The advent of the digital age has made the financial markets more accessible than ever
before, particularly derivative based entities such as the foreign exchange.
To this end, in excess of $5 trillion is now traded globally on the forex market every single
day, with volumes having increased incrementally in recent times.
The UK also remains one of the key drivers of forex investment, with the London Stock
Exchange considered to be one of the largest financial centres in the world.
But what makes forex trading so popular in the UK and why is this trend unlikely to change any time soon?
1. Non-Stop Trading for Incremental Gains
One of the standout features of the forex market is the fact that it’s open 24 hours a day, six days a week.
While this arguably increases traders’ exposure to market risk, it also enables individuals to target diverse currency pairings across three separate trading sessions.
The issue of diversity is key, particularly given the volatile nature of the forex market and the way in which macroeconomics and geopolitical conflicts cause significant price movements in relatively short periods of time.
Traders can also adopt numerous short-term positions in the market to capitalise on these
daily price movements, as they don’t need to assume ownership of an underlying currency
and can utilise brokerage sites to optimise their leverage and open multiple positions with a
2. You Can Profit in a Depreciating Market
Currency is best-described as a derivative asset, and one that traders don’t need to assume ownership of during the course of their daily transactions.
This offers a significant advantage to traders, primarily because it enables them to hedge
against falling currencies in a depreciating market and achieve a viable profit regardless of
the prevailing conditions.
This is extremely appealing to UK investors at present, with issues such as Brexit, economic contraction and the Coronavirus driving further market volatility and potentially larger returns in the near-term.
3. The Rise of Social Trading
We’ve already mentioned online brokerage sites, which dominate forex trading and provide
individuals with a unique opportunity to trade in real-time and while accessing in-depth
The digital age has also ushered in an era of so-called social trading, through which novice
traders are able to follow more experienced practitioners and copy their successful strategies.
In fact, this scenario allows traders to copy successful trades and portfolios, creating a level
playing field for investors and negating the challenges caused by continued volatility and (in the worst-case scenario) margin-based losses.