Forex Trading Review
Forex trading is one of the most complicated businesses in the world. But by using FX trading is a legitimate business of the world that generates revenue of $5 trillion daily. Forex trading is in trend since the last decade. Many brokers came into the field that brought an atmosphere of competition. However, the year 2020 has been a wretched year for the traders and lucky for the brokers. This content is a forex trading review that wraps the pros and cons of forex trading as well as the problem faced by the traders. various tips and tricks, you can easily cover your losses or can lessen your chance of loss. Our content has brought such useful forex tips and tricks that will for sure help you to trade in forex. These tips and tricks are about trading and risk management mostly.
What is forex trading?
The literal meaning of forex is foreign (currency) exchange. In forex, one can exchange the currencies and CFDs.
What is traded in forex?
People thought that forex only allows the exchange of currencies. That is wrong. You can trade several assets. All other instruments are traded as CFDs that stands for Contract For Difference.
A trade can trade in the following assets,
- Currency Pairs that involve the Majors, the Minors, the Exotics, the Scandinavian, and currencies of emerging countries.
- As CFDs, you can trade,
- Commodities (Metals, Energies, and Agricultural Products)
- Real Stocks
- Mutual Funds
- Real Estate (Specific Countries)
The bright side of forex trading
Forex trading is worthy to some extent. Some points make it attractive for the people.
- It provides you leverage. Through leverage, you can trade many instruments.
- The forex market is free from manipulation. Other markets are mostly manipulated by the speculators that are very dangerous for the other traders of the same country or region.
- This market contains a huge crowd of buyers and sellers. It means it is liquid.
- Forex market remains open 24 hours a day. You do not need to wait for the next day.
- It is a stable market that never crashes.
- There are many products to invest in.
- The requirement for the initial investment is comparatively low than the other markets. Beginning with even $500 is fruitful.
- You can trade easily by using variable methods. Many facilities are provided for different account types.
Dark Side of forex Market
Despite all the above points, some factors create fear for forex trading. Here are some of them that show the dark side of the forex market.
- There is a high risk of loss. CFDs are a complex financial instrument. When you invest, each penny is at high risk.
- The volatility of the market is sometimes very high, which sometimes turns the table for the winners.
- Forex brokers provide you leverages. Leverage lure everyone. But in reality, leverage can destruct or swish away your whole investment.
- The scam ratio is high in forex trading. Mostly the online traders do not have any registration. They have a complete portfolio of fake documents. This way, investors lose all of their money.
- The reward or return ratio of the forex market is low as compared to stocks or shares.
Forex trading review by the success
It is very pathetic to say that despite a huge market volume, the ratio of failure is high in the forex market. Only 5-10 percent of the traders are successful in forex trading. The rest of them contains some average traders. However, 70-75 percent of traders failed.
Causes of Failure
There are some problems that forex traders face during trading resulting in a loss.
- Many beginners have a lack of knowledge. They are not aware of the markets even.
- The use of high leverage is a top destructive weapon that traps the trader.
- Lack of working plans or strategies can create a sense of confusion for the trader.
- The new traders that are not aware of the market conditions mostly fall a victim to over- trading. After earning a profit, their greed dominates them, and they enter the next trade that mostly shrinks their account worth.
- Stress and depression can deviate the mind of a trader from working. This factor can also cause a failure of a trader in forex.
Solution for the problems
Every problem has a solution. Similarly, the problems of forex trading can be solved. Just go through the solutions of them.
- Create a working plan that contains your number of trades, days, and hours.
- Choose such a trading strategy in which you have a grasp.
- Trade on a dynamic and versatile software.
- Select a regulated and well-reputed broker.
- Explore the new ways of trading and techniques of trading.
- Lower down your stress level at the time of trading. In the case of hypertension, do not trade.
- Focus on the latest news and events. They have the ability to turn the market conditions.
- Set your destination by realistic approach. Once you achieve your target, do not perform any other actions.
- Avoid trading on the weekend and the first working day. There is comparatively high volatility than the days of the week.
Key to Success
The key to success in forex trading lies in the understanding of fundamentals and technical. A successful forex trader is always a brilliant fundamental and technical analysts.
1. Fundamental Analysis
In this method, the analysts study the economic, political, and geographical events. He focuses on even minor events that can affect the economy of the country. It usually gathers the news, data, and international events.
For example, the consequences of COVID-19 on the economy of the world are studied under fundamental analysis.
2. Technical Analysis
Technical analysis is performed by using charts, arithmetic formulas, technical tools, indicators, and oscillators. The results under technical analysis are more authentic than fundamentals. However, it is quite tough due to which most traders are failed to get possible results.
Verdict (Forex Trading Review)
By paying attention to the fundamentals and technicals, one can leave milestones in his forex journey for others. It takes a lot of time to understand the markets, strategies, and techniques. However, working smartly can increase the chances of rewards.
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