There can be many advantages and disadvantages to embarking upon a career in forex trading.
This article gives some pros and cons of starting and maintaining a forex trading career that you may consider.
The Pros of a Forex Trading Career
Trading on the forex market can give you access to a significant amount of leverage. It is not uncommon to see leverage ratios as high as 100:1, meaning that you may trade up to $100 with just one dollar.
- 24-Hour Trading
The forex markets are open 24 hours a day, five days a week. This means that regardless of your schedule you will always be able to find time to make trades without having to become a night owl.
There are all manner of trading platforms available that come equipped with technical analysis tools that may help you identify golden trading opportunities. What’s more, algorithmic trading opens the door to even more automated trading.
- Low Entry Costs
The fees associated with forex trading tend to be significantly lower than those paid by stock investors. The only fee that you will always expect to pay with forex trading is the spread, which is simply the difference between the value of the two currencies you are trading.
The Cons of a Forex Trading Career
- Leverage (again)
Although leverage allows you to trade with significant amounts of money, the risks to your margin are also far greater. A sudden change in the market conditions could quickly see your 100:1 leveraged position eat through your entire margin!
- Market Volatility
The Forex markets are incredibly volatile, especially on a near-time basis. Without adequate experience and effective technical analysis skills it can be very difficult to predict where your chosen currency pair will head next.
- Round-the-Clock Trading
Although 24-hour trading enables you to be more flexible with your trading schedule, it can very quickly prove to be a double-edged sword. Round-the-clock trading coupled with high market volatility may cause prices to change dramatically when you are fast asleep in bed or otherwise occupied.
- Temperamental Technology
The sophisticated technology that we have access to in modern-day trading can be somewhat of a mixed blessing. If your Internet connection is unreliable then you may miss out on trading opportunities, or even find yourself unable to close a losing trade before it is too late.
Trading in such a volatile and high-risk market may be an exciting and emotional experience for many.
Understanding the advantages and disadvantages of a forex trading career may be important because it may enable you to choose your level of investment appropriately.
There has been many a fortune made from trading on the forex markets, but there is only one way to find out if you have what it takes!
Risk warning: Forward Rate Agreements, Options and CFDs (OTC Trading) are leveraged products that carry a substantial risk of loss up to your invested capital and may not be suitable for everyone. Please ensure that you understand fully the risks involved and do not invest money you cannot afford to lose. Our group of companies through its subsidiaries is licensed by the Cyprus Securities & Exchange Commission (Easy Forex Trading Ltd- CySEC, License Number 079/07), which has been passported in the European Union through the MiFID Directive and in Australia by ASIC (Easy Markets Pty Ltd -AFS license No. 246566).