To Invest or Not: The Deciding Points of Forex Trading

The Forex market is known to be the biggest financial market in the world and though it is known for its advantages, some risks need to be properly considered. But before we discuss the cons of Forex trading, let us first tackle its good side.

Flexibility

The Forex market offers flexibility to its traders. In this market, there is no such thing as restrictions as to the amount of cash that you want to use in trading. No regulation is also being implemented in the Forex market plus it is open for 24 hours, 5 days a week. Traders who are working in the corporate world will have the freedom to trade in the market without sacrificing their jobs.

This advantage does not apply to stock traders. If you want to venture into the stock market, you need to dedicate a lot of your time to it. Meanwhile, the Forex market is also the perfect place for part-timers since it requires less time and therefore, won’t interfere with their corporate jobs.

Vast Trading Options

If you are undecided about which trading option should you take, something that will suit you well, then you can choose from the vast trading options that you can find in the Forex market. Traders can pick which currency pair they want to trade, different maturities and futures agreement are also widely available.

That being said, the Forex market indeed offers options for all kinds of investors, no matter their trading budget or the risk they are willing to take. Other than that, you must also take into consideration the massive trading volume that the Forex market offers. There are more trading happening in the Forex market than in the rest of the world.

Transaction Cost

A lot of people have a misconception in which they think that the Forex market has a high transaction cost. In fact, the transaction cost in the market is much lesser compared to other markets out there. But, beware of those brokers who are keen on providing a two-way quote on spreads.

Leverage

Another thing about the Forex market is its high leverage. You can increase your original investment as much as 20-30 times. It also magnifies your gains and your profits as well.

The ‘not-so-famous’ side of Forex Trading

It is totally biased to say that Forex trading only has advantages to offer when in fact, there are also disadvantages that can easily sweep clean your account if you refuse to counter it.

Counterparty Risks

As mentioned above, the Forex market is a market participated by different nations across the world. Because of this, there is no centralized exchange that will offer and guarantee a risk-free environment for traders.

Leverage Risks

The high leverage in the Forex market also spells risks, lots of risks. Since there are no limits on the investment that you can have in a day means that you can also lose all your investment money in as short as minutes.