Every single work certainly has its own advantage and disadvantage. There is no work that always get big profits without any risks. Thus, being a trader also have its own risks, including active and passive trading.
Active traders, both beginners and professionals, certainly use their best methods to carry out every transaction they make. However, most of them will face some risks in trading.
According Investopedia, the best traders need to incorporate risk management practices to prevent losses from getting out of control. Thus, you need to know what the advantages and disadvantages of being active and passive traers.
What are the advantages and disadvantages of active and passive trading?
Advantages of Active Trading
The advantage of active trading is that it can be done anywhere and can carry out trade transactions at any time. Active trading presents two-way profit opportunities. Both in conditions of opening buy and sell positions, traders can use it to profit. In addition, active trading can run with affordable capital and supported by low costs.
Disadvantages of Active Trading
Active trding have high risk experienced personally. Traders who carry out active transactions run the risk of trading pressure if their psychological condition is not maintained properly.
Advantages of Passive Trading
The advantage of being a Market Maker is that it can accommodate all orders sent from the transaction platform. In addition, the capital needed is relatively affordable and effective. If you want to become a Market Maker, then you must always update about market liquidity quickly.
Disadvantages of Passive Trading
Basically, all activities that take place on the financial market involve risks and shortcomings. As is the case with Market Maker, which usually cannot be resistant to drastic changes in conditions.
Read more: Active VS Passive Traders, Which One is Suitable for You?
