Wednesday, January 13, 2010

Advantages and Disadvantages of Operating in the Foreign Exchange Market

If you are thinking of investing your money in Forex it is essential to know about the pros and cons of it. One of the main advantages and reasons why hundreds of people worldwide rely on this market is because it’s considered "the most liquid market in the world. This is because Forex can absorb many large operations, compared with any other financial market. Proof of this is that daily movements are more than 3 billion dollars in the Forex market.

Another very important factor is that due to the global economic crisis, Forex is in its best time to invest because they so clearly by the volatility in the foreign exchange crisis, leads to better profits for traders. These would be the 2 main advantages of investing in this market, but the greater risk that a trader can take in Forex, is to trade without knowing what they are doing, without receiving special education and believing that this market is a game. But here are we are going to show many other market advantages and disadvantages, as ForexandPips.com believe it is important to be clear and honest with the traders and users before investing.

Advantages of Forex:

• It's a liquid market: as I mentioned, Forex is a liquid market for the many large operations that are performed daily. They are operated trillion dollars a day.

• Access all day: It is available to operate 24 hours a day. From Monday to Friday.

• It is easy market access and globally used: I can operate from anywhere in the world and in any location. It only needs an Internet connection. In other financial markets it needs a single physical location to trade.

• No high fees or additional expenses: At this point if we stop to explain: The Forex is transaction costs much lower than other investment markets, so you should consider commissions to broker or intermediary companies to manage their capital, if appropriate. There are no fees for services. There are no additional costs of operating time, but you should know that if you want to be a successful trader, you must spend on your education and on a specialized course in Forex strategies.

• It is a transparent market: Due to the multi-day market movement, it is virtually impossible to market manipulation.

• There are no deadlines forced: Traders of other financial markets are constrained by having to comply with a particular extension in time. In the FOREX market, however, a position can remain open as long as the trader-investor deems necessary.

• It is a leveraged market: That is, you can take leverage when investing your money, which means that a broker with solid finances lends money for investment and your profit, is greater. The leverage allows the trader to enter the market with only one hundredth of what he has invested.

Leverage is from:

• 2:1 = $ 1 you pay $ 2
• 10:1 = $ 1 you pay $ 10
• 100:1 = $ 1 you pay $ 100
• 200:1 = $ 1 you pay $ 200
• 400:1 = $ 1 you pay $ 400

• There are lots of free and paid courses to train: There are many experts’ traders on the web, which provide specialized education and even video demonstrations for learning to trade. You can also open a demo account for you to start gaining experience before opening a practice account with real money. In ForexandPips.com we strive to provide adequate education and specialized, we have free courses, forums, articles, virtual classrooms and other services for you to be a skilled trader to operate properly and getting steady gains. If you would like to have more information please visit the following link:

http://forexandpips.com/products-services/fundamental-course

Disadvantages of Forex:

• Runs the risk of choosing a inexperienced broker: On the web there are many unscrupulous people who are dedicated to defraud honest people. It is important when investing your money to have the support of a trusted broker; they usually must be properly registered, including some requests that the brokerage firms and they must have made at least 100 successful operations. Also do not forget that in the United States, the broker must be registered with the CFTC, which means by its acronym in English (Commodities Futures Trading Commission - Committee on Trade in Goods Fixed Term) or become members of the NFA (National Futures Association - National Futures Association). You can also check with Consumer Protection Office, depending on your country of origin and cyber laws thereof.

• Can leverage yourself:
As mentioned, you can take a leverage, which will allow you to enter the market with a larger capital, if the operations are successful, and use good strategies you can obtain better returns but if the opposite happens, you may lose all your money.

• Requires knowledge and time: If you know the market, you may enter without having the skills to trade and lose lots of money. If you manage to improve and train yourself, this ceases to be a disadvantage. Also if you do not have time to sit at your computer to monitor market movements, you may end up losing more than you think. If this is the case this would be a disadvantage if you take the signal service which ForexandaPips provides.com offers. In this service, an experienced trader will monitor and analyze the market and subsequently sends its results and it signals to buy or sell directly to you. For more information about this service click here:

http://forexandpips.com/products-services/signal-service

• You have a complex nature: the techniques are complex market analysis and strategy implementation requires much training and education. The currency exchange rates are influenced by a variety of factors, which may fluctuate over time.

• By a winner is a loser: Unfortunately there is always a loser and you may have some operations in its early losses, but then begin to make profits.

Being a bit more specific, there are two ways to invest your money have both advantages and disadvantages, so you need to choose which best fits your needs, to avoid failures:

1. Operating its own capital.
2. Giving capital to a company specialized intermediaries.

1. Operating its own capital:

Advantages:

• You can devote yourself to a career as a Forex trader and expert.
• You can get unlimited income within their capabilities, if you use the best strategies.
• You can enter with a small investment.

Disadvantages:

• As a novice you can lose all your capital, by not having a proper education.
• To become a skilled trader it may take more than 1 year on their education to show positive results.
• It requires dedication and time.
• You must invest in education, with some capital.
• First trades may have losses.

2. Giving capital to a company specialized intermediaries.

Advantages:

• You do not need special skills and experience.
• The potential losses are lower because their capital is operated by experts in forex.
• You can forget about the management of emotions and psychology and not directly trade.
• Your capital can make big profits quickly.
• You can open an account with xxxx capital.

Disadvantages:

• There are unscrupulous companies that engage in cheating people. You must be sure the company you trust.
• The company does not provide a guarantee of profits.

Remember that the Forex is a market full of opportunities but also risks, especially for inexperienced traders and those who are not disciplined in receiving education and investing time. It is very complex to traders in this market and currency volatility is very high, so the chances of losing all the money invested is very high for new entrants, but if you use the right strategies and several indicators simultaneously, you can get great profits.

If You would like to have more information please clicke here: Trading Forex

1 comment:

  1. This is a wonderful website!! 参考になります。
    ありがとう! Thank you!!
    I'd be pleased if you exchange reciprocal link with me.
    お互いがんばりましょう。
    http://easy-happy-invest.blogspot.com/

    この記事の中でリンクしています。
    Easy investment:Bollinger bands, Technical Analysis (2010/02/19)
    http://easy-happy-invest.blogspot.com/2010/02/bollinger-bands-technical-analysis.html
    良かったらみてください。

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