Advantages of forex currency market

Advantages and disadvantages of the currency forex market

Find out about the advantages and disadvantages of the currency forex market is absolutely necessary, as well as compared to other markets to determine which best suits our investor profile before you invest our savings.

These are some of the points that must be taken into account before choosing the currency market as a platform for our investments.

Advantages of forex currency market

Well used leverage

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

Open 24 hours a day

Being a global market and in continuous movement, we can perform operations on any time of the day since the price of currency pairs is continuous.

Very liquid market

Be so liquid is one of the biggest advantages of the Forex market since, except for highly volatile, we will always find a counterpart to our operations.

Cost of operations (commissions)

While operating we will find with expenses inherent to operations in the form of Commission (fixed) or through pay a differential (spread) between supply and demand. Either way, costs tend to be lower in comparison with the investment in other types of financial assets.

Bi-directional operations

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

Disadvantages of the currency forex marketPoorly used leverage

Seeing that the broker with whom we are doing operations allows us to open positions in a situation of 300:1 may seem a positive feature, but have positions open that leverage is a reckless if we are not aware of the high risk posed to our capital this way of operating.

Non-regulated market

Being a global interbank market, its regulation offers many difficulties. Therefore, we can see how the different 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 does not have a body or centralized institution through which pass all the operations and that it could oversee the proper functioning of the market.

These are some of the most important points that must be taken into account when taking the decision on the currency market is the most suitable for us or if on the contrary we must choose other financial assets for our investments, as can be the CFDs, equity investments,... etc.