Forex Trading – Pros And Cons

Pros of Forex trading:

1. Leverage: The Forex market allow traders to trade using only a small amount of capital. The leverage ratio can be as much as 100:1 in some Forex markets, which means that one actual dollar is worth one hundred dollars whilst trading. Hence, a small investment can lead to a large profit when one engages in Forex trading.

2. 24 hour trading: The Forex market is open all day, every day, so you can choose when you wish to get involved in Forex trading.

3. Low fees: When we compare Forex trading with other forms of trading, we see that there are less fees involved. The fees are generally limited to the transaction’s spread.

4. Able to trade online: It is very simple to carry out trading activities online, from home.

5. Option to use automated software: There are automated trading software programmes you can use which will make transactions for you, thus simplifying the process.

Cons of Forex trading:

1. Fast, volatile market: The nature of the Forex market is such that you can make or lose money equally quickly, due to currency values changing rapidly.

2. Leverage: Although leveraged markets allow you to make a great deal more than you initially invest, the opposite is also true. Hence, you could end up losing more than you put in when Forex trading.

3. Market changes: As the Forex markets operate 24 hours a day, it can prove difficult to keep up with the constant changes to prices and markets.

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