Learn To Trade
What are the disadvantages and advantages of Forex trading
25-11-2017 | No Views : 214
We can know Forex as an instant trade of currencies or commodities and metals, that is, a stock exchange or a non-marketable financial market through the Internet, and we can know Forex as a financial market parallel to what is happening in major stock exchanges in the world.
Forex trading, or what is known as trading in the foreign exchange market, has spread in the recent period, which has advantages that made investors prefer to trade in shares or other financial markets.
Forex trading carries high risk because of the high leverage offered by trading companies, which is a double-edged sword. It makes you able to start trading in a small capital at a good profit if you use it well, or cause a loss of capital if not Can develop a good capital management plan and lack of interest in risk management.
Forex Trading FeaturesThe Forex market is decentralized and it is the most liquid in the financial markets. This makes pricing manipulation difficult. This does not mean that price manipulation does not happen. It happens, but not so much as it requires the intervention of central banks and large financial institutions. The volume of trading in Forex, which is the largest financial market in the world.
Forex trading is a non-central, non-state market and trades online. Traders can trade 24 hours a day, from Sunday at night with the Sydney Stock Exchange opening Friday evening with the New York Stock Exchange closing.
Take advantage of the movement of prices in the ups and downs, the marginal sale enables you to trade during the downward trend, being able to sell at a high price and repurchase when the price reaches low levels.
Forex trading also provides a high leverage that enables you to start trading with small capital, which in some companies may reach 1000, but the high leverage raises the risk, so the leverage should not exceed 100 times the capital.
As for the average cost of a one-to-two point spread on the major currencies, the normal market conditions, which are low cost, and transaction execution speed are very high as the sale or purchase is done at the push of a button through the trading platform of your company.
Forex Trading DisadvantagesDespite the advantages of Forex trading, which we mentioned but also has disadvantages, it is a high liquidity market and this makes the volatility of prices is sometimes severe, in this case if you are not subject to the management of good capital can face serious risks.
Some traders may have difficulty controlling their feelings of fear or greed, and this causes loss because fear control causes the count to enter into correct deals, and greed leads to low quality deals, raising risks.
The most serious flaws in Forex trading, dealing with unlicensed trading companies can result in the loss of your head and you can not take legal action against it, unlike companies that are monitored to ensure you do not tamper with companies, so you should be familiar with the corporate licenses And how you can deal with a problem with your broker.
In order to protect yourself, you must constantly learn about the different types of analysis. The analysis is useful in executing high quality transactions with low risks to protect your head. You must follow a clear trading plan. Including the method of analysis used and risk management, and identifying the currencies to be traded.
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