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Do you want to give forex trading a try? Let’s look at the negative points first.

Currency trading is a sound investment option. Be wary of volatility, though. The forex market is moved by various factors, including economical and geopolitical developments. For example, a stock suddenly sustains massive losses, investors can pressure company executives to initiate changes, either within the management or operations, but not in currency trading. Currencies do not have control over their respective governments or central banks. Still, it is important to place the right stop losses and trade accordingly.

This market has high leverage yet high risk. Leverage is a double-edged weapon as it can amplify the returns or deplete trading capital. Coupled with due diligence, discipline, and skills, use leverage wisely.

It has no physical market. Since the forex market is not regulated, there is little or no transparency. Also, expect not to obtain the best prices or to get expansive outlooks on quotes. The market itself may not be under the umbrella of a regulatory agency, but brokers and their activities are. Do your own research and do trading with credible and reliable broker. Compare what they can offer as well.

In terms of rates, several factors come into play. It is primarily driven by financial and political news, which, by the way, are complex in nature. In most cases, currency trading takes place within the confines of technical indicators.

Currency traders have no one to lean on to seek advice on all things forex. They have no choice but to ascribe to self-study. It is difficult at first, but self-learning and discipline can take you to places.

Now, here’s the good side.

High volatility = high liquidity. Forex market is a lucrative market because of huge number of traders entering the market. Having said that, even massive orders are easily facilitated without any big price deviations, paving the way for tighter spreads.

Forex market is apt for all kinds of trading. The currency market gives more freedom and flexibility to trade currencies as it is open 24/5. This is beneficial to short-term traders who cash in on, naturally, short positions, or long-term traders who desire to notch long-term profits.

Being an over-the-counter market, no entity or government oversees the forex market. What makes it advantageous? Decisions or monetary actions, or sometimes interference, by central banks are already anticipated in or factored into market movements. Therefore, it won’t make sense to be surprised by any abrupt decisions. Plus, no market insiders.

And the most amazing thing the currency market? Low fees and rates. Majority of brokers earn from the difference between the rates.