Forex Trading: Myths And Pitfalls

Forex trading is not for everyone.That being said, the promise of instant riches draws people into forex.Forex trading is just the buying and selling of money with money. To make a profit one must buy low and sell high, the difference is the price is the trader’s profit.

Even though forex trading might seem easy, there are a lot of risks involved and stories of people losing all their money is not too uncommon. The difficulty arises because of the scale at which the entire process takes place. There are millions of others who are trying to make money, same as you and not everyone can win. To be able to make money in the currency markets, one has to be able to predict it.Given the complexity of the market and the factors that can influence the market, it is virtually impossible to predict market movement.

Forex trading is, like stocks, a zero sum game. When someone wins it is as the expense of someone else. There are numerous tools available on the internet which you could use to decide when to buy and sell. Blindly trusting software to make predictions for you is definitely going to land you in losses. You can also seek tips from your broker from time to time but don’t rely on their completely. If you want to be in forex, learn the ropes. You have to be familiar with the jargon, software, charts etc.

Since currency is traded over the counter, the markets are open 24, 5 days a week and you can buy and sell any currency in the world. As you might have learnt in economis 101, the price of any commodity, currency included is shaped by market demand. Hence, the ability to predict demand can make you a fortune.

To be a player in the currency markets you have to understand the concept of margin trading. Simply stated, instead of putting up your own money, the trader trades currencies on margin and if the price goes up the trader pockets the differerence. The actual leverage can vary and depends on how much risk the broker is willing to take.

Planning to venture into forex trading ? Don’t wait anymore, start here: Forex trading

Leave a Reply

Your email address will not be published. Required fields are marked *