Do the Benefits Outweigh the Risks in Forex Trading?

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Forex trading appeals to a lot of people looking to make some extra money, without the complications investing in shares on the stock market can present. Making money on the forex market isn’t as simple as a lot of people make out though.

There are always stories of people losing large amounts whether amateurs or professional traders. Like anything that promises big earnings, you have to decide whether the reward outweighs the risk before putting your finances on the line.

Flexible Market

The forex market is active 24 hours a day for five and a half days a week, opening in Australia on Sunday evening and closing on Friday afternoon in New York. This is flexible as you can choose a time convenient for you to start trading, which lets you fit it around a full or part-time job. The market is also affected by real world events and has no restrictions on directional trading which can increase profit margins.

Low Costs

Setting up as a forex trader, either part or full-time, only requires a computer and internet connection so start-up costs are very low. As an over-the-counter market too, whereby there is no physical central exchange, there is often no need to pay commission to a broker either. The cost of each exchange is the spread which is worked into each transaction as well, so even if you do use a dealer this is a set, lower amount.

High Liquidity

The forex market is one of the most liquid in the world due to its enormous size with over $5 trillion being exchanged each day. This does mean that you can instantly buy and sell at will with someone always willing to make a trade, allowing huge profits to be earned in seconds. However, in the same way this makes it easy to lose large amounts in one go. Using a professional trading account should help keep you better informed and on the right track.

Leverage

Large profits from a small deposit can be earned thanks to the leverage and trading on margin element of forex. This should keep the risk capital to a minimum when exchanging larger amounts using a smaller percentage. Most professionals advise never exceeding ten times your existing account value as large losses can still be achieved through leverage. When using a broker they will often close your accounts to avoid large los


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