Pros And Cons Of Forex

Pros And Cons Of Forex

Forex (FX), is a shortened name for foreign exchange and is the global marketplace in which currencies are traded. It’s essentially the most popular form of trading among professional firms and retail investors alike, with an average daily trading volume of a gargantuan $6 trillion. That kind of liquidity is what mainly attracts newcomers to learn forex trading, as it’s more fast-paced, exciting, and offers potentially very lucrative returns for those who know what they’re doing. If you’re trying to learn forex trading, one of the best places to find an easily digestible forex trading course is at Guerrilla Trading. With e-books, hyper learning, and even interactive backtesting available from our forex training course for beginners, you’ll gain an understanding of the terms and methodologies involved with forex, and the confidence to jump into the fray using the strategies you’ve learned to (hopefully) make some serious gains. 

Learn Forex Trading Starting From The Basics: How It Works

If you’ve had any experience with buying and selling stocks, you’ll notice that there are some similarities when you learn forex trading. Like with stocks, forex is a market that offers futures and options for you to trade. But, as you’ll learn in more detail from the forex trading course offered by Guerrilla Trading, there are radical differences past that point.

Unlike stocks, you’ll learn forex trading is done in pairs. Your trade does not depend on one company’s valuation going up or down, but on the performance of two separate economies – in euros/U.S. dollars, for example. As with stocks, you want to buy low and sell high, so if you bought 1,000 euros at $1,400 U.S. – a ratio of 1.4 to 1 – you would wait for that ratio (the currency rate) to go up, possibly to 1.5 to 1, and sell to make a $100 profit.

It is definitely possible to capitalize on the change in foreign exchange rates, but you can probably see already that there is a much wider range of considerations to take into account in your speculating of when and how much they will move compared to a company’s stock. These include geopolitical events and the global economy as a whole to decide which pairs to trade. A forex trading course for beginners is a good starting point, but you should delve deeper into more advanced education if you want to have consistent success in forex trading.

Is Forex Trading Worth The Risks?

There are a lot of risks associated with trading stocks or options, and you’ll find it’s no different as you learn forex trading. Our forex trading course will highly stress that you take into consideration diversifying your portfolio and interest rates to hedge against those risks – as you would with all equities and derivatives markets. But huge profits are possible, especially with the higher amount of leverage available that have no qualifying requirements, unlike with traditional stocks. Leverage will be discussed further with a look at the advantages and disadvantages of forex trading.

Pros

  • Liquidity – Forex trading experiences very high trading volume almost every trading day – more than the stock market if you are trading major currencies. This liquidity is one of its main attractions to investors, and even beginners stand a good chance of seeing profits early after taking a forex trading course to develop an understanding and basic strategies for the market.
  • Leverage – A forex training course for beginners will explain leveraging with forex, but you might already be familiar with the concept if you have ever traded stocks and know what a margin account is with day trading. Day traders have requirements to fulfill to their brokerage firm to access leverage of usually 4:1. That requirement is to have a lot of money in your account at all times. But, with forex trading, there are no qualifications, and you can access as much as 50:1 leverage to generate massive profits on your investment.
  • Access – One of the biggest surprises newcomers realize when enrolling in a forex training course for beginners is that the after-hours sessions for the forex market remain just as active as in regular hours. Trading happens on the various stock markets around the world during after-hours, too, but the liquidity is so low that it effectively bars individual traders from participating. Since foreign currencies come from around the world and in every time zone, the forex market is very active 24/7, Monday through Friday.

Cons

  • Volatility – With all of that high volume and liquidity comes volatility as most forex traders are trying to make quick profits. There are strategies to deal with it, like automated processes from hedge funds to make the logical decisions for you. You could also use the forex markets primarily to hedge against interest rates. With a forex trading course from Guerrilla Trading, you will become aware of several strategies that can help you manage volatility.
  • Less Regulatory Protections – Brokerage firms that handle forex trading aren’t always as vetted as in the stock market. You should be aware of who you are depositing money with, especially if you are in another country.

Some other cons can be what was mentioned as pros but looked at in a different way. Though there is high liquidity in the forex market there may be less price variation than with stocks. There are huge amounts of currency available in every country, so it could take huge trades before seeing any strong movement. The access to larger leverage may be a con to some investors, as well. Less qualifying requirements mean some people will get in over their heads.

Forex Trading Course For Beginners

Forex trading is worth the risk if you are empowered with the right information. With our forex trading course, you’ll enter into this lucrative market much more safely and with confidence. Become a part of our community and get access to troves of data and resources to start your journey today at guerrillatrading.co.uk.

HAVE ANY QUESTIONS?

Do you want to learn more about Forex? Or would you like to understand how Forex experts achieve their trading goals? Speak with our team now and we will be more than happy to help.