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Can Forex Trading Lead To Quick Riches?
The forex trading market is a highly accessible market with utmost liquidity and the leverage it renders. That is why the forex market is extremely popular among fresh traders and traders with low funds.
So can forex trading lead to quick riches? The instinctive answer to this question would be a natural "no". And we have several factors in qualifying our response. Yes, forex trading may make you rich, quick if you are exceptionally skilled or if you keep on hedging funds with amicably deep mint pockets.
But apart from such lucky traders, all other retail traders have to go through a somewhat rocky road to reach the successful peak of currency trading. Many retail traders look up to forex trading for quick profits, but numbers and stats prove otherwise; many traders fail early and even lose large amounts of funds.
According to an article published by Bloomberg in November 2014, both FXCM Inc and Gain Capital Holdings Inc, the largest forex company at that time, reported net losses for 68 percent of its clients in 2013. These numbers were quoted by Bloomberg just two ...
... months before the whole forex market went hay way with unexpected shocks, which interpreted high risks of trading currencies.
In January 2015, the Swiss franc's cap of 1.20 against the euro was abandoned by the Swiss National Bank. Thus, the Swiss franc rose around 41 percent against the euro. This led to hefty losses in millions of dollars on many participants in the forex market, which involved the largest of banks and seats of retail traders and investors.
These unexpected events and other factors infer that forex trading for quick profits is a far-off dream. But consistent efforts, experiences can lead to success in the forex market. In this article, we will retrospect on various aspects that relate to why forex trading for quick profits is not viable.
Yes, currencies are pretty volatile in their movements, but the shocks like that of the Swiss Franc happen seldom. Most of the time, in EUR/USD, a substantial change over a week is not more than 10 percent. On the other hand, a stock, on average, can trade up and down up to 20 percent in a single day. But the whole glory of forex trade lies in the extravagant leverage that can magnify gains as well as losses. In many jurisdictions, leverage can be as high as 1:500. Even though it aids to extended profits, it can also magnify losses to the most. If your trade fails, you're in for borrowed money and the loss you incurred.
No information set for retail traders
Forex trading for quick profits may not work for retail traders because they do not have access to information that big banks and institutions do. These forex trading banks have access to data like government intervention, commercial foreign exchange flows, and more.
Forex Market works over-the-counter (OTC), which is not centralized and regulated like the stock market. So another reason why forex trading for quick profits is not feasible is the counterparty risk involved due to its decentralized nature.
Things to consider before trading currencies
Now, we are not saying forex is a bad, bad guy. Forex is one of the fairest markets rendering the most profitable opportunities. But you need to understand unless you put in efforts, learn tactics of the market, you cannot make adequate profits. And this is applicable to all kinds of trading markets. Here are some factors that you must keep in mind before trading the forex market:
All forex traders lose money on some of the other trades
Due to loopholes in planning, discipline, and experience, about 90 percent of traders lose money in forex trade. Another core reason why currency traders lose money is that they do not have structured money management rules in place. If you always want to win and do not like to learn from your mistakes, then forex trading may not suffice you.
Unrealistic goals of retail forex traders
Forex trading for quick profits is one unrealistic goal. Many new traders in forex are clouded by dreams of making millions in the market when they actually lack the discipline and the very art of forex trading. Forex trading requires time and practice to be mastered. One cannot substitute hard work with any game trick or shortcut. Therefore, one must set up achievable and realistic goals while trading.
Choosing the wrong broker
If you choose the wrong broker for forex trading, you are bound to incur losses. Some forex traders have impoverished money management schemes, some foster ill-functioning, and are outright frauds. It is crucial that you look at the ins and outs of a broker. One must always go with a highly regulated broker.
If you are looking for an authorized broker to facilitate forex or any other trade, we recommend you to check out T1 Markets. T1 Markets is a top-tier regulated broker trading in a wide range of instruments like forex, stocks, indices, CFDs, cryptocurrencies, commodities, and more.
How forex traders get rich?
It is quite possible to trade currencies with small funds alongside pursuing another job or fulfilling other commitments. But traders and investors who taste riches in forex traders are the ones who trade diligently, devote more time to the market.
A professional forex trader is any trader who pursues currency trading full time and devotes most of the time to analyzing the market. The primary income of such traders and investors comes from trading currencies. These professional forex traders can either invest their own capital and work for themselves or trade via banks and hedge funds, investing clients' money.
These traders working for banks earn between £45,000 and £150,000. On the other hand, it is quite challenging to decipher the average income of those professional traders who work with their own capital—the reason being the decentralized nature of the market and variation in forex budgets. But a professional forex trader is considered successful when he or she gets at least a 20 percent return on their capital.
Conclusion: Is forex trading for quick profits?
Currency trading is a skill that needs time and patience to learn and enhances. Skilled and patient traders make fair profits and sometimes substantial gains in the forex market. But this does not and cannot happen overnight. If forex trading was just a piece of cake, then many traders and investors would have been billionaires. But the thing there is no secret getaway to make quick profits in the forex market.
At the same time, different traders have a different definition of being wealthy and thriving in the market. Therefore, you must acknowledge and decipher what you want to achieve from your trade instead of setting unrealistic goals like using forex trading for quick profits.
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