Finance

Advantages and Disadvantages of Forex Currency Trading

Published

11 months ago

July 7, 2022

Rodrigo

For those who are starting to invest in variable income, it is common to feel a little lost in the many different investment options. Investment funds, commodities, stocks, foreign exchange/forex and many other possibilities have started in the financial market.

The foreign exchange market is becoming increasingly popular in the digital age. The global daily trading volume has increased from $5.1 trillion in 2014 to $6.6 trillion by the end of 2020, providing opportunities for overseas investment.

However, foreign exchange is a seemingly complex market. Depending on traders’ risk appetite and basic investment strategies, it offers traders many benefits and potential pitfalls. In this article, we will present the main advantages and disadvantages of foreign exchange trading.

Advantages and Disadvantages of Foreign Exchange/Forex Trading

The foreign exchange/Forex market has approximately 170 major, secondary and foreign currencies from around the world, which are traded in pairs and as derivative assets. This allows speculation on price changes without having the basic tools, creating profit potential in a falling market.

But what are the other benefits of foreign currency trading? Here are some of the best examples:
Liquidity: This refers to the ease of buying and selling assets, and currency pairs are rated as one of the most liquid options in the global market. This applies in particular to the major currency pairs such as EUR/USD and USD/JPY, which have a large trading volume and often trade within a relatively narrow range.

Leverage: When learning how to trade foreign currency for the first time, you will understand the basic relationship between leverage and margin. In short, the former refers to the process of generating debt for open trading positions that are much larger than your initial deposit, and the margin is the amount of borrowed capital.

Low capital requirement: Because of the spread (referring to the currency pair-specific unit of change of the exchange rate) and the availability of leverage, relatively little capital can be used to initiate foreign exchange transactions. Make it easy for part-time or amateur investors to enter the market.

Therefore, understanding the logic of candlestick patterns is essential to read the chart more accurately, as it is an analysis mechanism that helps visualize price changes.

What are the disadvantages of foreign exchange/Forex trading?

Failure to manage risk by holding highly leveraged positions can result in disproportionate losses, so as an inexperienced trader, it is important to keep this in mind.

There are other risks, challenges and pitfalls, including the following examples:

Higher volatility: the concept of volatility can also be viewed as positive or negative, depending on your risk appetite. For example, escalators execute hundreds of short-term orders every day, trying to take advantage of real-time price fluctuations and accumulate incremental profits in the process. However, volatility can be a problem for risk-averse traders or traders with long-term perspectives, as prices fluctuate significantly every 24 hours.

Lack of transparency: relatively speaking, the foreign exchange market is an unregulated space. This creates an inherent lack of transparency, which is further exacerbated by the lack of control over how transactions are conducted and the basic fact that tokens are issued by banks as the central control point of the market.

The foreign exchange/Forex market is open 24/7 with separate activities in three different geographic regions (North America, Europe and Asia-Pacific). Without a systematic trading strategy and careful selection of currency pairs, this can make it difficult to regularly monitor prices and volatility.

Finance

The world’s main stock exchanges – Check them out

Published

11 months ago

July 7, 2022

Rodrigo

Today we will introduce you to the world’s major stock exchanges. If you are an investor, you may have heard of them.

For you as an investor or who wants to become an investor, it is very important to understand where and how they operate, for more information, keep following us.

How big is the stock market?
To consider the stock exchange bigger, it is necessary to evaluate the points accumulated during its constitution, the participating companies and the market value.

When it comes to determining its placement patterns in relation to others, we can consider some aspects, such as the volume of transactions carried out during the year, the market value of the stock exchanges, and the number of transactions carried out during the year. Several other aspects.

Understand the following main content:

New York Stock Exchange

Founded in 1972, it is also known as the New York Stock Exchange, and is also considered to be the largest stock exchange in the world.

It is located on Wall Street, the world’s largest financial center, and trades shares of the largest companies in the United States.

It has deals with major companies such as Apple, McDonald’s, Coca-Cola, Microsoft, and Facebook, as well as other large companies.

Nasdaq

The National Securities Dealers Automated Quotation Association is considered one of the greatest developments in the American capital market, headquartered in New York, founded in 1971. It brings together several large companies in technology, telecommunications, biotechnology, electronics, and others.

The current market value exceeds 7 trillion US dollars and cooperates with giants such as Google, Facebook, Amazon, Apple and Netflix.

London Stock Exchange (LSE)

Located in London, it is the main stock exchange in England and the United Kingdom, was founded in 1801 and has had a market value of approximately $6 trillion in its 200 years.

Highly related companies Royal Bank of Scotland, HSBC, Unilever and Royal Dutch.

Tokyo Stock Exchange

Also known as the TSE, it is located in Tokyo, Japan. It merged with the Osaka Stock Market in 2012 to create the Japan Exchange Group in 2013.

It holds large companies such as Honda, Mitsubishi, and Toyota.

Shanghai Stock Exchange

The Shanghai Stock Exchange, known as the Shanghai Stock Exchange, was established on November 26, 1990.

Mainly large companies, such as Bank of China, Longi Green Technology, etc.

Euronext

Last but not least Euronext is the leading stock exchange in Europe and is recognized as one of the leading stock exchanges in the world. Thus, Euronext includes companies from some EU countries, such as Portugal, Belgium, France and the Netherlands.

It has large companies, the main ones being L’Oreal, Louis Vuitton, Philips, Renault and so on.

Contents

Finance

See how to earn in dollars living in Brazil

Published

11 months ago

July 7, 2022

Rodrigo

Currently, there are two most popular ways to invest abroad and earn in dollars. The first type is the BDR’s, the securities with real guarantee issued in Brazil, which refer to companies based abroad, and the second type is for joining foreign brokerage firms and buying shares abroad directly.

According to investor and businessman César Karam, choosing BDR’S instead of opening an account in a foreign brokerage house has several advantages. “The tax issue is easy because it is seen as a stock. So, if you are used to investing, everything will be easier,” he explains. According to him, the control of his behavior has been simplified because there is only one account for investment. Another point is that, for the BDR, there is no transportation cost, which will be the amount paid for the variation in the price of the currency.

However, opening an account with a foreign brokerage house and earning in dollars is a way to diversify investments, which provides greater security to the investor. For example, in the United States, the stock exchange is bigger than in Brazil, which generates greater liquidity. “You are actually buying and selling at the price you want,” said the investor report. Karam also said that compared to buying the BDR in Brazil, there are more investment opportunities in the United States.

For those who have difficulty in foreign languages, César Karam explained that there are brokerage firms founded by Brazilians in the United States, so the service is carried out in Portuguese. “Some American brokers don’t have integrated trading services, but in my company this happens automatically,” he gave an example.

Investors warned that it is necessary to verify that foreign brokers are registered with the SEC, which is similar to the CVM in Brazil. “Just like in Brazil, you have to check if the brokerage is registered with the CVM. In the United States, it must be registered with the SEC. Otherwise it is not safe,” suggested César Karam.

César Karam graduated in business administration, with a specialization in investments, and studied the stock market deeply.