Today we present a guest article
Forex trading is a popular form of investment where traders buy and sell currency pairs. However, what many people quickly realise is that, unlike other forms of investment, Forex Trading requires almost daily supervision to closely monitor exchange rates.
So what should you consider when trading exchange rates and going abroad on holiday? We have listed the pros and cons that you should be aware of to help you make an informed decision.
What is Forex Trading? Explanation
Forex trading is a term that refers to the buying and selling of currencies. Forex traders thus buy and sell currencies with the intention of profiting from fluctuations in the exchange rate in a global market that almost never closes. Thus, they can trade on any day of the week and at any time they wish.
According to fxforex It is quite similar to exchanging money before travelling abroad. That is, you start with the Swedish krona and switch to the euro. Then, when you come back from your holiday, you buy back the original currency with your euro. How much you get will depend partly on the fees - but also on the exchange rate.
What are the benefits of forex trading when travelling abroad?
There are many advantages to currency trading. The first is that it is easy to access and use, and there are no restrictions on who can trade currencies. That is, it doesn't matter if you are in EU countries or as far away as Japan or the US - you will always be able to access the market.
Another major advantage is that, unlike the stock market, for example, the foreign exchange market is open 24 hours a day, 5 days a week. This means that you can trade in US dollars and Swedish kronor if you are in the US. Or Euros and Swedish kronor if you are in the EU, without having to worry about the time differences.
What are the disadvantages of forex trading when travelling abroad?
First of all, it is a risky form of investment where daily changes can occur. Sometimes it can be difficult to keep up with daily changes if you are out and about. For instance the euro fell sharply against the US dollar in early July to the lowest level since December 2002. Events like these are important to follow closely.
Another downside is that internet connectivity is not always the best in hotels abroad - so double check that they have fast Wi-Fi or that you can connect to the network with an Ethernet cable.
Last but not least, if you are abroad for an extended period of time, it is a good idea to check the local tax rules to avoid tax disputes.