One of the other most common statements made about the forex market is that it is highly volatile. But what does this mean for you?

The high levels of volatility mean that the buy and sell prices of each currency pair can go up and down very quickly creating a constant stream of trading opportunities. The high volatility of the currency market offers forex traders the potential to earn 5 times more money from currency trading than from trading the most liquid shares.

The power of leverage

There are not a lot of banks or people who would lend you money for you to trade shares with. And if there were, it would be very hard for you to convince them to invest in you and in your idea that a certain share is going to go up or down. Therefore most of the time, if you have USD 10,000 in your account, you can only really afford to buy USD 10,000 worth of stocks.

When you trade currencies however, you mostly trade on ‘borrowed money'. We have explained in detail how this works in the section entitled “How to trade PIP-FOREX"

CU tomorrow.

Francesco