Disadvantages of currency trading

Trading in the currency market is tough. You have a lot to learn and a lot to remember. But on the bright side you can do something completely different from your day job and still earn more than you make. That is of course if trading is not your job.

BUT.

Just like with anything else currency trading has its advantages and its disadvantages. And to see trading clearly we need to look at it as it is.

So, here we are – disadvantages of currency trading.

1. Too many influencing factors.

2. Risks are too high

3. You are alone.

4. High volatility.

5. You get cocky.

6. You need a lot of information.

7. Fear.

1. Too many influencing factors.

The global politics and economy influence all of the currencies thus creating uncertainty of the price. Of course trading is always done with technical knowledge and technical indicators that indicate whether the trade is going to be lost or not but if you have a hard time reading and understanding the chart, its patterns and its indicators then you are going to have a hard time trading as well.

And with so many influencing factors no one is going to blame you if one day you just give up.

2. Risks are too high

There is a very high risk factor in the currency market. There is a high leverage which results in higher risk. There is uncertainty of the price and rate of the couples which can ultimately give higher profits or can result in a huge loss. That only means that you have to be very careful in trading and choosing your leverage as well as not try and predict the future of the market.

3. You are alone.

Of course you can seek the help of broker managers or financial advisors and but in reality when it comes to trading you are all alone. This is one of the most popular reasons for the newcomers to quit – because they feel completely alone and lost while bearing losses and failures.

4. High volatility.

While moderate volatility can be seen as a plus, high volatility is definitely not making our lives easier. It is in fact making it very hard to compete with the markets as well as turn at least some profits around. And the higher the volatility, the less we want to keep on with trading at all.

And we all know – high volatility is the thing to be afraid most in the markets.

5. You get cocky.

With time going by and wins piling up it is easy for traders to forget that losses are never sleeping. They are always lurking around the corner and we need to remember about them. But the thing about that that it is easy to forget about your fails – after all we all want to see ourselves as winners.

So, it is easy for us to get over-confident about our abilities, skills and luck. And that may turn all the wins into horrible losses.

6. You need a lot of information.

To enter the currency market one should have sufficient knowledge about the ways the market works so that to escape losses and multiple setbacks. And sooner or later you are going to get tired of constant need to study and to get so much information. After a while it is going to start feeling as if your head is going to explode with knowledge. And sooner or later you are going to snap.

That is a real problem for traders.

7. Fear.

Fearing for your future is a pretty natural thing. It is just that with trading fear grows together with the risks and the further you go and the more money you bet – the higher are the risks and the fears. Doesn’t sound too good, does it? Fear in the number one reason of why people leave trading in the first place.