Despite what you hear from people, forex trading is not a gamble. And there are several reasons why. The first reason is the leverage and volatility of the market. The second is the potential for scams.
Leverage
Depending on your definition of the term, Forex may not be the faddish affair it was touted to be. Fortunately, the perks of trading on the global stage haven’t waned. In fact, it’s become a breeding ground for seasoned pros to test their mettle. In short, a lot of money can be made on the forex market. Getting a foothold in the market may take some time, but it’s well worth the effort.
The best way to go about it is to get a brokerage account, which will allow you to trade using leveraged funds. This will give you the best bang for your buck. Of course, if you want to make serious pips you’ll have to put down some cash. A standard account with leveraged perks can cost you upwards of $1000.
Volatility
Traders need to learn how to read and utilize market volatility in order to maximize their profit. While it is not easy to predict exactly what will cause price fluctuations in the markets, there are a few key factors to consider.
The volatility of a currency is influenced by the amount of money circulating in the economy. Central banks play a role in regulating the amount of money in circulation. They can also control the size of money in the market via interest rate levels.
Trade wars can cause volatility in the markets. This is because they affect the number of transactions in the market and increase the level of uncertainty.
If the markets are highly liquid, they are less volatile. However, if the market is less liquid, it can become very volatile.
Scams
Investing in the forex market involves a certain amount of risk. No trader can eliminate this risk completely, but it’s important to be aware of the risks.
Scammers use a variety of methods to lure in investors. They may promise large profits, high returns, or risk-free investments.
They might also offer bonuses or incentives to get traders to deposit money as soon as possible. Some scammers may deny you access to your bonus funds or even ask for a transfer to an account that you don’t have.
The best way to avoid being a victim of a forex scam is to research the companies you’re considering before making any commitments. A good way to do this is to check out the company’s FCA registration.
Besides checking the company’s website, you should also ask about its contacts and credentials. It’s also a good idea to get a second opinion from a licensed financial advisor.
Getting Scammed
Getting scammed when trading forex can be very detrimental to your trading capital. You should check out the credentials of a broker before investing. Avoid binary options brokers and those that promise high returns.
The first sign that you are dealing with a shady broker is that he or she makes unrealistic promises. For instance, you may hear about high success rates, or a guaranteed 96% profit in 30 seconds.
These claims are not only inaccurate, but also unachievable. The Forex market is dynamic and volatile. No broker can guarantee your investment will generate profits.
Scammers are usually the owners of fake websites that offer trading services. They claim to know the perfect time to buy or sell a certain currency. They charge a fee for their services, and they tout their experience and trading abilities.
Conclusion
Regardless of whether or not you consider Forex to be a gamble, you must have the right tools at your disposal to play the game. Getting the most out of your forex trades requires a solid education and plenty of practice. You also have to keep your wits about you, as a lack of success can spell doom for your self-esteem and your trading capital.
For example, you must be aware of the fact that you are not playing with a house. In fact, you are playing against the house. This is why a little bit of forethought and a sound plan goes a long way. The best way to do this is to use a good forex broker and a solid education to keep you on the straight and narrow.