When we ask ourself: Is Forex trading profitable?
Even if our instinctive response to the issue is an unambiguous “no,” that reaction should be qualified.
Is Forex trading profitable?
You can be wealthy by forex trading when you’re an exceptionally qualified currency trader or a hedge fund with deep pockets.
However, for the average seller, instead of being a simple path to wealth, trading in forexes can be a rocky road with huge losses and potential shortages.
Is Forex trading profitable?
First of all, statistics.
An article in Bloomberg indicated that two of the largest publicly traded forex firms reported to their customers.
In each of the last four quarters of shareholders 68% had a net loss of trade currencies.
This could be interpreted as not losing cash trading currencies in approximately one in three traders.
Not the same as getting wealthy forex trading.
only two months before an unexpected seismic shock in the monetary markets, such figures have been quoted, highlighting the hazards of retail investor forex trade.
In 2015, the Swiss National Bank dropped the 1.20 Swiss franc cap against the 3-year euro.
As a consequence, the Swiss franc rose by 41% to the euro and by 38% to the US dollar that day in this year.
The surprise move caused hundreds of millions of dollars in losses to countless stakeholders in foreign exchange businesses, from tiny retail investors to big banks.
Losses in retail accounts have wiped out at least 3 brokerages ‘ assets, making them insolvent and taking FXCM, then, to the brink of failure, the biggest retail forex brokerage in the USA.
There are seven reasons here, then about why retail trader’s odds are stacked through Forex Trading, who wishes to get wealthy.
1- Rewarding asymmetrical risk
Experienced forex traders keep the losses small and compensate them for significant profits,
if their monetary call is true.
However, the majority of retail traders do the opposite.
This could also lead to more loss than your original investment.
2- Market of OTC
The Forex market is a global market,
which is not like the future market centralized and controlled.
This implies that a clearing organisation does not guarantee forex traders,
that leads to the risk of the counterparty.
3- No edge of information
Massive trade activities carried out by the largest foreign trade banks,
that have an informational advantage,
and is not accessible to the retail trader and connected into the currency globe.
4- Volatility of currency
Remember the instance of the Swiss franc.
In the case of periods of unexpected currency volatility such as that in the first half of 2015 high leverage means that trading capital can be depleted very rapidly.
5- The Malfunction of the system or platform
Includes extraordinarily volatile times, if orders like stop-losses don’t work.
6- Market manipulation and fraud
In short, Sometimes the market for forex fraud has occurred,
Secure Investment like that which in 2014 vanished with investor funds of over $1 billion.
Trading in Forex price market manipulation was also widespread and involved some of the major players.