FX – Advantages and Disadvantages of currency exchange

 

FX is the short name of the word Forex. We have gone through many theories of Forex market, and have learned a lot about it. Many of the beginners who are just entering into this market try to know about various advantages and disadvantages of the Forex market.

Here, we have given a list of advantages and disadvantages of the Forex market for the beginners to make the aspects of the FX market clearer in their minds.

Advantages of FX market:

  • No commission is charged in Forex market: There is no commission charged in the Forex market. You will not have to pay clearing fees also. Even the government does not charge fees for investing in the forex market.
  • No middle men: It is you and the broker who will deal with the transaction. There will be no middlemen who you may have to .
  • No fixed lots in the Forex market: There is no fixed limit for a person to invest in the market; he can invest as much as he wants. There is no amount of money that has to be invested specifically in the Forex market.
  • 24 hour global market operations: Forex trading is done 24/7 in a week. The participants of the Forex market are working for 24 hours and are available 7 days in a week.
  • There is high liquidity: Liquidity of money is very high in the Forex market. Liquidity here means to convert the asset into money easily. With the help of this liquidity option, it is very easy for you to deal in the Forex market.
  • Low cost in transaction: Every broker charges a small amount of money for a currency transaction, this is called spread. The amount of spread is very small.
  • Leverage: Forex also allows its users to have an advantage of the leverage. Leverage is the value which has been added to the amount of money which is being invested. Suppose you are investing $1 US, the leverage will make your investment more by showing $60 US.

Disadvantages of FX market:

 

  • Decentralized market: The market is not centralized or governed.
  • Leverage can create loss for you: The leverage option of the Forex market can make you suffer from losses in forex market.
  • Scam activities: In Forex you can come across scam activities. This is the reason why it is important to choose the broker carefully.

 

 

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