Why forex trading is popular?


I keep seeing quite a lot of ads online for forex trading. A lot of new platforms are being promoted and above all, a lot of systems that promise risk free profits(some of them on autopilot).

Category: Tags: asked December 2, 2012

1 Answer


People always try to find ways to make easy money. I don’t know if you are familiar with the forex arbitrage but the short version is that the markets are inefficient in the short term. So you can buy US dollars in one market and sell it at a premium in a different market. Of course, you need knowledge and exposure to valid and real time information.

This kind of arbitrage exist only for the short term and transaction costs shrink the margins. In addition, forex is as not as complicated as the derivatives market (at least in my opinion) and you can form an opinion by analysing a smaller set of information. For example, it can become clear that when the head of the ECB announces “good” measures for the Euro, the substitute currency will lose against the Euro. On the other hand, people tend to forget that the margins are low and the transactions costs substantial.

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