Advantages and Disadvantages of Forex Trading
Now there is a lot of debate about whether or not it is worth trading on the Forex exchange; opponents of trading claim that it is absolutely impossible to win, while supporters, on the contrary, boast of huge profits.
It is possible to understand how things work in practice only by assessing the main advantages and disadvantages of Forex.
It should be understood that any assessment here is relative, since everywhere it is necessary to apply an individual approach, taking into account the personal qualities of a particular trader.
Indeed, in a similar situation, someone wins, and someone, on the contrary, suffers losses; all exchange trading is built on this principle.
But it is still possible to identify a number of main criteria by which the advantages and disadvantages of Forex trading and the existing risks and disadvantages of this profession are assessed.
The main advantages of Forex
Because of which the foreign exchange market has gained such enormous popularity among different segments of the population.
1. High profitability of trading - you can earn the same amount only by playing in a casino, but at the same time the level of risk on Forex is tens of times less than when playing gambling. Unlike gambling, everything here depends only on you; you yourself can regulate the level of losses by closing the deal yourself.
They earn quite a lot from stock trading, record holders manage to make up to 1000% profit in a day, but, as a rule, such trading is carried out according to the riskiest scheme and it is not possible to trade with such results consistently.
The average income of an ordinary trader is 10-20% per month; you must agree, not every business provides up to 200% of annual income on the amount of invested capital.
2. Free work schedule - you trade independently when you see fit. Earn $1,000 in a day, and then take a week off; trading is available at any time of the day - morning, evening or night, as you wish.
In fact, investing is an activity for a free artist, who plans his own working day and determines the size of the workload.
3. Place of trading - one of the main advantages of Forex is that the work is absolutely not tied to a specific place, it is possible to trade at home or in Hawaii.
And thanks to the emergence of mobile platforms, you don’t even need to have a computer or laptop with you to open transactions; a regular smartphone is quite enough.
The truth is, where you conduct transactions does not affect the result of your work at all; a favorable environment only helps you to fully relax.
4. Lack of education a lot of literature online that will make learning easy. Free training is available at most brokerages.
For some, this point is also a disadvantage of Forex, but such traders rarely become professionals; as a rule, their career ends with their money.
5. Prospects - only here you can make a dizzying career without connections and cool diplomas; an indicator of your success is the account history in the trading platform. Good traders often become managers of the largest investment funds and earn millions using other people's money.
Disadvantages of Forex Trading
1. High level of risk - making a profit does not always depend only on you; you can also lose your money in the event of a computer failure, an order not being processed, a trading terminal freezing and other technical troubles.
Most of which are related to the correct operation of the broker; to prevent this from happening, immediately start working with reputable companies whose reliability has been proven.
And no one has canceled such disadvantages of Forex as the risks of unfavorable changes in exchange rates, because you cannot always enter into transactions only in the right direction.
2. Experience - according to statistics, more than half of novice traders lose their first deposit in one day, so in order to successfully trade in the foreign exchange market you will need not only money, but also time to study.
It only takes a couple of days to understand the technical aspects, but it can take years to grasp the essence of trading.
3. Capital - the amount of earnings is closely related to the amount on your deposit, for example, per month you make about 30% of the deposit amount, then the amount of your earnings will be significantly different if you have $1,000 or $10,000 in your account.
There is a consistent pattern - the more funds in your account, the less risky your trading strategy becomes.
True, this drawback of Forex trading is quite easy to eliminate; as soon as you start earning consistently, without drawdowns or losses, investors themselves will start looking for you. Take my word for it, there are quite a lot of people who want to invest money in trust management.
4. Harmful work - trading is a huge burden on the nervous system; working at a computer affects your eyes and joints. After several years of hard work, you will not only have a healthy bank account, but also many health problems.
The advantages and disadvantages of Forex have virtually no effect on the number of people who want to try their hand at this difficult task, since the main factor that attracts new traders to the currency exchange is the exceptional opportunity to get rich.
An example of this is the careers of foreign traders who, within a few years of working on Forex, became millionaires, starting their journey with just a few hundred dollars in their account.