It is often said that forex trading is taxing emotionally and mentally. A lot of new traders who get into this market are not prepared for the mental labor and discipline required by it.
For anyone who is thinking about joining the forex market, there are two kinds of opinions and advice out there:
1. ‘Don’t do it! You will lose all your money!’
2. ‘It’s great! My friend made a million dollars his first year.’
Unsurprisingly, like with most things the truth is actually somewhere in the middle. Let’s dive in.
#1. Forex is NOT a scam
Yes, you heard that right. Forex is not a scam.
There are a lot of scammers in the market, sure, but the market itself is too big to be a scam itself. Multiple trillion dollars run through it after all and you have governments and big banks participating in it.
Forex is an OTC market. This means that it is an Over The Counter market and there is no central exchange. When there is no one in charge, then that means there is no one trying to rig it. Well, they might be trying, but the market is independent.
Having said that, a lot of scamming does go on in the market because there are a lot of phony service providers and brokers. So you have to beware of them.
#2. You will most likely not make millions in your first year
This is meant for those who are trading for the first time and opening an account with a couple of thousand dollars.
The truth of the matter is that your rewards depend greatly on what you are risking. So the amount in your account and the amount you are trading with will determine how much profit you can make should the market turn in your favour.
You can find out more about making profits in the foreign exchange market here.
Apart from this, there is no guarantee that your trades will all be successful. In fact, losing is part of trading. You won’t be able to find a trader who has never lost a trade
The question then is if you are making more than you are losing. That difference determines whether you are a successful trader or an unsuccessful one.
#3. Forex trading is NOT easy money
Some people, due to their vested interests, try to paint a far too appealing picture of forex trading. They make it look too easy because they want you to believe that anyone can do it so that they can sell you whatever they are selling you.
You have to keep in mind that forex trading, especially for retail traders, is a business. You have to be willing to put in the same kind of energy and work into this as you would in any other business.
It will not be easy but if you do your research and can develop a good understanding of the market as well as a good strategy, then this business can offer great returns.
I hope this helped improve your understanding of the market because it is important to go in with the right expectations.