What is the purpose of Forex trading?
This is most likely one of the questions for which you require a reasonable answer. There are hundreds of investments to choose from, but why trade foreign currencies instead?
In many ways, forex investment is unique.
When compared to other markets, its trading volume is relatively large.
It has extreme liquidity, or the ability to buy or sell currency without causing significant movement in the market price.
It has the most and most diverse traders.
It is one of the markets with extended trading hours (24 hours a day, except on weekends).
Trading locations can be found almost anywhere, not just in the United States or major European cities.
Foreign exchange rates are influenced by a variety of factors.
Another astounding fact that will entice you to engage in Forex trading is that the traditional foreign exchange market has an average daily turnover of around $1.88 trillion, according to the BIS’s Triennial Central Bank Survey (Bank for International Settlements). Here are the daily averages of Forex market turnover over the last 17 years:
500 billion dollars (April 1989)
750 billion dollars (April 1992)
1.18 trillion dollars (April 1995)
1.48 trillion dollars (April 1998)
1.16 trillion dollars (April 2001)
1.88 trillion dollars (April 2004)
The figures alone show that the average trend of Forex turnover is increasing. It is expected to reach 2 to 3 trillion dollars within the next 8 to 10 years if the number of traders worldwide continues to grow. In fact, now that the Forex trading marketing is being automated, everyone has a good chance of getting a substantial piece of the Forex market wealth pie.
Automation has emerged as a new trend in the foreign exchange trading market. The Interbank Spot Forex market has also considered using an automated method.
A Forex trader can gain several advantages from automated Forex trading. Here are some of these advantages, as well as reasons why Forex trading and other investments (futures and commodities) prefer the automated process. Transactions can now be completed in real time thanks to automated processes. Although manual systems have been around for a long time, it is difficult to achieve the benefits that an automated Forex system can provide to its traders. All trades can be completed in a matter of milliseconds, which is a significant advantage for automated transactions over manual transactions. In fact, there are issues that are addressed using automated Forex trading, particularly if the trader has lost a few trades in a row and is unable to make new trades. The automatic trading system could be used to address such a problem. You will have more diversification with automated Forex trading. It means you can trade in multiple markets in different time zones at the same time. Even if it is 12 a.m. in the United States, you can execute trades with traders in Singapore or London. This benefit provides you with a variety of exchange model options. To evaluate short-term data, various trading models can be used. This means you’ll be able to predict the trend for a shorter period of time, say, fifteen minutes to half an hour. As previously stated, the Forex market is distinct due to its extreme liquidity. When the market becomes automated, this liquidity increases. Automated Forex trading helps to solve risk management issues. International checks, which are commonly used in Forex transactions, are synchronized using automated technology. Because the transaction in an automated process is now in real time, there is little chance that payments will be delayed, lowering the risk of non-payment by either party. Although there have been some issues with the automated system, they can be resolved with consistently updated technologies.
The prediction of $2-3 trillion average daily turnover within the next 8 to 10 years can be changed within the next 4 to 5 years with automated Forex trading market. Because of the quick yet efficient trades on different time zones, automated Forex trading will now be among the existing lucrative businesses all over the world.