Wednesday, November 28, 2007

Disadvantages of Forex

No Exchange

The disadvantage to forex, some would say, is in the lack of an exchange system in forex trading. Some traders find comfort in knowing that there is a regulated mechanism backing their market participation. What's more, the lack of a centralized data point means the spot forex market does not have all the great add-on information stock and futures are used to seeing .

Complex Nature

In terms of market analysis techniques, technical analysis is just as useful in forex trading as in any other market. The thing that gives some traders concern. however, is the complexity of the fundamental side of the forex market. Currency exchange rates are influenced by a wide variety of factors, which can fluctuate over time.So,the fundamental analysis is very useful to and sometime the fundamental can breakout the technical analysis which had been predicted by traders.

Two-Sides to Every Position

There are always two sides to the forex market, because currencies are quoted in terms of their value against each other. That means for any given exchange rate there are two countries (or region) to take in to consideration. Sometimes issues related to one of the countries will dominate, while sometimes the other will. It can be quite fluid in that regard, which can sometimes lead to quite confusing reactions to news and events.

While these issues may seem like significant barriers to trading forex for some, the fact of the matter is that for most folks they are easily overcome. Just like any market, forex requires some getting used to. Once you do, though, it provides a wide array of opportunity.


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