Most times, when people talk about Forex trading, they only tell you how you’ll become a millionaire in one night, they never tell you that you could also become the poorest man on the planet if you are not careful. I’m not trying to frighten or scare you away, i just believe everyone you know the dangers in the trade called FOREX.
How Does FOREX Works?
Before you put your money on the line, you should find out how forex markets and trading works, do extensive research and consider getting professional.
FOREX trading involves you buying a world currency, hold it for a period of time, and hope that it will rise in value. If that happens, you sell it. As easy as that sounds, it can be much more risky than trading with the conventional stock market.
Things They Will Never Tell You About Forex Trading
You Need to Work Really Hard
One of the things they will not tell you about FOREX is that you have to know almost everything. Forex trading is complex and risky. Currency markets are extremely difficult to predict because so many factors affect exchange rates. Even the most skilled and experienced forex traders have difficulty predicting movements in currencies. Trading in international currencies requires a huge amount of knowledge, research and monitoring.
Leveraging Can Wreck You
Leverage involves borrowing a certain amount of the money needed to invest in something. leverage has the potential to enlarge your profits or losses by the same magnitude. The greater the amount of leverage on capital you apply, the higher the risk that you will assume. A highly leveraged trade can quickly deplete your trading account if it goes against you, as you will rack up greater losses due to bigger lot sizes.
The Brokerages Dont’ Really Care
You will have to pay fees for any profits that you incur, as well as trading fees and commissions. The brokerages make money even when you lose money, so its not their problem when you loose, they really don’t care about your well being, either way, its win-win for them.
Exchange Rates are Never Stable
There are significant investment risks as currency fluctuations may move against you, causing you to lose money. Exchange rates are very volatile – they tend to move around a lot even within very short periods of time.
You’re on Your Own
Forex trading raises the stakes further by letting you trade with borrowed money (leverage), but you’ll be responsible for all losses, which may exceed your initial investment. Margin forex trading is one of the riskiest investments you can make.
You’ll Have to Study the World
To successfully trade in forex, you will need to have good knowledge of foreign exchange, leverage, volatility and the conditions of each country whose currency you are trading.
You will also need to predict how these conditions affect the relative value of those currencies. This is extremely difficult as so many factors come into play, including politics, economics and market confidence, and these are unexpected, random events