The main reason why people get fascinated with forex trading is its potential for earning huge profits. However, the volatility of this exchange, as well as the time needed to reach the profit zone, makes trading in forex a risky affair. To make sure that you make the best use of forex trading, here are five cons to watch out for:
- Huge Risk
This point can’t be overlooked. Forex trading can expose traders to tremendous risk, as they bet on different exchange rates and even volatile currencies, like the British Pound and the Euro. Therefore, it is advised to follow a beginners to mid-level forex trading knowledge.
- Lack of Expertise
Although you could have experience in trading stocks, you will most likely need an expert to guide you through the process of doing forex trading. With this, you’ll be at the mercy of the market and can make errors by entering your own orders. In order to get your forex trading license, you will need a bank or broker’s certificate to be registered in this trade.
- Time Consuming
Forex trading is an easy process but the time it takes to reach the desired profit is not negligible. You will need to take a look at the European and Asian markets daily, monitoring the rates, and so, you can never say when you will make your profit.
- You May Not Make More Than 1% a Day
A trader with a 10,000-pound monthly limit, or monthly trade cap of 2,000 pounds, will earn around 60 GBP daily or 1000 GBP monthly. Similarly, a trader with a 1,000-pound daily trade cap will earn around 120 GBP per day or 2500 GBP per month.
Therefore, there’s no point in hoping for the huge profits, as they are impossible to gain in such low numbers.
- The Accurate Currency Rate Is Not Guaranteed
Even though the currency rates are based on historical data, there’s no guarantee that these rates will remain accurate and will do so without any volatility. Therefore, it is best to trade with a more knowledgeable trader, and not gamble with trading alone. One of the good example is veracity markets: http://tradefx.co.za/veracity-markets-minimum-deposit/.
The risks involved with forex trading can be managed with the proper knowledge, but it can’t be avoided altogether. This is why it is recommended to trade in a company that provides a 30-day money back guarantee. Buying the right forex trading forex license is also a must if you’re serious about learning how to trade. When it comes to getting your forex license, it’s important to have a chat with your broker, or a reputable brokerage firm, that can help you get your account registered, so that you can trade properly.