Advantages and Disadvantages of Stock Trading

Forex tips may be a short sort of the word exchange, that is that the basis of the business transactions that occur between 2 countries with their own currencies. The forex market refers to the mercantilism that takes place at intervals this space and is completely different from the stock tips. Established since the '70s, this market deals not simply with one business or investment however the whole gamut of mercantilism and merchandising of currencies. While each the forex and therefore the stock markets agitate cash, the largest distinction between the 2 is that the sheer volume of cash transacted on a day to day additionally the span of operations. The forex market deals with nearly two trillions of bucks that compared to any stock exchange is way larger. The players within the forex market also are completely different, wherever the cash transactions area unit done between governments, international banks and money establishments of various countries. The amount of cash that is bought, oversubscribed or listed in an exceedingly forex market will quickly be was liquid money, or higher still, it's really created into cash. The speed with that such transactions occur in an exceedingly forex market is very quick for any capitalist, regardless of the country of his origin. The other distinction between a stock and a forex market is that stock markets operate in shares and businesses that belong to a particular country; forex markets on the opposite hand operate globally and might embody any and each country of the planet. Its span of operations is way wider. The market encompasses nearly each country of the planet and agitate mercantilism. 


Advantages: 

1. Electronic Exchange: One gets an option of buying and selling shares online through electronic exchange option. The broker is involved here also. A person can save, time, fuel and energy through this option.

 2. Easy: the concept of share trading is not very complex. As a new investor, one can easily understand this trade and can earn money through it.

Leverage - requires good risk controls

HedgingDecaying asset - when you are shortZero sum - if you are constantly winning.various strategies can be used across months and strikes.can be used as part of a portfolio hedging strategyUnlimited upside - if long options, and you can run them (subject to expiry, and if put or call)Limited Downside - if long optionsDividend and corporate strategy plays - dependent on local laws






 3. Wide Variety: There are array of companies to choose from. There are numerous companies who issue shares almost everyday. The demand for buying shares is high in the market. With this kind of huge variety, an investor can choose the best one which matches his strategies and planning.

 4. Good Returns: one can expect good returns if the shares are purchased intelligently. One can buy the shares when the prices are low and can sell them when prices rise. Hence one can control good returns by holding the shares.

 5. Brand Name: Companies have a advantage of shares. They can show the growth of the company through price fluctuations f the shares.


 Disadvantages:

 1. Uncertainty: There is a lot of uncertainty involved in share trading. This is because a lot of things can impact the prices of the shares. Things like government polices, political pressures etc can change the price of the shares. Hence, everything is very uncertain. It is a risky trade with only two outcomes: profit or loss. People who involve in this kind of trade should always be prepared to face risk. More risk means more profit and vice versa. People should have thorough knowledge abut a specific market before they decide to put their money on stake. Proper knowledge and understanding of the details about the market helps an investor to do planning.

 2. Loss: One can face losses if the value of shares purchased instead of increasing falls down. A person needs to sell the shares at a price more than the price he bought the shares for. In case, he sells the shares at a lower price then it is always loss for him.

Excessive leverage when risk controls are poor
Hedging is often misunderstood and the hedge may in-fact merely change the risk profile but not actually act as a hedge
Decaying asset - when you are long
zero sum - if you are constantly loosing and have no way of offsetting this
various strategies can be used across months and strikes -dangerous if you dont understand what you are doing
You might not have enough capital/assets to effectively implement a portfolio type strategy
Unlimited downside - if short options, (subject to expiry, and if put or call)
Limited Downside - if short options


 3.Limitation to Short Sell: Yes, this kind of limitation is faced by traders in this case. It is essential for a investor to wait till the price rise of a particular share before he can actually short sell it. This acts like a limitation for the trader.