Forex Trading Is Not for Everyone: The Study of Foreign Exchange Market
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Forex trading is a hard activity, difficult and not suitable for everyone. With trading you can’t get easy money. All Forex traders lose money when they do trading. Only a small number of them is able to offset the inevitable losses with operations in profit. Specifically, the 95% of forex traders lose money and in a short time is ejected from the market. This is mainly caused by lack of operations planning, insufficient market knowledge, poor money management and risk management. Also the personal character affects the results. If you hate losing or you are a super perfectionist, probably it will be very difficult for you to adapt to the forex trading. If you don’t learn to control your emotions and if you don’t have discipline, you can’t be successful.
Forex trading is not for the unemployed or those who have a little income. You must have at least 10,000 USD of capital for trading (in a mini account) that you can afford to lose. Do not expect to open an account with a few hundred dollars and become billionaires.
Forex is one of the most popular markets for speculation all over the world, as it is a huge market, liquid, and currencies have the feature of moving in trends. Most people invest in Forex market with the false hope of making a lot of money, but in reality, they lack the most important asset for trading: discipline. Trading, especially short-term, it’s not for amateurs, and rarely is the way to get rich quickly. Forex trading is not a system to get rich in a short time. Doing Forex trading is a skill that is learned over time, with effort and suffering. Also expert traders are subject to periods of losses. There are no shortcuts, it takes a lot of time to get familiar with Forex trading.
The road that will lead you to success is hard work. It’s advisable to practice working with a demo account. You have to operate with virtual money the same way as real money. It makes no sense to open a demo account with $ 50,000 if then, in reality, you can open a real account with only 5,000 $. It’s correct to put on demo account the same money you could put on a real account. Don’t open a real account until you operate profitably on a demo account (this can require many months).
It’s advisable to invest on a single currency pair. The major pairs are the most liquid and so the spread is lower. When you start trading, is too complicated to follow more than one currency pair. To be successful in the foreign exchange market, as in all other aspects of life, you need hard work, dedication, a little luck, a lot of common sense and judgment.
Before starting to invest in Forex, you must carefully consider the purpose of your investment, level of experience and risk tolerance. The most important thing is do not invest money that you can’t afford to lose. There is a considerable exposure to risk in any trading. The market is open 24 hours a day, 5 days a week. This means that unexpected events may affect your investment while you sleep.
The most attractive aspect to operate with currencies is the high degree of leverage used. Leverage seems to be very attractive to those who want to turn a small amount of money in a large amount, in a short time. A high leverage refers to the speed with which an account wins or loses money. You can’t hope to make extraordinary gains without taking extraordinary risks. The leverage should be increased gradually with increase of profits on your account.
There are also other additional risks that affect investment in Forex. For example, losing internet connection, computer or server malfunction, failure to upgrade software, inappropriate use of trading tools. A prudent investor should be prepared for unforeseen contingencies. Also, beginners should always improve the quality of their trading, starting with a test period in demo, followed by a period with a mini account, and then switch to a real account if all tests are concluded as planned.
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