Pros and Cons in Forex Trading
Many pros and cons in forex trading that you may have experienced. High levels of liquidity, 24/7 schedule and easy access to forex trading as a career that is targeted by many people, especially those with financial backgrounds. Being a boss for yourself by making money from a personal laptop or smartphone is one of the sufficient motivations for new graduates and experienced professionals.Even so, you must remain aware that forex trading also has drawbacks in addition to its advantages.
PROS AND CONS OF FOREX TRADING EXPERIENCED BY MANY TRADERS
ADVANTAGES OF FOREX TRADING
Low Cost. Forex trading can have very low costs (for brokers and commissions).In fact there is no commission and the majority of brokers benefit from the spread between currencies in forex. Therefore, don’t worry about the broker’s separate fees, remove it from your mind. compare it with equity or trading other securities where the broker’s structure varies and the trader must enter the fee into his account.
Varied Trading Style. The forex market takes place throughout the day, providing traders with comfort, which is very beneficial for short-term traders who tend to take shorter term positions. Some traders trade during competitive hours. In addition, traders can also take long-term trading where it can end in days or weeks. Forex trading is very accommodating in this way.
Offering Very High Liquidity. Compared to other financial markets, the forex market has the most numbers in terms of participants. This causes the forex market to provide the highest level of liquidity, which means that if there is a large order for a currency, it can be easily filled without too large a price deviation. It also eliminates the possibility of price manipulation and price anomalies so as to allow tighter spreads that lead to more efficient prices.
There is no Central Effect. Being a market that operates throughout the world makes no central changes or regulations for the forex market. Various central banks of countries in the world sometimes intervene as needed, but this is a rare event and only occurs in extreme conditions. Most developments have been felt.Like decentralization and market deregulation help avoid sudden surprises.Compare this to the equity market, where a company can suddenly distribute dividends or report large losses that lead to large price changes.
Volatility is a Trader’s Friend. Most currencies often display high price changes. If trading is placed wisely, high volatility helps open up opportunities for big profits.This is the spearhead and often discussed in the pros and cons of forex trading in other places that you must pay attention to.
Many currencies available. There are around 28 major currency pairs including 8 major currencies. The criteria for choosing a partner can be done comfortably, patterns of volatility or economic development. Traders can easily switch from one currency pair to another.
Low Capital Needs. Because of the tight spread, one can easily start trading fores with a small initial capital. Availability of margins starting at 50: 1 also makes traders easy to start trading.
Convenience. There are many technical indicators in forex to attract short-term trading and some fundamental analytical theories and tools for long-term forex trading, making many choices for traders with varying levels of experience.
LACK OF THE FOREX TRADING
Less transparent. Natural deregulation of the forex market which is dominated by brokers is really against professionalism. Being a broker means that the forex market is not fully transparent. The forex market may not be under the control of regulators, but it is the broker’s activity that controls it.
Complex Price Determination Process. Forex rates are influenced by several factors, especially global or economic politics which can make it difficult to analyze information and draw conclusions that can be relied on for trading.
High Risk, High Leverage. Forex trading is available with high leverage, meaning that one can gain profits or losses from trading capital several times. So forex trading can be a beautiful dream and nightmare simultaneously.
Learn Yourself Directly. In the stock market, traders can ask for help to other experts or professionals, but forex traders must stand without assistance.Discipline and continuous learning are a necessity in forex trading.
High Volatility. With control over macroeconomic and geopolitical developments, people can easily suffer huge losses in the forex market. If in the stock market, shareholders can do something to change things, in forex traders can not do anything to change things. The 24/7 market makes it difficult to monitor prices and regularly.
Those are some of the pros and cons of forex trading that you can know. It sometimes makes you confused in doing various transactions in forex, but as a professional trader you must be able to deal with it.