Pros and cons of forex trading – advantages and disadvantages
Importance of Foreign Exchange Market: 6 Practical Benefits Of Forex Online Trading to know! +Bonus. Let’s look at reasons why Forex market is so popular…
In this post you will learn not only about Importance of Foreign Exchange Market, but also about structure of foreign exchange market, types of foreign exchange market, what are the three major functions of the foreign exchange market?, how does foreign exchange work, functions of foreign exchange market and identify 3 foreign exchange instruments you would recommend…
Contents
The Importance of Foreign Exchange Market:
Foreign Exchange Market or Forex trading is a very exciting activity that requires an individual to have a mix of discipline and analysis.
With the ideal knowledge and right ability to browse charts or fiscal reports, there are plenty of opportunities to make a profit on buying and selling currency pairs.
Let’s take a look at a few reasons why the Forex market is so popular:
The 6 Pros and Cons of Forex Trading You Need to Check!
1- Eliminates the middleman
Most individuals using the Forex market have the option to trade directly without the needed to rely on a middleman to broker the transactions.
All pricing for the currency pairs is determined by the market responsible which significantly helps to speed up the trading activity.
2- No commissions
Forex trading does not rely on brokerage fees, exchange fees or cleaning fees.
Most of the brokers involved in the Foreign exchange market earn a commission through the bid/ask spread amount.
Under normal trading conditions, the bid/ask spread amount is often less than 0.1%. However, for the high volume traders, this can be lowered to a rate of about 0.07%.
3- 24-hour market (The 3rd Importance of Foreign Exchange Market)
Pros and Cons of Forex Trading : The Forex market is open and available to trade at any time of the day or night.
This is certain to appeal to the part-time traders that have limited free time.
Whether is it morning, midday, or nighttime, it is possible to place a trade with other active traders elsewhere in the world.
4- Low entry barriers
Traders in the Forex market have the option to get started with a very small trading account which can be as small as $20/25.
This is completely different to the futures, options, or stock markets, which require a substantial trading account to get started.
A basic micro or mini account is a practical option for the first time trader. // Pros and Cons of Forex Trading..
While it is more beneficial to have a start-up capital that is more than the bare minimum, the low entry barrier is certain to be appreciated by the average individual that only has a small amount to invest.
Pros and Cons of Forex Trading – The last 2 benefits :
5- Wide open market
The Forex market is at such as size and with so many active traders that it is impossible for a single entity to have a major impact or influence on the market prices for a long period of time.
6- Access to free resources
The majority of the brokers (like eToro) involved in Forex trading offers a variety of free resources to help learn the basics.
This can include opening a demo account to build your skills by actually placing the practice trades.
Also, there are plenty of charting services and real-time news feeds to stay in touch with the latest information.
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