Forex has been popular since the 1990s, but is it still relevant in 2021? Around the world, 13+ million people are engaged in trading through the internet. Cutting-edge financial platforms may be installed on any computer or mobile device. Apparently, Forex has not lost its appeal. On the contrary, it is expected to become more popular than ever. Here is why.
The Perfect Storm
The devastating pandemic has disrupted conventional employment around the world. Unemployment has skyrocketed, and lockdowns are still lingering. These factors are conducive to a surge in online trading. As so many consumers are stuck at home, brokers have been able to reach a wider audience. With more free time on their hands, people have started to explore opportunities in the currency exchange.
Forex trading is based on the process of buying and selling currencies through the internet. Those who Trade in Forex may work from any device, wherever they are, 24/5. They connect to the largest financial market, where over 6 trillion US dollars is exchanged daily. It is a colossal ecosystem in which banks, hedge funds, corporations, and individuals make money in the same fashion — by buying and selling currency pairs.
Another factor contributing to the rise of Forex is a cheap entry. Unlike stockbrokers, Forex companies allow you to begin with as little as $19, and all educational resources are free. Traders can start small and increase their profits over time. Moreover, the instruments are not limited to currency pairings: one may trade stocks or derivatives just as easily using the same tools and (sometimes) the same account.
A Look at Profitability
It is hard to calculate the average monthly profit, as too many variables are at play. Generally, traders are expected to achieve a 10% return on their capital monthly if they practice consistently for 6-12 months. Other crucial factors are:
- the size of their initial investment,
- risk tolerance,
- costs per trade, and
- whether they withdraw or reinvest their profits.
Causes of Failure
Critics say the majority of traders lose, and this is true. In general, around a third of all participants achieve consistent returns. This is not because Forex is a sham by definition (although scammers exploit it, too). Reliable brokers create fair conditions, but too much depends on the skills of every trader. Besides, the market is not fully predictable. This explains why participants without a solid risk management strategy are doomed.
The Bottom Line
Forex still attracts finance-savvy individuals around the world. The industry has seen impressive growth over the past few years, and the trend is expected to continue. Forex is neither a fraud nor a path to immediate wealth. It is a process of monetizing financial skills in the largest market on the planet.