Forex trading: advantages and disadvantages

currencies (gold foreign exchange, FX) is one of the largest financial markets in the world, if not THE largest. Its daily turnover is approximately $3 trillion dollars, it deals with the real-time exchange of currencies from different countries. This foreign exchange market has a much larger volume of buyers and sellers than any other market combined.

Some of the main foreign exchange The centers around the world are: New York, Tokyo, London and Sydney. Forex is also the only market that is open 24 hours a day, almost 6 days a week…in the entire world. Forex is a speculative market, and obviously one of the biggest. It is well known for the volume that is traded, its superior liquidity, as well as constant trading. This attracts high levels of leverage, meaning you could buy 100,000 units of a coin for just 100, if your broker allows you to do so.

Advantages:

High level – Usually starts with 100:1, this is really a relatively unique feature for the Forex market. You could make a huge profit just by investing small amounts.

superior liquidity – Most of the transactions made in the Forex market are made up of the 7 major currency pairs, due to the high volume of transactions, this tends to show some positive side effects on the currencies themselves. Price stability and small slippage are just two of many.

24 hour operations – Forex currency trading offers its operators a 24-hour trade opening, in this time an investor can trade at any time of the day, at any time. The market is open from Sunday 5pm (ET) to Friday 4:30pm. This gives traders a huge advantage, knowing when the market is closing or opening is a big piece of the pie. Traders use this to enter or exit trades at key times.

Cost effectiveness – Tea forex trading It can be called many things, one of them is an “over the counter” market. This is when a trader always buys one currency and sells the other in real time, so he effectively protects himself against himself in a sort of soft forex security system. There is no prejudice in this market, everyone benefits equally.

commission no. – The forex currency market allows its traders to keep 100% of their trading profits. If it is an almost daily financial market, regular traders are the ones who really benefit from commission-free trading.

Disadvantages:

24 hour market – Although, as stated above, it is convenient for the market to be open 24 hours a day and for a trader to be able to trade from anywhere, it can also be a difficult position. This is because sometimes it is not possible for a trader to keep track of the forex market 24 hours a day. This is where the forex broker is starting to show up, most people should get professional help with their trading for this reason alone. It is always better to deal with someone who can simplify the situation rather than the problem itself.

The forex broker can be described as a professional who keeps you updated on everything from news to ticks, trades and prices. A broker will even tell you when to trade and when not to, they are his “guide” so to speak.

High level – While this is also a benefit like the one above, this blessing in disguise can also turn off traders and can be perceived as a drawback for them. With such high levels of leverage coming from a forex broker comes a level of profitability AND loss that is just as high. As the saying goes “play big or go home”, if you trade big you can expect to win and lose big too.

Too much leverage in a forex account can lead to a margin call from a broker, this is a very bad thing as your account can be wiped out entirely if you don’t watch your trading positions. This is where money management comes into play.

Like all other markets, the forex market will have its ups and downs. Being aware of both is what gives good traders their profits. Know when to trade, time of day/week, lot sizes, etc. Take these points and learn them, make them your routine and you will benefit.