Forex Markets – Myths and Facts
The Forex market in brief
For the last three decades Foreign Exchange market, – briefly Forex or FX, had integrated into the world’s biggest financial market. The volume of daily transactions is about 1-3 trillion of US dollars. The trading instruments on this market are the currencies of different countries, so the fluctuation of currency’s rates allows to gain or loose money on your investments..
The advantages of Forex market are:
- Round-the-clock trading access: the ability to trade for 24 hours a day;
- Liquidity: the market works with a huge money and gives the customers complete freedom to open or close their position of different volume;
- Leverage: an ability to use leverage. It decreases requirements to the sum of the initial deposit (margin trade). So in case you deposit 10 000 USD into your account you’d have an opportunity to work with 1 000 000 USD (leverage 1:100);
- Objectivity: no exterior regulated structures, so the currency’s rate is establishing in accordance with current supply and demand on the market;
- Global Access: everyone can become a market participant irrespective to the living place, as trading requires only your skills and understanding the market trends
Tip to evaluate currency Trending — Look at stock markets for clue
When the stock markets are booming in DOW and NASDAQ – foreign investors have to sell ( Sell Signal ) their currency to buy stock and visa versa.
Myths abut Forex Markets:
- Get rich easy: There are many misconception about Forex /Currency Trading. Many beginners on Forex platform think that they can become rich easily. Forex markets look rosy and lucrative with the enormous potential to earn on internet, sitting at home. It is true but not easy earning. Money can neither be created nor destroyed. Unless many loose, few can not gain. If everyone gains on the currency markets the Forex markets will collapse. Unless one understand the strategies and fundamentals of currency trading, it is out of question to earn in this business. Many come into this business believing the grand advertisements and the hypes shown.
- Attractive leverages: Leverages like 1:100. 1:200. 1:300 is a great attraction to newbies. For a dollar investment a gain of 300 dollar is tempting. Remember there is negative side to high leverages. The amount one thinks, they gain is only if the markets move in their direction otherwise it is a great loss.
- Market rigidity: Fore markets are legal and not a scam. Billions of dollars are traded every day. Blaming the market are rigid when you loose is not a correct approach
- Trading at news hours: When ever trading news is released, for few seconds there will be heavy fluctuations in currency signals. Believing that one can make good profit during these fluctuating period is a misconception.
Facts about Forex Markets
- Forex markets are speculative. Hear all speculations but do not decide trading plans on speculated news.
- Forex markets are real, and understanding the techniques of this business is the road to success.
- Long term trading is always beneficial than short term plans
- Do not expect heavy profits or loose heavily. Decide and stick on to days or months targets.
- Plan trading well in advance and adhere strictly to your plan
- Do not trade on emotions or on gossip
- Do not enter into real time trade unless you are familiar with trading techniques.
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