Some More Advantages of Trading Forex through a Bank Account
Several days ago, I talked about Forex trading through a bank account and some of its advantages and also the way you can trade the currencies against each other through a bank account.
Indeed, trading through a bank account, be it currencies or stocks, is what almost all professional traders and investors do. You can hardly find a professional trader that trades through the retail brokers, not because brokers cheat and can hardly be trusted, but because trading through a bank account has several other advantages and is more trusted.
One of the most important advantages of trading through a bank account is protecting your money while the sudden and strong movements like The Swiss Franc Tsunami occur. If this happens while you have a position and the price goes against you for thousands of pips (like something that happened on 2015.01.15 with CHF cross currency pair), not only your account and everything you have in it will be wiped out, but you also will end up with a negative balance in your account which is your responsibility to pay it back to the broker.
This happens for two reasons:
- Your account is leveraged.
- You have a single currency account.
Negative balance happens only when your account is leveraged. Although you will lose money if the market goes against you when your account is not leveraged, it will never get wiped out and will never end up with a negative balance.
That is one of the advantages that trading through a bank account has, because banks usually don’t offer leveraged accounts.
But the other reason which is even more important is that your account with a retail broker can be in one currency. For example you open a USD or EUR account and then you can trade the currency pairs through it.
But you have to open a multi-currency bank account when you want to trade through the banks, because banks don’t offer any currency pair like what brokers do on their platforms. After opening a multi-currency account with a bank, you have to deposit money in each of the accounts to become able to exchange currencies to each other. For example you deposit 10,000 unit in your USD, EUR, GBP, CHF, JPY, CAD, AUD and NZD.
Therefore, your whole account will never be wiped out if something like the CHF tsunami happens. The reason is that only those currencies that are involved will be affected, not the other currencies. For example, let’s say you have bought CAD against CHF through your bank account which means you have paid your 10,000 CHF and bought CAD. Then the CHF tsunami happens and CAD loses its value against CHF. Then only the CAD you have bought will be affected not the money you still have in your USD, EUR, GBP, CHF, JPY, AUD and NZD accounts.
This is a big advantage of trading through a bank account, because your money will be safe automatically against the strong and sudden movements.
Learn more about trading through a bank account here: Forex Trading With A Bank Account
But there is a problem here which is money. Trading through a bank account needs a lot of money, whereas you can open a $500 or even a $100 account with a broker.
Money can’t be a problem that can stop you. You don’t have to open a trading bank account now if you don’t have enough money. You can keep on making and saving money through your routine job and the other opportunities while you are learning how to trade and you are improving your trading skills.
Maybe the money you make through your full time job is not enough even to cover your expenses, and so, you can never save any money to become able to open a trading bank account. This is the problem that many of those who are learning to trade forex have. That’s why they open a small account with a broker and then they get cheated by the broker and lose that money as well. Chances are the lose their interest and give up on trading for good.
For this reason, we thought about creating a good source of income for our website followers. We through we couldn’t help people to achieve their goals just by teaching them how to trade, because many of them can’t even open a reasonable trading account (they cannot afford it), and they get cheated by the brokers exactly for that reason.
You need a good source of income, no matter if you are already a consistently profitable trader, or you are still learning how to trade.
If you are still learning how to trade, then you have to be able to cover your expenses and keep on learning how to trade with peace of mind.
If you have become a consistently profitable trader, then you have to become able to open a professional live trading account otherwise you can’t make any money through the trading skill that you have developed by spending lots of time and energy. Even if you can afford to open a reasonable live trading account, you still need an extra source of income to cover some probable losses that can happen sometimes, and also to be able to survive when there is no trade setup for a long time.
Therefore, you need another source of income that makes money for you consistently while you trade and invest to make more money.
This is what all professionals do. They have several sources of income including trading and investment. They make money, and then they make their money make more money for them through trading and investment.
This is how it works.
Here at LuckScout.com, we have thought about all these things. That is why we are working on creating some great opportunities to support you and help you to make your dreams come true. Those who follow us properly, will become able to become financially free.
Good luck 🙂