Forex trading is usually portrayed as “get rich quick overnight” way to make money. Many people who don’t know much about it are taken in its snares and end up losing their hard earned money. There are some facts about forex trading that everyone must know before they jump into it.
Who Really Wins With Forex Trading?
There are many companies that sell trading software and there are many that offer their own platforms that you can use to trade. In order to buy or sell currencies, you need to go through a retail trader. They make money each time you buy or sell. So the more you do the trading, the more money they will make. In the real world, about 95% of the new forex traders are not able to really make it and that means 5% of the rest who know what they are really doing end up getting their money.
Forex Trading or Gambling?
Forex Trading is like gambling. You can’t really tell in advance whether a certain currency will go up or down in price and it’s much easier to lose than to make any gains. Traders who really know what they are doing use sophisticated software to get buying and selling signals, their own experience and use fundamental and technical analysis. Using a software to get buying and selling signals is just one of the factors that they use to trade. Depending only a software is almost a guarantee to lose your money.
Before You Start Trading
Before you start doing forex trading, it is highly recommended that you join a forum and read what the experienced traders are talking about. Even the most experienced traders have their bad days and lose money in forex markets. It’s wise to do paper trading for a few months and study fundamental and technical analysis before you start real trading.
Which Platform to Use for Trading?
Many companies offer free trials to use their online trading platforms. There are many companies out there that manipulate their software so that during the trial period, you actually end up making some fake money, but as soon as you start using their real platform, you start losing money. It’s quite possible that even real platforms are manipulated so that you are not really able to make money. Consult the veterans in online forums to find out which ones are good and reliable.
Should You Use Automated Software for Forex Trading?
Although I don’t recommend the automated software for the reasons mentioned above, they have been gaining popularity in the recent years. As mentioned before, it should only be one factor out of many that you should use to trade forex.