Pros and cons of forex trading

pros and cons of forex trading

What are the pros and cons of forex trading? Forex we know that this is a foreign exchange, which has the largest turnover of money compared to stocks and other financial markets.

There are many advantages of forex that makes this industry quite attractive to many people looking for luck in forex trading.

Forex trading is increasingly popular, many people talk forex both in the news, television, and the internet.

The perpetrators of trading also more and more. Why? In fact, the world of forex trading has a variety of advantages that can not be served by various other investments.

Here the pros and cons of forex trading.

Some simple questions are often asked by new investors before starting investing in forex trading is “Why should I invest in forex?” and “What are the advantages of forex compared to other investments?”

Start from the pros of forex trading. Here is 11 points benefit forex that is not offered by other investments:

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Pros of forex trading (advantage forex)

Forex trading provides many advantages rather than including the benefits of foreign exchange earnings. Being an industrial land that provides potential income to forex market participants from brokers to retail traders and all market participants involved in it.

We begin one by one the details of the advantages of forex.

Return on Investment (ROI) is highest compared to other investments.

Is there an investment capable of offering returns to infinity? Forex trading can do it. Surely this is aligned with your consistency and your strategy of adding profits gradually.

This is one of the advantages of forex trading overstocks, or mutual funds, with margin trading and leverage features allowing traders to get high profits in a short time.

High liquidity

High Liquidity means you can always buy or sell the currency you want to transact and there is no term failover. When you take action, there are always others who will sell it to you and vice versa.

Privileges of this forex occur because of the scope of investment in the world of exchanges that are connected to each other. In contrast to the local exchanges where transactions only take place on the exchange only, so vulnerable event of the handover failure.

Capital forex trading is relatively small

Compare the advantages of this forex with other investments, such as stocks. Or compare with real sector investment. Although once forex trading capital is also quite large, now in some brokers allow starting with a capital of $ 1 you can start trading.

Not only that, but there are also even brokers provide capital $ 5 for free when you will open a real account.

Trading hours 24 hours a day and 5 days a week.

There is no word night or day in the world of forex trading. The market runs for 24 hours a day starting from the Asian market to European and American markets.

Compare with stock and commodity markets. The stock market is only open based working hours. While the commodity market is only open in the morning until noon.

If you are an office worker, the advantages of forex in terms of time is certainly very profitable. You can trade forex trading at night and do not disturb your working hours.

In the forex, you can trade anytime and anywhere.

Yes, investment does not know caste. So also with forex trading. Whoever you are, a merchant, a worker, a housewife, or even a farmer can join.

Greater, with the advancement of the internet world, you can trade anywhere without having to go to the exchange or call your dealer directly. This can definitely save you time and cost.

Investors are active in their investments.

Unlike other investments where investors can only trust funds managed by third parties (mutual funds, insurance, deposits, etc.).

One of the advantages of forex is you alone can determine when and how much you will invest by buying or selling.

Pros and cons of forex trading

Real-time prices you can access at any time for free.

Starting from platforms, indicators, quote prices, to running news, everything is obtained for free. Even without opening a real account and making a deposit.

You can also get all the advantages of forex facilities. Because the broker also provides a demo account complete with all the tools needed for trading on a real account.

Available demo accounts for free practice

One of the advantages of forex is the availability of demo accounts. If you are new to the world of forex, this will really help you because the price listed on the demo account is the same as the price that actually happened in the market.

Demo accounts can be used by beginners to learn trading before starting with a real account with real money. Besides that, it is also useful for backtesting a robot or trading system.

Leverage can reach 1: 1000

Leverage can be interpreted as the proportion of loans provided by brokers to traders, based on the capital they provide. For example on forex trading is implemented leverage 1: 500, then with a capital of $ 100, you can buy dollars as much as $ 10,000; and vice versa for selling.

High leverage and low margins, basically can increase profits, but can also vice versa, resulting in losses. Therefore, you should consider the risks and your investment plan well in order not to wallow in trading with a high-risk level.

Online reporting and transaction.

Indeed first forex trading is done by phone and written reports. The results of your transaction will be sent by email or even post every month.

In its development, the advantages of forex supported by internet access, and in the end, you can access transaction reports anytime without having to wait from the brokers to report it to you.

Security and confidentiality are assured.

Although transactions are conducted over the internet, it does not mean the security and confidentiality of your information and funds are not guaranteed. The broker provides transactional data encryption. Meanwhile, your funds are also securely stored in a segregated account if you do it on a legal broker.

Obviously, many of the advantages of forex that does not exist in other investment models. Market liquidity and active time can provide ease, while capital and demo account holdings are an advantage that offers opportunities to retail traders.

However, there are also risky points, such as leverage and the active role of investors in managing their own investment. To deal with it, you can consider it objectively and tailor it to your investment objectives.

Cons of forex trading (Disadvantages)

Although it provides many advantages, the forex also has disadvantages that are cons of the benefits offered. The following are some of the cons of forex trading.

High risk

This of course is inversely proportional to the advantages of forex which gives a high return. Actually this applies to all businesses if they provide high gain then the risk is also high.

A trader in forex trading might experience a big loss if they do not have good qualifications to be a profitable trader.

Lack of Transparency

Because a trader needs a broker, that someone actually trades against professionals. A trader may have no control over trading, so he may not get the best price.

Or your broker offers a limited offer at a monopolized price. Choosing a broker that has regulations is one solution to this problem. Although the regulatory body does not control prices.

Complex Pricing Process

Studying and analyzing currency exchange rates is influenced by many complex factors. Mainly because of the influence of global politics or the economy that is difficult to analyze information and how to draw conclusions that can be relied upon to trade.

Self-study firsthand

In the forex market, most trade alone by studying on their own. While on the stock market, one can seek professional help, whether from trade advisors or financial managers.

Forex traders are independent, although they can find sources of trading referrals, trading decisions are entirely in their own hands. This is why most beginners fail after they leave forex trading.

High volatility

High volatility besides giving potential benefits, but also a person can easily suffer huge losses in a short time. Macroeconomic and geopolitical developments, which made high volatility a trigger.

In contrast to stocks, if there are major changes with certain shares, shareholders can put pressure on management to initiate the necessary changes.

While in forex trading, forex traders have no place to go. Whatever happens, traders can only watch these changes.

Final thought

Forex trading aside from providing unlimited potential income. But also has a high-risk factor. For forex traders, choosing a reputable forex investment company is very important so that trading will be more comfortable and safe. Its pros and cons of forex trading.

But is it safe to invest in forex now? This will all depend on the merchant itself. In general, forex is not a safe investment from risk. Where many small traders fail in this industry.

Are you ready to start trading?

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