- See more at: http://blogtimenow.com/blogging/automatically-redirect-blogger-blog-another-blog-website/#sthash.CpFtWfic.dpuf Traders digest: FOREX PRO & CONS

Monday, 20 January 2014


Pros of forex trading

Leverage - Its pretty complicated explaining how this works at this stage if you are starting. Its one of the major characteristics of futures. What it simply means that you can earn a lot of money with a relatively small investment relative to normal stocks or asset trading.

Round-the-clock trading - Markets are open 24 hours a day, five days a week. This is because of the varying time zones, they overlap. The New York stock exchange opens when the London one is closing. The markets are only closed on weekends based on a standard time. This means that you can trade at any time of day or night that is comfortable for you.

Lower fees - One of the biggest advantages of the forex market is that there are fewer fees involved, in comparison to other markets like the stock exchange. There is no commission. In forex trading, fees are normally limited to the spread (the difference in value between the two currencies being traded) of the transaction. Lower fees means that you have more money to save, invest, or spend on other things.

Online services and tools - You can trade from the comfort of your own home. With even mobile platforms, you can literally even trade from anywhere you are. Say you were in a toilet and China refused to buy Soyabeans, you can sell the futures and make money! Online services and tools have made it easy for even beginners to understand, monitor, and analyze the market. Furthermore, the Internet allows you to start trading within a few clicks. Make use of all of the tools and services available to you. This will put you in the best position to make income in the forex market.

Automated trading software - Another advantage of forex trading is that you can use automated trading software that can make transactions for you depending on how you programmed the software. They are called algos. They never sleep, not emotional and only need performance tracking. This makes it easier to make trades at the right time and in the right situations.

Cons of forex trading
* Learning curve: It might take some people longer to learn how to trade. It depends on your learning speed, IQ and screen time. There are those who learn how to trade in relatively very short time. Anyone can do it though.

* The forex market is fast and volatile.

One of the biggest disadvantages of the forex market is that it is fast and volatile. There is a huge number of participants. Although this means that you can make money fast, the downside is that you can lose money just as fast as well. Currency values can change without warning, making it difficult to accurately predict where to invest your money.

* Leverage can work against you.

Although good leverage can help you make bigger investments with smaller capital, it can also lead to losses that are greater than what you initially invested. Just as you can make $100 for every $1 of capital, you can also lose that same amount.

* Online connections may fail.

Another downside of forex trading is that your Internet connection may fail, causing you more problems. Some of the problems that you may encounter if your Internet connection goes out include incomplete transactions and inability to monitor the market. In such cases, you will be held solely responsible for the effects of disrupted Internet connection.

Other disadvantages include:

Scammers - Perhaps the most dangerous downside of forex trading is that there are many scammers out there looking to steal your identity, your money, or your financial information. Scams range from phishing scams and hacking scams to fraudulent companies and fake software. It's important to be very careful when dealing with others on the Internet. Only deal with well known, reputable, and high rated companies, brokers, and markets.

24-hour market changes - Although a 24-hour trade market can be convenient, it can also work against you. The fact that the market works around the clock means that prices and values can change at any time of the day. The market continues to move even when you are asleep or too busy to manage your forex investments. This is where the automated software comes in handy. Still, it can be dangerous to rely too much on automated software.

How to learn?
You can pretty much learn on your own although it might take you longer. You only need to learn the basics. Actually most hedge funds when training traders just give them the softwares and basics so that they can develop their own strategies. There is no defined method of making money although there are strategies out there that still work generally. Its best if you can develop your own defined strategy. Don't put too much trust on indicators or buying trading signals.
Learn money management and don't risk more than you would be willing to lose.

(Borrowed some bits from myforextips)

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