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What are the Pros and Cons of Online Forex Trading?

02 Nov 2021 0 COMMENT

Currency trading is slowly gaining popularity among smaller retail investors, thanks to its faster-returns potential. Moreover, with the advent of cheap Internet services, most of the traders are now flocking to the online forex trading platforms provided by brokerage houses to stay ahead of the curve.

If you are planning to start online trading in the currency market, it is advisable that you first thoroughly assess its advantages and disadvantages, in order to keep your risks minimal and decide a more suitable approach to your investments.

Below is a compilation of some of the pros and cons of forex trading to help you make a well-informed decision.

Pros of online forex trading:

  • Access to real-time data: One of the biggest advantages of an online forex trading platform is that it gives you access to real-time market pricing, latest news, technical price charts and other tools and strategies that can help you improve your returns. All you have to do is just log in on your broker’s website and download the trading software offered. As soon as you log in, the charts will be displayed immediately.
  • Timing: The forex market is open 24 hours a day 5 days per week. Through an online trading platform, you can effectively trade at any point in time of the day. This gives a lot of flexibility to you as traders to utilise your time as per your convenience.
  • Anyone can trade: Online trading can give anyone across the globe an easy access to the currency market with the help of just a decent Internet connection and some initial capital. You do not require any special training or permits. Just open a trading account with a registered broker and you are ready to go.

  • Leverage: Online forex trading offers you the most amount of leverage. It can permit you to hold a certain amount of money in your account but then leverage it by up to 100 times. This kind of high leverage lets you control large amounts of money with little capital. It means you can make both big profits or losses from small currency pair movements.
  • Automated strategies: Online forex trading platform offers automated trading strategies that can help you set up automated trades or stop-losses Thus, you can take full advantage of price swings without exhausting yourself physically and mentally.

Cons of online forex trading:
  • Internet troubles: Since a smooth Internet connection is so essential for online forex trading, any kind of disruption with connectivity or computer machinery can affect transactions and lead to accidental losses.
  • Leverage risks: While trading on margins has its own advantages, it is also very risky. Never get carried away because of high leverages offered by your online trading platform. Trade only for an amount that you can afford to lose.
  • 24x7 market: The 24x7 online foreign exchange leaves no scope for traders to get comfortable after they have taken a position. You need to stay attentive and updated with the market trends that can change any minute and adjust your trades accordingly.

 

Conclusion:

Online foreign exchange trading can be highly convenient and lucrative if you take the risk factors into account and use the leverage wisely.

Disclaimer
ICICI Securities Ltd. ( I-Sec). Registered office of I-Sec is at ICICI Securities Ltd. - ICICI Centre, H. T. Parekh Marg, Churchgate, Mumbai - 400020, India, Tel No : 022 - 2288 2460, 022 - 2288 2470. The contents herein above shall not be considered as an invitation or persuasion to trade or invest.  I-Sec and affiliates accept no liabilities for any loss or damage of any kind arising out of any actions taken in reliance thereon. The contents herein above are solely for informational purpose and may not be used or considered as an offer document or solicitation of offer to buy or sell or subscribe for securities or other financial instruments or any other product. Investments in securities market are subject to market risks, read all the related documents carefully before investing. The contents herein mentioned are solely for informational and educational purpose.