Forex Trading is often considered an easy moneymaking business, but it is a bit difficult. Trading currencies is a lot different from trading commodities or stocks. Forex Market is the largest and the most liquid financial market in the world.
Since the forex market is highly liquid, easily accessible, open 24/7, forex trading has become a popular career, especially for those who have a financial background. Forex Trading attracts young graduates as it allows you to be your boss in making money from the comfort of your home just using a laptop.Like any other business or career, forex trading has its pros and cons.
Here we will highlight some of the pros and cons of forex trading.
Pros of Forex Trading
There are many advantages of a forex trading career. A few of them are as follows:
1- Low Costs
Forex Trading has very low costs (commissions and brokerage). While doing forex trading, you do not need to worry about extra brokerage charges. For example, the Forex Trading Broker (FBS) offers you the fbs minimum deposit.
2- High Liquidity
In comparison to other financial markets, the forex market has the highest notional value of daily trade. This offers the highest level of liquidity. High liquidity minimizes the possibility of price anomalies and price manipulation. By that means, the market enables tighter spreads leading towards more efficient pricing.
3- Variety of Pairs to Trade
Forex market offers you twenty-eight major currency pairs that involve eight major currencies.
Choosing a currency pair has criteria that include volatility patterns, convenient timing, or economic developments. You can easily switch from one currency pair to another.
4- Ease of Entry
Anyone across the globe has easy access to online forex trading with the help of just a good internet connection and some initial capital. A trader does not require any special permit or training. You just have to open a trading account with a registered broker and can start forex
Cons of Forex Trading
1- Lack of Transparency
The forex market is highly unregulated and dominated by unregulated brokers that trade against professionals. This makes the forex market lack transparency. This means a trader may not have any control over his trade order and as a result, he may not get the best price.
2- High Risk, High leverage
Forex trading offers you high risk and high leverage which means you can lose/ profit exposure multiple times of the trading capital. If you do not have a strong knowledge of leverage, forex trading could turn for you into a loss-making nightmare.
3- Complicated Price Determination Process
The exchange rate in forex trading is influenced by several factors. Any change in global economics and politics has a huge impact on the forex market.
4-Requires High Levels of Patience
Last but not the least; forex trading requires a lot of patience to wait for good opportunities to take advantage of. Especially the novice forex traders need time to learn the forex market to gain profit.