Currency trading is an increasingly popular form of day trading that involves trading foreign currencies for a profit. As with any other type of investment, there are pros and cons. Knowing these before starting can made a difference and will ultimately play a role in how successful an investor will be.
- There are many advantages of trading currency. One of the greatest pros is that only a small amount of capital is needed in order to start. A currency trader can simply setup an online brokerage account and start buying currency.
- It is possible to buy and trade small amounts, because there is no need to worry about paying commissions or expensive transaction fees.
- Another good thing about this type of trading is that it is easy to do from anywhere and at anytime. This freedom is unique to currency trading and appeals to many investors.
- Finally, it is possible to make a lot of money in just a short period of time with a little luck and lot of research.
- However, there are also some cons of currency trading to take into consideration. One of those is the fact that even though the earning potential is great, so is the potential to lose everything in a matter of seconds.
- There is also no way to tell for sure how a currency will react to real-time events happening around the world.
- It is possible to determine trends, but currency value can go up or down drastically at the spur of the moment due to natural catastrophes or local problems.