The Risks and Benefits of Forex Trading

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Just like a coin has two different sides, everything that we do has two aspects and in terms of business, these are the risks and benefits. If you are well acquainted with both and know how to use your skills, you will end up making extraordinary profits.

Forex trading is gaining high popularity amongst the people who are from financial backgrounds. Forex trading is accessible 24/7, has high liquidity, is open to everyone from an individual to a big financial institute, and can be accessed easily from anywhere where you have a phone, a laptop, and internet. This makes this career option very lucrative, but as it is very volatile you can also have risks of bearing huge losses. To avoid the risks and make the best use of the benefits, this article will help you do so.

The Benefits

1. Low-Cost Brokerage

Investing in Forex trade is very convenient as there is no kind of commission or brokerage involved in it. The brokers in the Forex market get their profits from the spreads of the currencies. This is a good feature for the investor. And if you compare the Forex to equity trading or trading of the other securities, you’ll figure that brokerage has a substantial amount.

2. Investing Is Not Complicated

If a person wants to get into the Forex market for a trial and is thinking of investing in a short-term trade, there are various channels to do so. If you are also going to have a long term investment, you can do that with ease and know about the current situation of the growth of your investment with the various tools. The Forex market is open to both experienced and non-experienced traders.

3. Can Be Done With Small Amount of Capital

Unlike other trading markets futures, equity, and options, in the Forex exchange market, you can have a small amount of investment in your hand, to begin with. Margin trading has high leverage which can range from 50 to 1 is one of the most lucrative offers to the traders in the Forex market. Yes, such high leverage does have risks but if you are investing with a small capital this can also turn out to be an opportunity of earning more by investing less.

The Risks

1. Mostly Broker Dominated

The Forex market is run by the brokers and is not regulated. The Forex market may not be completely transparent. But it runs mostly by the brokers. Moreover, a new trader in the market come across or against professional and seasoned traders.

The disadvantage of getting into the market through a broker is that you will have very less control over the execution of your trade. Sometimes you may get a higher price than the fair one, and the quotes of trade that you have been given by your broker can be limited. Though this can be fixed if you deal with the only brokers that are regulated. The Forex market may not be regulated but the activities of the brokers working in it are.

2. High Volatility of The Currencies

Since the rates of currencies in the Forex market fluctuate often as the geopolitical and macroeconomic developments cannot be controlled, the trader’s investment is at high risk. One can suffer a big loss. If you see it in the share market, a particular stock of shares which is depreciating in terms of value, the problem can be fixed. The shareholders can pressurize the authorities of the company to work in favor of the improvement of the company’s share value. But in the Forex market, if the value of a currency dips down significantly, it will be because of the situations that cannot be fixed easily and shortly even by the government.

Investing in the Forex market can surely get you huge profits but if things go wrong then there is also a chance of big or even bigger loss than the profit. Being a successful Forex trader needs good analytical skills and thus is tough, but not impossible. Hafizzat Rusli who is one of the big names in the Forex market has developed techniques for both beginners and professionals. Even one session of Rusli’s Forex trading course can help you understand the way of investing in the Forex market. To know more about these courses, click here.

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