Forex for beginners
Forex is a wonderful trade which can also be done by beginners. It is popularly known as foreign exchange trade and the asset which is used for trading are the different currencies used world wide. There are several small and big traders in the field and also small families or individuals who are exchanging currency for a foreign tour can be referred to as doing a forex trade. Forex is just changing one country's currency into another one for any sort of reason. However some individuals take it up as a business and gain profit by the difference in amount between the selling and purchase price of a currency. This business can be done globally from any location and this is a decentralised business which is not governed by any…show more content… Without knowing the details of the pros and cons if one starts with this trading then one can incur huge losses in the near future. So it is important to know this for beginners who intend to trade currencies.
Pros and cons are as follows --
1. The market is global and huge and there is a high liquidity in the market which gives a high earning potential. However if the investment is not done by proper analysis then an equally big loss can be incurred. The market is easy to make an entry or an exit from any position and by using any of the major currencies used worldwide. The position of any currency may change at any point of time within a fraction of second.
2. The liquidity offered by the market allows the banks to offer high leverage to the traders. Due to this leverage the traders can control a larger position with relatively lesser amount of money. Most common ratio of leverage offered in forex trading is 100:1. But for a beginner he must clearly understand the terms leverage and liquidity in the market else he may end up losing his money. Leverage must be used wisely to earn profit and benefit out of your trader's