Why Do People Trade In Currencies?

People trade in currencies with the motive of earning high profits by predicting future movements.

The currency market is considered to be the most liquid market in the world. It is open 24 hours a day, for 5 ½ days every week, and players like governments, financial institutions, corporations and retail investors take part in this trading. Although currency trading is considered to be risky due to constant volatility, the average daily turnover of the currency market is increasing everyday.

The value of different currencies keeps changing constantly, which provides investors an opportunity to predict future movements and profit from it.

Mentioned below are the two main reasons why there is a constant increase in transactions in this market.


People trade in currency markets mainly due to the large earning potential it provides.The value of different currencies keeps changing constantly, which provides investors an opportunity to predict future movements and lay bets on the favorable direction.Apart from this, it also gives investors and traders an opportunity to earn a lot of money with a small investment. This method is known as leveraging.


Earning huge profits in currency is possible largely because most brokers today offer an option to trade with leverage. Leverage is a temporary loan provided by the broker to the investor.

Usually, brokers allow leverage of 50:1, 100:1 or 200:1, depending on the total amount of transactions. So, for instance, if you are given the leverage of 100:1, you are required to deposit only 1/100=1 percent of the total transaction value to carry out the transaction. This essentially means that you can invest up to 100 times the amount you actually have. Hence, your earning potential also grows 100 times.


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