however in Forex Trading most brokers have at least a 100:1 leverage which is sufficient for making large profits while practicing sound risk management. Some brokers will go as high as 400:1 leverage, however the risk/reward is not best for the trader so further risk management skills are required.

High leverage is a double edged sword as we have said one way to use it effectively is to calculate how much you have in total leverage available then at least cut it in half and maybe more so you don’t get margin calls and put out of a potential winning trade. For example if I have $1,000 in an account that offers 100:1 leverage I could trade as much as 100,000 however if used it all I would get a margin call if it went against me just a pip or more. A safer level would be to trade as high as 50,000 or even less.

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Reduced margin levels to Trade Forex and the high leverage and to top it off the significant profit potential even starting from small account balances is helping to make Forex Trading Popular through-out the world.

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