Not too long ago, if you wanted to buy or sell currencies on a speculative basis you had to call your bank or your broker to execute a trade. However, since the advent of the Internet, forex trades can now be placed electronically at online forex trading companies. To add to the ease of access to the foreign exchange markets for retail traders, there are now several different ways to trade currencies as innovations in the online trading space have created new forms of trading and new financial products that traders can use.
In this article, you will be introduced to three innovative new ways you can trade forex from the comfort of your own home.
Social Trading
Social trading is an entirely new way to trade, which has sprung out of the recent boom in financial technology. Social trading also knows as copy trading, combines elements from social media with online financial trading. Social trading platforms allow users to follow and communicate with successful traders who share their trading strategies and their performance in a transparent manner on the platform. However, you cannot only view their trades and their portfolio’s performance, you can also copy their trades in a fully automated fashion to effectively replicate their investment strategy and performance.
If you want to trade forex using social trading, you simply sign up to a social trading platform such as eToro, deposit funds, and search for successful traders who are speculating in the foreign exchange market. Once you have identified traders with profitable track records, you can set the platform to copy their trades automatically using your investment capital.
Social trading, therefore, allows you to generate a profit in the forex market without having to actively manage your trades. On the contrary, you can earn money on an entirely passive basis, although checking your trades regularly is still advisable.
Binary Options
If you prefer a very active approach to forex trading, then trading currencies using binary options would be an option. Binary options are financial derivatives that allow you to bet on whether the price of an asset will end higher or lower after a predetermined time horizon. The outcome of the option is binary as the name suggests, so either you generate a profit or you lose your initial investment. The time horizons of binary options are usually very short, with 5-minute, 10-minute, and 20-minute options being the most popular among traders.
Binary options are the ideal financial product if you want to bet on short-term market trends. For example, buying a 5-minute binary option on the EUR/USD just after the European Central Bank has announced new measures to boost the Eurozone’s economy would be a great way to benefit from a strengthening Euro on a short-term basis.
Various online forex brokers, such as Saxon Trade, offer their customers to trade using binary options, which have become popular financial products for those who are new to the financial markets as they are easy to get started with, even if you don’t have strong knowledge of the forex market.
Currency ETFs
Currency ETFs are fairly new in the world of exchange-traded funds but are an excellent way to bet on the performance of a currency or a basket of currencies from different regions at a low cost. Whether you want to bet on a declining Euro or bet on a strengthening Chinese Renminbi, there are ETFs you can purchase to place these speculative trades. Alternatively, if you want to be long the currencies of emerging Asian economies, there is also an ETF for that. ETFs are traded on exchanges just like stocks. Hence, they make it easy to enter and exit a position once you have made a profit.
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