Disadvantages Of Forex Trading

For those of you who are sitting on the fence and thinking if you should put your foot into Spot Forex trading, perhaps the disadvantages of Forex trading listed here can help you decide if you should stay out.

Even though there are many advantages of Forex trading, the disadvantages mustn’t be overlook. Depending on individual characteristics, there are some that may find Forex trading is not your cup of tea.

Disadvantages Of Forex Trading

  •  It’s a fast moving market and not to be traded with a gambler’s attitude. For those who have that gambler’s instinct to try and recover losses in the shortest possible time, you are likely to be carried away and may end up with huge losses.

 

  • If you are a perfectionist, Forex trading may not suit you. You are bound to lose some trades, the fact is you cannot win all of them. If you have the alter ego that you must win all trades, then Forex trading is not for you. Remember, there’s no ego here. Frankly speaking, you and only you are aware of any win or losses that you chalk up. There’s noboby looking over your shoulder to see how you perform.

 

  • Risk of choosing a broker that doesn’t suit your trading style. Not all brokers are created EQUAL! You will need time to check out different brokers and if what they offer suits your trading style and strategy. Not all of them are WYSIWYG (what you see is what you get). Believe me, we have tested 6 brokers to date with live account and not all of them meet our one common need. It doesn’t mean we disqualify all of them but it means we have different accounts for different strategy because some work better than others. So the chances are you may need to open more than one account with different brokers to check them out before finally deciding which one suits you.

 

  • Coming across the next greatest Forex robot or expert advisor (EA) to be ever released and believing all that you read and putting all your money into it.  Another acronym for EA is Erase  automatically! There are plenty out there when you do a search and new one appearing all the time given the popularity of Forex trading but be forewarned that Not all Forex robot are created Equal!  Not all Forex robots or Expert advisor will give you the same performance when run on different broker and on forward testing. Again, this is an area that we have been doing a lot of forward testing. 

 

  • With the easy availability of information over the internet, you are very likely going to suffer from information overload if you start searching for the best strategy and indicator looking for the Holy Grail of Forex trading that is going to help you win enormous amount of money. And before you know it, you could be all confused and mixed up with all that you have been reading and your chart could be overloaded with indicators that you don’t know what you are looking for.

 

  • Need to invest not only money but also lots of time to gain experience and knowledge. Some lessons don’t come easy and can be very painful. Some things, you will only learn when you have been sitting in front of your computer and monitoring for a while before you realize something is wrong or how some things differ from broker to broker.

 

Discouraged By The Disadvantages Of Forex Trading Yet?

So, if you are still considering the pros and cons and undecided, head over to the other post on advantages of Forex trading and look at it to see if the advantages outweighs the disadvantages of Forex trading or make you more confused!

The choice is yours. If you decide to join in, Good luck and safe trading!

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Advantages Of Forex Trading

For those of you who are sitting on the fence and thinking if you should get into Spot Forex trading, let me list out all the advantages  of Forex trading and you decide for yourself over the pros and cons if you should join the fray.

 

What Are The Advantages of Forex Trading

  •  It’s a 24 hour market.

The spot Forex market has no physical location of central exchange as compared to other financial markets such as the London Stock Exchange or the New York Stock Exchange. It is considered to be a over-the-counter “OTC” market because it’s run electronically within a network over a 24 hour period. From Monday morning open in Australia till the Friday afternoon close in New York, the Forex market is open to anyone who wants to trade at whatever time that is convenient.

 

  • It’s Considered A Perfect Market

It doesn’t matter if the currency is rising or falling, everyone has an equal opportunity to trade and make a profit either by buying or selling the currency.

 

  •  High Liquity And Market Cannot Be Cornered

The Forex market is the biggest and most popular in the world to date, open to all and it’s so huge with so many traders, it means high liquidity and not one single entity has the ability to control the price for an extended period of time.

 

  • Trading Time And Location Flexibility

Since the Forex market is open 24 hours a day, you have flexibility to trade the market when you choose to and don’t have to fix your schedule to the market. You can also choose to trade wherever you want as long as you have an internet connection. Nowadays, besides using a laptop to execute your trade, Smart phones can also do that and there are also some trades who trade using computers in internet cafes.

 

  • There’s No Fixed Lot Size

In the spot Forex market, you decide how big or how small a position you want to trade.

 

  • Low Entry Level

You don’t need a lot of money to open a trading account, in fact, it requires to lowest amount of money as compared to other investment options to get yourself started in Forex trading. In fact, some brokers require only $1 deposit to open a micro trading account! But this doesn’t mean you should open an account with $1 although it makes things very accessible to any average person who doesn’t have a high start-up trading capital.

 

  •  Leverage.

A small deposit allows you to control a large contract value because of the high leverage in forex trading. Although leverage can work in your favor, it can also work against you without the right risk management in place. The high leverage can result in large gain as well as large losses.

 

  • Minimal Or No Commissions

There’s no clearing, exchange, government or brokerage fees. Most of the retail brokers earn their keep from the bid-ask spread. The spread differ from broker to broker for different currency pair though.

 

  • No Middlemen

There’s no middlemen in spot Forex thus allowing you to trade directly and chances are prices are what you see is what you get although that is not always true because of possibility of slippage during high volatile market movement and you could be face with “trade context is busy” thus not allowing you to execute your trade at the price that you want.

 

  •  Free Stuff Everywhere!

Last but not least, most online Forex brokers offer free demo accounts, funding your demo trading account with virtual money for you to practice your trading to build up your confidence and hon your skills and getting use to the trading platform before you actually go “live” with a live trading account.

There are also lots of free strategies, indicators and expert advisors (EA) available for MT4 that you can lay your hands on if you search for them.

 

Encouraged By The Advantages Of Forex Trading Yet?

I believe I have listed out all the Advantages and of Forex Trading here and may have miss out some points along the way. Anyway, are the advantages above enough to convince you that you should join in too?

Not so fast!  Even though there are many advantages of Forex trading, you mustn’t overlook the Disadvantages of Forex Trading too. Check out the disadvantages and then decide  if you should get into Forex trading yourself.

Good luck and safe trading!

 

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