Is Forex Trading a Hoax?

Some people are sceptical about the possibility of profits on Forex. Like many electronic money-making systems, it raises suspicion. In reality, the result of trading depends on three factors: the provider, fundamental market forces, and your skills. Here is a look at trading on the foreign exchange in 2021. 

Is Forex Trading a Hoax?

1. The Largest Market in the World

Humans have been exchanging currencies for centuries, since the dawn of international trade. Today, they do it in the largest global market — it is bigger than any stock exchange. The daily turnover exceeds 6 trillion USD. This volume circulates between institutional and retail traders.

Until the 1990s, only organisations could partake in the exchange. Large banks, hedge funds, and businesses are still involved in currency trading. Individuals gain access through FBS forex and other global intermediaries, and trade alongside the giants.

So, is this financial market real? It definitely is. Moreover, it is the largest one worldwide. Modern software for computers and mobile devices makes Forex easily accessible.

2. Principles of Brokerage

Individuals may not access Forex on their own — they need a registered account with a regulated provider. This industry has rigorous standards in terms of data and fund protection. The most popular global brands that serve millions of traders have licences from organisations like the CySEC in Cyprus or the FCA in the UK, which attest to their compliance.

Sceptics suppose online brokers only want their clients’ deposits. That is not the case with lawful providers. Their revenue is either spreads — the difference between Ask and Bid prices, or commission per trade. If all brokers were scammers, retail Forex would have disappeared long ago.

Two pricing models exist. The first one (market maker) has spread-based costs for traders, while the second (ECN) charges a commission. Market makers provide liquidity for their clients and determine their quotes. ECNs connect users to other providers, allowing them to use real-time market prices. Neither system is better by definition. Fierce competition forces market makers to offer tight spreads as well.

3. Why Traders Fail

Undeniably, some traders make a loss. Why? The answer is not as straightforward as critics think. Traders work in the largest financial market whose fundamental forces are beyond their control. All currencies gain or lose value due to economic and political factors. The factors range from interest rates to oil prices to diplomatic relations.

Traders have no opportunity to eliminate all risks, but they should calibrate the risks they take. Losers may blame their failures on the broker instead of admitting their shortcomings. Forex does not tolerate venturous behaviour. Without risk management, you are bound to fail.

How to Make a Profit

Forex is the largest market which is now easily accessible through platforms and apps. It allows every individual to monetise knowledge and trading talents. Only those who choose regulated providers and work hard to polish their skills can succeed. Lucrative decisions are based on careful analysis of the market and meticulous risk management.

Leave a Reply

This website uses cookies. By continuing to use this site, you accept our use of cookies.