Advantages and Disadvantages of forex

Inquire about the pros and cons of forex currency market is absolutely necessary, as well as compare with other markets to see which one best fits our investor profile before investing our savings.

These are some points to consider before choosing the currency market as a platform for our investments.

Advantages of forex currency market

Leverage well used

Leverage is a very useful tool if we use it wisely and will allow you to easily increase or reduce our exposure to the market.

Open 24 hours a day

As a global market on the move, we can conduct business at any time of day as the price of the currency pairs is continuous.

very liquid market

That is as fluid is one of the biggest advantages of the Forex market since, except high volatility always find compensation for our operations.

Cost of operations (commissions)

During the operation we will find expenses relating to operations in the form of commission (fixed) or via pay a spread (spread) between supply and demand. Either way, the costs are usually lower compared to other types of investment in financial assets.

bidirectional operations

In this market the brokers allow us to open short positions (to take advantage of a bearish movement) olargas (can take advantage of the upward trend) and, therefore, makes our chances of finding investment opportunities increase.

Disadvantages of forex currency market

Leverage misused

Seeing that the broker you're doing operations allows us to open positions in a situation of 300: 1 may seem a positive feature, but have open positions that leverage is foolhardy if we are not aware of the high risk to our assets this mode of operation.

Market not regulated
As an interbank and global market, its regulation offers many difficulties. Therefore, we can see how the various agents that are part of it, such as banks or brokers are regulated and supervised by national institutions such as the CNMV in Spain or FINMA in Switzerland.

Without a centralized market

One of the main characteristics of this market is that it has a body or central institution through which pass all operations and that could oversee the smooth functioning of the market.

These are some of the most important points to consider when deciding whether the foreign exchange market is the most suitable for us or if instead we choose other financial assets to realize our investment, as you can be CFDs, equity investments, ... etc.