Did you know that the forex market is the largest market in the world? In fact, the foreign exchange market is so big that no other market can even dream about competing with it.
Most people assume that the stock market is the largest market in the world since it’s the one that you hear about the most in media and the market people tend to talk about when discussing trading and investments. But the truth is that the stock market is nothing in comparison to the forex market.
But why is it that the forex market is so big and more importantly why are we so confident that it will remain the largest market in the world?
There are, in fact, a number of reasons for this and we have outlined the 5 most important below.
1. Currencies Are a Cornerstone in Our Society
Currencies are one of the factors that hold our society together. Every country in the world has a currency that supports their economy, and on a global level, there are currencies that influence our everyday life. And as our world becomes increasingly more globalized, currencies are becoming more intertwined than ever before making their influence even more important.
Let us use an example to describe what we mean.
In order for you to be able to buy a product or a service from another country, you have to rely on the exchange rate between your currency and the currency that the product is sold in being correct. Without this, there would be no way for you to know what the product was worth. Because of that, your life is constantly being affected by exchange rates, and as you probably know, exchange rates are the foundation that the foreign exchange market stands on.
In other words, the first reason why the forex market will remain the largest market in the world and a dominating force across the globe is its role as a cornerstone in our society. Without currencies and exchange rates, the world as we know it today would collapse.
2. Most of the Trading is Done by Central Banks
The reason why you probably didn’t know that the forex market is the largest in the world has to do with who uses it. You see, the stock market is dominated and controlled mostly by private and corporate investors. The forex market, on the other hand, is very different.
Even though there is a huge number of private hobby traders and professional day traders that trade currencies regularly, the market is dominated by banks.
You see, central banks and governments trade currencies for billions of dollars every day in order to help stabilize our economy. If it wasn’t for this, the forex market would be much smaller, and our economy would be in complete chaos with prices fluctuating to the point where they would lose their value.
3. The Forex Market is Perfect for Day Trading
As mentioned, most of the forex market is controlled by central banks, but that doesn’t mean it’s not suitable for private traders but rather the opposite. In fact, the foreign exchange market has been designed in a way that provides optimal opportunities for day traders.
The combination of a highly volatile market and high leverage creates opportunities for traders to make a quick profit. In turn, this has resulted in most day traders relying completely on or at least partially on the forex market.
4. It’s Easy Enough to Learn
One of the more controversial reasons why the forex market is here to say is that it’s relatively easy to learn how to trade currencies. Today, there is a range of tested strategies and comprehensive guides and courses where you can learn everything you need to succeed as a forex trader.
With a basic understanding of math and a dedication to learning, anyone can succeed at trading forex. That being said, it often takes many years of practice before one can be considered a professional that can live off trading.
5. There is a Huge Range of Reliable Brokers
All of the above-mentioned factors have made the forex market highly attractive to traders which in turn has lead to a large number of regulated and reliable brokers to choose from. For example, there are several trusted forex brokers for beginners and even more brokers aimed at more experienced traders.
In other words, it’s never been easier for people to start trading forex and as long as there are trustworthy brokers, the market will continue to thrive.