Forex trading is a transaction of buying and selling of different currencies through a broker. The traders make profits from the changes in exchange rates. This field is becoming very popular in different parts of the world. If you can do it rightly, it is a profitable business.
But do you know exactly how to start forex trading? At first, get enough knowledge of different terms related to forex, then understand the strategies. After that, choose an experienced broker for doing trading activity. Create your forex account. Once you complete all these steps you will be completely ready to act as a foreign exchange trader.
What are the benefits of forex trading? There are many of them.
- If you do it properly, you will be able to make huge profits.
- It is the most liquid financial market.
- Trading activity increases smartness in a person.
- It allows the investor to trade directly with the market. There is no middleman in the forex trading.
- You can join the trading activity at any point of time. You can choose the time of trading the way you want. It is very convenient for the part-time trader.
- In forex, you can decide your own lot size.
- Transaction cost is generally low in forex trading.
Concepts of Long and Short in Forex Trading:
Long position is made when the trader expects that the value of the currency will rise later. In this case, a trader buys a currency pair at a certain price and then hopes to sell that currency pair later at higher price. An investor can make benefit from the rising market.
Short position is created when the market falls. In this case, a trader sells a currency pair to purchase it back at lower price. In order to understand which position to enter, you need to get familiar with the technical analysis.
Forex Long vs Short:
One question may arise in your mind. What are the basic differences between long and short in forex trading. Check them all out.
- For pessimists, short selling is a good way to play with forex market. On the other hand, buying long positions is a good way to make money for the eternal pessimists.
- Long position investment is the most prevalent type of trading.
Benefits of Long Position Forex:
Many advantages make long position special.
- The relationship between volatility and time is a major advantage of long position trading.
- If you put your money in long position investment, it will provide tax advantage on the capital gain.
- Once a trader becomes a long position trader, he should choose some investments and risk tolerance based on his trading risks.
- Long position investment is very easy which anyone can do.
Benefits of Short Position in Forex:
There are many advantages of short position as well.
- Short position provides the chance to develop a part of capital at a fast pace.
- It gives the opportunity to keep the traders’ hands busy. But short position trading is not suitable for everyone. It is difficult because it takes a lot of experience and time to be an expert.
Thus, from the above discussion, hope you get enough information about the various aspects of forex trading. However, if you have any thought that you would like to share with us on this topic, you can write in our below comment section. We will be delighted to hear from you.
The content of this article reflects the author’s opinion and does not necessarily reflect the official position of LiteForex. The material published on this page is provided for informational purposes only and should not be considered as the provision of investment advice for the purposes of Directive 2004/39/EC.