Advantages and disadvantages of Free Forex Trading
Free Forex Trading is widely known as an investment in currencies worldwide that can be started with a small amount. You can trade almost 24 hours a day on weekdays, excluding maintenance time, and you can also leverage and aim for big profits with a small amount of money.
However, it would be best if you also understood in advance that Forex has risks. In some cases, significant losses can occur.
If you are new to Forex, you need to understand the benefits and risks and how Forex works fully.
Benefits of Free Forex Trading
Free Forex Trading in currencies worldwide has many merits regarding the investment amount, investment time, trading method, etc.
When you are a beginner and start Free Forex Trading, it is good to deepen your understanding of the benefits. Forex can be leveraged, and the leverage of Forex companies in Japan is up to 25 times. In other words, you can start Forex by preparing 1/25 of the amount you want to invest.
Moving many times more money with a small amount of money is a significant advantage in Forex. Forex has a longer trading time.
For example, stock investment has a limited trading time from 9:00 to 15:00 on weekdays, so it will be difficult for people who work in the daytime to trade frequently.
Forex, on the other hand, can be traded almost 24 hours a day on weekdays. The market is moving early in the morning, and late at night, so you can have time to invest according to your lifestyle.
Forex is an investment that aims for profit by buying and selling currencies between two different countries. Since you can start trading from both “buy” and “sell”, you can aim for profit whether the market is rising (up to phase) or down (down phase).
In the up phase, you can aim for profit by holding a buy position, and in the downgrade, you can aim for profit by having a sell position.
Equity investment can only aim for profits on the upside. Still, FX can aim for earnings on both the upside and downside, so there are more profits opportunities than equity investments.
Free commissions and low transaction costs
Except for some companies, forex trading fees are free.
The actual cost of Free Forex Trading is the spread on buying and selling currencies. It is the difference in the amount offered to buy and sell the money provided by the Forex company. Still, since it is “0.1 sen” or “0.3 sen” in US dollar-yen, it is considerably compared to foreign currency exchange when going abroad. It is a cheap fee.
There is a risk of significant losses in a short time due to sudden fluctuations in the market price. When there is big news or disaster that shakes the world, the exchange rate fluctuates suddenly. It would help if you always kept in mind the risk of significant losses.
The Lehman shock, Turkish shock, flash crash, etc., are significant changes in recent years.
The “Employment Statistics” released on the first Friday of every month in the United States is also an important indicator of market movement. Many investors are paying attention to it as an indicator of the US economy, such as the number of employees and the unemployment rate.
In the movement of the Japanese yen, the possibility of sudden fluctuations increases when there are significant political and economic movements in Japan. When the prime minister resigns or takes office, or when a natural disaster such as the Great East Japan Earthquake occurs, it is necessary to be aware of sudden fluctuations.
In some cases, you may lose more than the amount you deposited.
In Forex, even if the deposited amount becomes 0 yen, the transaction is not forcibly terminated there. If a significant market fluctuation occurs momentarily, the loss will be more than the deposited margin, and you may need to deposit an additional margin.
Forex companies have a loss cut system to protect investors so that this situation does not occur. However, if there is a sudden change in a short period, there are cases where the loss cut is not in time, and in that case, an additional margin will be required.
In addition, forex companies are stipulated by the “FX Margin Regulations” set by the Cabinet Office to immediately eliminate the shortfall if it determines that the required margin is insufficient. If this is not resolved, all positions will be forced to settle. For details, please refer to the “Margin Regulation (Leverage Regulation)” page.
Let’s also understand how to minimize the loss by trading with plenty of funds and using the ordering method to decide the amount of loss in advance.
Difficult to look ahead due to market/investor movements around the world
Forex price fluctuation factors are very complicated. It is characterized by the fact that it is challenging to read price movements because all kinds of events, such as international affairs and security affairs, are related to the foreign exchange market, which is related to markets and investors around the world.
However, the movement of exchange can be predicted by technical indicators, so let’s learn how to read the business direction.
Start with a small amount and get a feel for it.
The amount you can invest depends on the person, but be aware that you should start with a small amount and get a feel for it, rather than spending most of the money you can invest from the beginning.
You can experience Forex by experiencing the movement of the market, the period until profit or loss occurs, the specific amount of money, etc. For that reason, it is essential to start with an amount that will not hurt you if you lose it.
With Forex4money Free Forex Trading, you can start FX from about 4 yen (when 1 dollar = 100 yen) by trading US dollar-INR. It is suitable for beginners because you can start with a small transaction amount.
Remember how to order to minimize loss.
In Forex, you can buy and sell currencies in real-time and place orders in advance to buy and sell when the price reaches a specified price in advance.
Specifically, limit orders, stop orders, IFD orders, OCO orders, etc., are introduced in detail on each page.
By learning and mastering these ordering methods, you can reduce the risk of loss even when the market price fluctuates suddenly by taking measures such as specifying the price at the stop price at the time of ordering and determining the amount of loss. Can do.
Be careful not to over-leverage
Domestic Forex companies such as Forex4money Free Forex Trading can leverage up to 25 times.
By applying leverage, you can aim for a more significant profit than the original one. Still, if the market moves contrary to your expectations, the amount of loss incurred will increase accordingly.
Understand the benefits and risks and gain experience from a small amount
Free Forex Trading has many advantages, such as starting with a small amount, having a long trading time, and leveraging.
However, it is also essential to understand that it is difficult to look ahead, and there is a risk of loss due to sudden fluctuations.
Until you get used to it, trade for a small amount and gradually feel for it.