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FOREX MARKET: PROS AND CONS

The Basics of Forex Trading

The market has always been known as a place where an exchange of goods or services occurs for monetary returns; or basically a place where various sort of monetary transactions take place. Most markets involve the payment of money for another item; however, Forex is quite different from most markets. It is basically the exchange or swapping of one currency to another; hence the items involved in this market are both money but in different currencies (or forms). Forex market is a global market where these activities take place.

Pros of forex

  • Forex also known as foreign exchange influences the value of each currency on the forex market. This is possible as the participants on the forex market are able to influence the rate of the currency via their involvement and movement of capital. Hence, the value of a currency can increase by a significant amount on the market. 
  • The market unites different countries as the transactions are about the buying and selling of currencies from different countries and nationalities. Little wonder it is the largest market in the world as its coverage extends all around the globe. 
  • The market is open to anyone to trade despite its size. Governments, national banks, private corporations, retail traders and so much more participate in the market. However, most retail traders might have to trade via a broker who brings part of the large part of the forex market to them. 

Cons of forex

  • The market is quite capable of reducing the value of a currency making it less valuable in terms of other foreign transactions. This disadvantage is tied to the fact that participants of the market are quite capable of influencing the forex rate of each currency on the market. 
  • The market might be quite technical to most retail traders as it is a large market involving a lot of factors. 
  • The market does not offer large profit. The profit earned from the market is quite low compared to other markets.
  • Like every other market, the market is faced with the risk of possible loss of funding capital. 
  • The market can be influenced by the major traders on the market which might turn out to be unfavorable for other small traders.

Conclusion

Forex market is an interesting market where profits and losses can be made depending on how the trades close. Although the profit margin of the market is quite low, traders can still make quite a lot on the market via strategic meanswith hotforex.

A lot of currencies are present in the market and if there’s need to exchange one currency for another, the forex market is a good place for that to take place. 

The market fluctuates easily; hence it can be quite easy to make a profit if the deal is higher than the rate bought. However, it is also quite possible to suffer a loss because of its fluctuation as the deal might be lower than the rate at which it was bought. 

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