Business: Marketing
There are a growing number of people who are trading in the Forex market nowadays however it must be remembered that is not for everyone. To see if trading currencies is something for you, below are its pros and cons.
Benefits of trading in the Forex market
The currency market is larger than other financial markets such as the equity market and for that reason it has remarkable liquidity. No matter how large the order is, it is almost always filled immediately. This near instant execution is not seen in thinly traded assets.
The foreign exchange market is a highly leveraged one. With the ability to trade at a margin, you can hold positions that are substantially larger than your capital. Leverage can increase your earning potential considerably.
In other financial markets you are required to maintain a minimum balance so you can continue to execute trades. For example, in the equity market it is not uncommon for you to be asked to keep $25,000 in your account. This prevents people with regular income from taking part in this market. This is not so much of an issue when you trade in Forex. The limits for Forex accounts are typically determined by your broker, and it can be as little as $25.Finding forex brokers isn?t very easy. You have to know forex in and out yourself. There are very few brokers who can help you. One of them is IC Markets.
Apart from being available to individuals with modest capital, the foreign exchange market also makes it possible for people to trade after work. This is possible because this financial market is open 24 hours per day except weekends, which means unlike other financial markets you don?t need to wait for starting bells to execute trades.
Disadvantages of trading in the Forex market
There are also a number of issues you need to know about currency trading. For one, it has incredible volatility, and prices can be affected more easily by social, economic, and political issues than other asset classes. Even natural calamities can affect the financial market. Also, trading at a margin can work against you. It can help you increase your earnings, but you can also lose a large amount of money quickly if you do not employ the necessary measures to manage your risks. Due to its volatility, the foreign exchange market is a time-intensive market. What this means is that lucrative opportunities can come up when you?re working or when you?re sleeping. Traders can use of stop orders when they are unable to monitor their portfolio, or use trading software to automate their trades.
This article was written by admin on September 25, 2012
Source: http://www.cameleon.net.au/blog/?p=8714
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