FOREX Investing Made Simple - Pros And Cons Of Forex Trading? - Maverick Investing Series
Forex is the largest trading market in the world, trading close to four (4) trillion dollars worth of currencies daily.
It is open 24 - (Monday through Friday 24 hours a day).
Let's review the primary "Pros" and "Cons" of this market.
Minimum setup Requirements You will need to setup a brokerage account with a reputable regulated broker.
Many online brokers are not "regulated.
" We suggest you completely stay away from these scam artists, generally created to steal your money.
They present themselves through beautiful official looking websites designed to get a deposit from you and provide you with nothing but a financial loss.
A new account can often be opened for as little as $50.
This can't be done with most other vehicles like stocks.
Low or No Broker's Fees As you are probably aware, when buying stocks you pay a broker fee, often for each trade performed.
There can be exchange, government, regulatory, and other associated fees too, usually built into the brokers fees.
But fees are minimal or nonexistent in Forex trading because the broker makes fees based on the spread, the difference between the set "Buy" price and the "Sell" price.
For example if your Buy price is $1.
00 and your Sell price is $0.
97, the broker's "Spread" is $0.
03, meaning he would earn three cents on each dollar traded.
No Intermediary or Middle Man Since you are paying a spread price when you buy or sell on the Forex exchange, the middle man (broker with varying, often hidden, and inflated fees) has been eliminated.
A Comparatively Simpler Market You are trading in set "currency pairs," and there are a limited number to select from.
They are the world's most popular and active currencies and structured in different set formats like AUD/USD (AUD is the Australian Dollar and USD is United States Dollars).
Stocks offer thousands of choices spread over several exchanges to complicate matters.
Forex is much simpler to learn and watch.
Highly Volatile This is a plus or minus benefit depending on your viewpoint.
It's high volatility offers the opportunity for large and fast profits.
This same features can also create swift and substantial losses.
Experience and learning successful trading can make the difference between success and failure.
One unique techniques often used by insightful beginners, is Social Trading, following and copying verifiably successful traders in real time.
We will cover this concept in an upcoming article shortly.
24 - 5 Trading Hours The Forex exchange is open from Monday through Friday, twenty-four (24) hours a day.
There's no opening and closing bell until Friday afternoon.
Then the market reopens Monday morning.
As long as you have Internet access, an electronic access device like a laptop, and your own online trading account, you good to go.
Many traders are now using their Android phones and similar devices to access the market from about anywhere in the world.
Great Liquidity The unique aspect of Forex trading is fast access to your money.
Since the exchange doesn't close Monday through Friday, and it is so vast, normally, you can sell your currency pair fairly quickly at the current market price since there are so many buyers and sellers trading much of the time.
Flexibility On some broker platforms you can switch from currencies, to oil, to gold, and even to silver instantly.
One minute you can be buying gold, the next minute selling it and buying a currency pair.
This flexibility to buy precious metals, oil, and currencies opens up many vast opportunities, and day traders in the Forex market are also exposed to these other markets opening up a world of opportunity for you.
Risk It's important for any trader to note that this marketplace is quite volatile and risky.
The better equipped you are with proper training, accurate advice, and experience can greatly reduce your risk.
We suggest beginners shouldn't be caught up in the gambling atmosphere many others tend to do.
In other words don't spend your food or rent money hoping you will make it big instantly.
Learn the basics and a proper strategy first.
Then start with discretionary extra capital.
Money you can afford to lose if it happens,.
and still live.
That the beauty of starting with a practice account to learn the ropes.
It is open 24 - (Monday through Friday 24 hours a day).
Let's review the primary "Pros" and "Cons" of this market.
Minimum setup Requirements You will need to setup a brokerage account with a reputable regulated broker.
Many online brokers are not "regulated.
" We suggest you completely stay away from these scam artists, generally created to steal your money.
They present themselves through beautiful official looking websites designed to get a deposit from you and provide you with nothing but a financial loss.
A new account can often be opened for as little as $50.
This can't be done with most other vehicles like stocks.
Low or No Broker's Fees As you are probably aware, when buying stocks you pay a broker fee, often for each trade performed.
There can be exchange, government, regulatory, and other associated fees too, usually built into the brokers fees.
But fees are minimal or nonexistent in Forex trading because the broker makes fees based on the spread, the difference between the set "Buy" price and the "Sell" price.
For example if your Buy price is $1.
00 and your Sell price is $0.
97, the broker's "Spread" is $0.
03, meaning he would earn three cents on each dollar traded.
No Intermediary or Middle Man Since you are paying a spread price when you buy or sell on the Forex exchange, the middle man (broker with varying, often hidden, and inflated fees) has been eliminated.
A Comparatively Simpler Market You are trading in set "currency pairs," and there are a limited number to select from.
They are the world's most popular and active currencies and structured in different set formats like AUD/USD (AUD is the Australian Dollar and USD is United States Dollars).
Stocks offer thousands of choices spread over several exchanges to complicate matters.
Forex is much simpler to learn and watch.
Highly Volatile This is a plus or minus benefit depending on your viewpoint.
It's high volatility offers the opportunity for large and fast profits.
This same features can also create swift and substantial losses.
Experience and learning successful trading can make the difference between success and failure.
One unique techniques often used by insightful beginners, is Social Trading, following and copying verifiably successful traders in real time.
We will cover this concept in an upcoming article shortly.
24 - 5 Trading Hours The Forex exchange is open from Monday through Friday, twenty-four (24) hours a day.
There's no opening and closing bell until Friday afternoon.
Then the market reopens Monday morning.
As long as you have Internet access, an electronic access device like a laptop, and your own online trading account, you good to go.
Many traders are now using their Android phones and similar devices to access the market from about anywhere in the world.
Great Liquidity The unique aspect of Forex trading is fast access to your money.
Since the exchange doesn't close Monday through Friday, and it is so vast, normally, you can sell your currency pair fairly quickly at the current market price since there are so many buyers and sellers trading much of the time.
Flexibility On some broker platforms you can switch from currencies, to oil, to gold, and even to silver instantly.
One minute you can be buying gold, the next minute selling it and buying a currency pair.
This flexibility to buy precious metals, oil, and currencies opens up many vast opportunities, and day traders in the Forex market are also exposed to these other markets opening up a world of opportunity for you.
Risk It's important for any trader to note that this marketplace is quite volatile and risky.
The better equipped you are with proper training, accurate advice, and experience can greatly reduce your risk.
We suggest beginners shouldn't be caught up in the gambling atmosphere many others tend to do.
In other words don't spend your food or rent money hoping you will make it big instantly.
Learn the basics and a proper strategy first.
Then start with discretionary extra capital.
Money you can afford to lose if it happens,.
and still live.
That the beauty of starting with a practice account to learn the ropes.