Forex Is Great But Beware!

Discussion in 'General Trading Discussion' started by TraderAnalyst, Aug 17, 2019.

  1. TraderAnalyst

    TraderAnalyst Senior Investor

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    Forex is an amazing trading platform , it's true. Everyone interested in trading wants to be part of it but there are also risks which one must not ignore. Being a very large market it is prone to riskso place your steps carefully.
     
  2. Phillip Mark

    Phillip Mark Active Member

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    It is never advertised that way, vendors only talk about the good part and how you can make millions, but they don't ever talk about the risk involved.
     
  3. J_C_Anderson

    J_C_Anderson Senior Investor

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    There are two main types of risk associated with Forex trading:
    • Market risk caused by uncertainty and unpredictable nature of trading process. A trader should understand that nothing is guaranteed in Forex and it is impossible to find a strategy that would be profitable in 100% of trades. That is why it is so difficult for people from other spheres to strart trading - they are looking for something that would give them 100% result.
    • Non-market risk related to the broker. The level of customer protection in Forex is relatively low, especially in case if trader works with unregulated broker or broker registered in offshore jurisdictions.
    That is why one is going to become a trader, he should evaluate all pros and cons of such business (to my mind, trading is mostly like a business, not a job). First of all he will have to define the sum of money he could afford to lose because the entire initial capital could be lost due to the nature of Forex trading. The idea is that the sum of money exposed to risk should not be substantial for the trader. Another important point is that the goals should be realistic. Trading for living is very difficult, so it is possible only for professional traders. If newbie trader would try to get huge profit using his relatively small account, he would probably lose all his money, and this is the main risk in trading. That is why it is so important to be patinent, trade in a conservative manner and to start with the self education - now it is quite easy due to the huge numbers of resources available, in some cases even for free.
     

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