Online foreign exchange market trading has constantly grown in popularity all around the world. With the internet, it is now very easy for people to find resources that will help them become traders, and this has increased the number of people angling to take the leap into online foreign exchange market trading. Here are some positives and negatives to consider if you are still pondering taking the step into trading.
The positives of the foreign exchange market
Ease of the process: Becoming a professional forex trader takes quite some time but the basic trading principles and concept is fairly easy to learn. Accessing the market and starting trading is also a fairly quick and easy process with very minimal documentation, unlike other forms of trading.
Accessibility: Anyone that is able to get connected to the web can begin online forex trading. With an internet connection, you can sign-up under a broker and begin taking trades.
High leverage: With the ability to trade on margin, traders can trade amounts much higher than their initial investment. This means that even the smallest movement could result in significant profits or losses, as the case may be
Liquidity: The forex market delivers turnover of 4 trillion dollars on a daily basis so there is no other market that provides the same level of liquidity.
Transparency: Unlike other forms of trading, it is very easy to see what is happening with all the tradable instruments at once. The information can be accessed for use in analysis by anyone.
Transaction costs: Unlike other markets, the cost of opening positions is very low especially when compared with the profit potential. No other market comes close in this regard.
Ability to make money from falling markets: It is only in the foreign exchange market that traders make money regardless of the direction of the underlying market.
Availability of learning resources: All over the internet there are so many free resources to aid in the learning process. This encourages people to take up online forex trading.
The negatives of online forex trading
Leverage: This is touted as one of the advantages of forex trading but it can also be detrimental to the trader if it is not properly managed. This is why the trader must keep an eye on the used and free margin at all times to avoid overcommitting funds into one particular trade.
Addictive: This is one huge negative about forex trading. Most of the time, losing traders finds it hard to stay off the markets even though they are obviously not making any headway in their trading. This leads them into depositing more money into their account until they are down to the bare bones.
Anti-Social: Most first time traders end up anti-social because they are obsessed with calculations and postulations of how much they stand to gain if they win a trade. Other traders can also be engrossed in finding a strategy that works. This time spent alone could end up turning the traders account history for the better but relationship and family life could take a hit.
In general forex trading is a good way to delve into the financial markets but the trader has to make sure he is aware of the negatives so as to be ready to combat them.
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