Along with changes in technology, especially in the financial sector, trading is becoming one of the more popular activities.Activities that trade foreign currencies, stocks, commodities, and cryptocurrencies are seen as having great profit prospects.
However, there is still a risk following it. So that you can think, here are 10 trading advantages and disadvantages that you should recognize, taken from Pintu Academy. There are several types of trading based on the type of asset, of course the advantages of trading bitcoin are different from stocks. So are the advantages of trading crypto and money markets.
But in general, trading has 5 advantages as follows:
1. Can be started with a small initial capital
The initial capital is relatively small because generally the basis gives an initial limit of the trading value which is not too large. In an online trading exchange, some even trade stocks for only US$ 5. But of course you have to re-analyze whether the stock is right for your trading ideas later.
2.Flexible and Real-Time
Currently, various types of trading can be carried out online, so that it is a certain advantage because it is more flexible. You can do this activity anytime and anywhere.
3.Fast Return
Trading activities are generally carried out in a short period of time compared to investments. Therefore, the returns or profits obtained are faster to obtain. But because of that trading activities must be based on good experience and strength.
4. Funds Unlocked
Assets that are generally used for trading are not locked, such as long-term investments that can only be taken after one year or even up to several years. Call it Retail State Bonds (ORI), which generally can only be disbursed within a period of three years. However, traders must analyze the market and asset condition first to make sure that the trader’s entry and exit status is accurate.
On the other hand, in addition to profits, there are also trading losses that can occur as long as you are buying and selling. Here are 6 trading losses that you need to recognize before engaging in this activity.
1. Obscurity
Trading markets are not always easy to read. Expert traders may even accidentally make mistakes. That’s because the trading market can’t be completely predicted. Switch fast.
2. Need Knowledge
When you want to participate in the world of trading, it means that at that time you choose to compete with the knowledge, instincts and resources of all traders in the world, including those who are professionals with decades of experience.
3. Big Risk
The next trading profit and loss is a big risk. Trading market movements can make you lose big in short time. However, on the other hand, of course, the concept of high risk, high return, of course applies. As long as it is based on knowledge and knowledge, trading can be a profitable activity.
4. High Volatility
High volatility means high risk. In the world of trading such as forex, for example, there is no control over macroeconomic and geopolitical changes that can cause market fluctuations in an instant. Long-term investors may be able to leave their assets even if prices fluctuate without feeling anxious, but this will be difficult for traders who generally have short-term profit goals.
5. Leads to Addiction
With the right strategy, trading can give you high income in an instant. Therefore, trading can also lead to addiction. According to research in the journal Addictive Behaviors, some investors prefer short-term trading tactics. They are looking for a form of investment that offers a large prospective profit, while carrying a large risk of loss.
6. Not Gaining Dividend Profits
In stock trading, generally several investors are entitled to an annual dividend payment per share. Until then, in good odds, some investors will get a steady return.