The Downside of Forex trading
Currency trading across the globe is referred to as ‘Forex Trading’. Currencies are exchanged in order to conduct business overseas and to trade in foreign countries. This need to exchange the currencies all across the globehas made the forex market as the 24*5 market in the world. No other markets are open 24 hours a day!
This market doesn’t have one single central marketplace to be traded centrally. But, they are traded across the internet networks among the various traders worldwide. When so is the opportunity for the market and trading to be built upon, what could be the downside?
Well, like everything, even this one has its own shares of downside. Though there are plenty of opportunities and its open all the time, and all nations participate in it, there are risk factors associated and we shall what are they!
Here is the list of thedownside of the forex market:
The general stock markets are regulated by the various stock exchanges and government of that nation. But, with forex trading, it’s not the same; there are very little regulations set across the nations. The government agencies and stock exchanges lack the rules to be enforced on to the other country.
This leaves the investors and traders under high risk. They are vulnerable to brokers who are illegal and unethical, who try to make trades against the wishes of the client. So, when such unethical brokers are caught, there are no proper rules and regulations to punish them. The various countries involved can’t take a joint decision, making it easier for the culprit to escape.
A Higher percent of leverage:
Leverages are nothing but the credit limit extended by brokers. In forex trading, the leverages are very high. This comes with associated risk, for both brokers and the investors. The investors who utilise the complete leverages are under risk, to pay back the amount. They can lose the whole amount in one bad trade, or make amarginal profit with it, which again is risky, as the amount drawn is higher.
So, in case of lower and minimal leverages, both of them would be safe, as the amount would be less to trade with and the risk too lower. Hence the factor that is actually considered as good, is not really in realistic trades. Therefore, try your hands with a trustedforexbroker, who can advise you on the goods and bad and help you in overall trading experience.
24 hours open market:
This feature, which many people consider as good, is another reason for a risky ride. As the name says, the market is open for 24 hours in a day, and for 5 days; in few nations, it comes upto 5 and half days.
So, when the people of one nation are asleep, the other one tries to make profits. When the other one sees, the positions would have been fallen. This constant fluctuation is a mentally draining out exercise for both traders and investors. Traders need to be awake whole through the night, to keep a constant check and the investors to make profits. So, both traders and investors are at risk, of being awake, mentally draining out themselves.
Volatility is too high:
Forex is affected by the overall changes in the globe, where there are thousands of factors that change each day. This makes the forex market highly volatile than any other market. The various market force, economic changes, bank policies of various central banks of various nations affect the forex market.
With the $4trillion per day transaction, a small pebble in it can make changes that could be devastating for people.
While this good to be totally online, forex trading can be risky due to the same. Any markets for that matter needs you to be quick and responsive during thetrading period, with a sturdy internet connection.
In times of crucial problems oninternet, or during you placing the trades if there is a loss of the internet connectivity your whole money is at risk. Youwill never know If the trade ended up in your account, or did it miss, or was it a good profit or loss. If it had a centralised exchange, you could check it. But, staying on the internet, though it’s not your fault, sometimes risks can’t be avoided. Especially during natural calamities occurrence, this is even worst!