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If Forex Trading Risky Or Just A Myth – The Myths and Truths Revealed

If Forex Trading Risky Or Just A Myth – The Myths and Truths Revealed
May 15
14:29 2014

In the recent years, online forex trading has grown tremendously in popularity. The internet has played a huge role in making this happen. Along with the huge popularity comes the inevitable myths, hype, and in certain cases, complete untruths. The truth of the matter is that some of the myths are completely harmless. Nonetheless, they normally cast doubts on the foreign exchange industry. Actually, come can be quite costly especially to the novice traders in the market. How one handle myths and truths of the forex market is very important. It can either be quite disastrous or work to one’s advantage.

The fact of the matter is that the forex exchange market stands out as the biggest market in the entire world. Here volumes of money are traded every day. Tones of positions move between trades as each day passes. Today, more than four trillion dollars has exchanged hands in the forex market. What is for sure is the fact that currency trading provides numerous benefits or advantages compared to other markets. Unlike other investment alternatives, the forex market stands out as an incredible and viable option for most prospective businesspersons and women. If you are seeking a low risk and high return business model, then look no further, forex trading is the way to go.

So what does the forex market entail?

Forex exchange market involves the exchange of a country’s currencies against another. Forex traders trade money. For instance, they can be selling US dollars and buying Great Britain pounds or buying Swiss Francs and sell US dollars. A country’s currency is usually dependent on the relationship of two economies as well as their prospective futures. Of great importance to note is the fact that the exchange rate depends partly or entirely on very many things. One of these is a country’s economy in comparison to another’s. Buying a particular country’s currency is like purchasing a share of their economy. Of the economy of that country does exceptionally well, your currency’s value will definitely increase. This in turn means more profit for you.

The difference between forex market and other markets

Unlike other conventional future and equity markets, there is no particular central trading location in the foreign exchange market. Generally, trading is conducted over the internet or phone. The main market for the different world currencies is “interbank market.” It usually includes a series of banks, large corporations, and insurance companies among other financial institutions. Some of the major currencies traded in the forex market are USD (United States Dollar), Japanese Yen (JPY), Euro (EUR), Swiss Franc (CHF), British Pound (GBP), New Zealand Dollar (NZD), Australian Dollar (AUD). All these are normally known as the ‘majors’. This is because they are the main or widely traded currencies. The different combinations of currencies are EUR/USD, GBP/USD, USD/CHF, and USD/JPY. In order to have value in any trade, you must relate it to something else. Currencies are normally traded in pairs. You buy one currency and sell another.

The first truth

The truth of the matter is that forex trading is very easy. It is more than easy to start trading in the foreign exchange market. Buying and selling currencies online is effortless. However, succeeding and maintaining success in this market is the difficult part. It takes practice, time, and education. The talented traders normally learn very fast. Novice traders ought to dedicate most of their time practicing and educating themselves. They should always spend time coming up with new strategies that will surely help them make more money in their trade.

The first myth

Most people share in the myth that forex is gambling. The sad reality is that, this is untrue, it is a myth. Forex trading stands out as the epitome of macroeconomics. This is in the purest form. It deals solely with the structure, performance, and behavior of regional and national economies. It also deals with their interrelationships. If all of these was the truth, then it means that all advisors, economic administrators, students, consultants would be the best gamblers in the while world. The truth of the matter is that forex trading engages students of economics, and individuals who are great at fundamental and technical analysis as well as psychology.

The second myth

The other myth that rotates in most circles is that forex is a scam. Actually, this has led many firms to shut down. The truth is the forex industry is regulated, law abiding and legitimate. It is a real and genuine currency market where anyone can actually trade. Traders are responsible for their own decisions and practices. The only scams to be on the lookout for are scamming brokers as well as marketers who sell forex books, trading systems, sure-fire strategies, and guaranteed returns. By the way, when you are starting, it is very important to be on the lookout for these individuals because they can surely take advantage of you as a new trader.

The second truth

Forex trading is very risky. This is not a myth but the ugly truth. Just like in any other form of investing or trading, the forex market has no guarantees as well. One can lose all the money they choose to invest in their trade. Well, sound risk management practices can surely avert such a thing from happening. Ensure your money is progressing steadily as you make your investments. Also, to be on the safe side, always make sure that you invest small amounts of money as you gradually increase. This will surely go miles in ensuring all your money is in safe hands. The truth is that traders can come up with technical ways of preventing their money from getting lost.

As earlier indicated, there is no doubt that every market brings with its own myths and truths. The forex market is no exception. The above are some of the common myths and truths that the market boasts of.

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Articles on the Jadenforex blog written by "Jadenforex" include guest posts, and items written in collaboration with several authors.

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