Forex buying and promotion make you rich? Even if our instinctive answer to the query can be a clear “no”, we should limit the answer. If you are a well-funded hedge fund or a skilled foreign exchange trader, then foreign exchange trading can make you rich. But for general retail traders, rather than as a clean way to get rich, it is better to use foreign exchange shopping and promotion. May suffer huge losses and loss of functionality.
But the first is statistics. Bloomberg (Bloomberg) mentioned in an article in November 2014 that it was based entirely on the comments of the largest foreign exchange group at that time on the client-acquired capital holding company (GCAP) and FXCM-68% of buyers suffered from trading Net loss of currency in earlier years. Even if it is interpreted as meaning that about one-third of traders no longer lose money buying and selling currencies, this is not similar to buying and promoting foreign exchange for getting rich.
It is reported that Bloomberg data was mentioned only a few months ago before the surprising earthquake in the overseas cash market highlighted the risks of foreign exchange purchases and sales. On January 15, 2015, the Swiss national financial institution’s exchange rate against the Swiss franc fell by 1.20 Swiss francs, which has been in the country for 3 years. The end result was that the Swiss franc was terrible. On the day, the exchange rate of the euro against the dollar rose by 41%, while the exchange rate of the dollar fell by 38%.
Wonderful moves from relevant Swiss financial institutions caused losses and caused tens of thousands of dollars in losses, from countless retail dealers to large banks, countless foreign exchange transactions, and purchase contributors have paid the price. The loss of retail purchases and promotional payments dried up the capital of at least three brokerages bankrupted them, and put FXCM, the most important retail foreign exchange broker in the United States, at the time of the financial crisis.
A sudden event is not the biggest danger to foreign exchange investors. It is here that there are seven special reasons why it is possible to oppose retail suppliers who wish to obtain affluent purchases and promote the foreign exchange market.
Excessive leverage
Despite the fact that the currency may be unstable, the aforementioned sharp fluctuations in the Swiss franc are not uncommon. For example, the euro-dollar exchange rate fell from 1.20 to 1.10, while the US dollar remained flat this week, which is still less than 10% of the exchange rate. However, the stock price can alternately rise or fall by 20% or more within a day. However, the charm of foreign exchange trading lies in the huge leverage provided by foreign exchange brokers, which may increase income (and loss).
If the provider shorts USD 5,000 at 1.20 and the real value is close to USD in Euros, and then short at 1.10, it will receive a considerable profit of USD 500 or 8.33%. If the trader uses the maximum leverage ratio authorized by the United States of 50: 1 (without considering the cost of buying and selling and commissions), the profit is 25,000 USD, which is 416.67%.
Of course, if a trader is long EUR at 1.20, using a 50: 1 leverage, and exiting the trade at 1.10, then the loss of capacity maybe $ 25,000. In some remote areas, leverage can be as low as 200: 1, or even better. Since insufficient leverage is the biggest opportunity factor for unmarried in retail foreign exchange trading, regulatory agencies in many countries are restricting this.
The danger of instability is rewarded
Experienced foreign exchange shoppers can keep losses to a very small level and use large amounts of income to make up for these losses, and it turns out that their foreign currency names are accurate. However, the largest retail consumer will do this in another way, earning a small amount of profit in certain positions, but then keeps losing money for a long time, and the loss is very large. This may bring in more funds than your initial funds.
Platform failure
When you have great characteristics and cannot close the transaction due to platform failure or system failure, please consider your dilemma, platform failure or system failure may be a power outage, network overload, or computer crash. This class may contain extremely volatile instances, and orders containing stop loss are no longer drawn. For example, many shoppers have tight regional stops on their fast Swiss franc positions, earlier than the surge in foreign exchange on January 15, 2015. However, these shoppers proved to be ineffective, because even if everyone closed the short position, liquidity was exhausted. Franc position.
No statistical aspects
The largest foreign exchange trading bank has a large number of shopping and promotional activities that can be inserted into the foreign exchange international market and have information elements that are not available to retail traders (for example, commercial enterprise foreign exchange flows and secret government intervention).
Forex fluctuation
Consider the example of the Swiss franc. Too high leverage means that during abnormal foreign exchange fluctuations, the time to buy and promote capital may be exhausted immediately. These movements can slip into the market earlier than the time when the largest role investors have a chance to react.
OTC market
The foreign exchange market is an over-the-counter market and is not always managed centrally like the inventory or futures market. This additional method of not guaranteeing foreign exchange transactions by not using any form of clearing agency can increase counterparty risk.
Fraud and market manipulation
Fraud incidents occasionally occur in the foreign exchange market, including loose investment behavior, which disappeared in 2014, and investors charged more than $ 1 billion in fees. The market manipulation of foreign exchange quotations is also rampant and concerns gamers about some of the most critical issues. For example, in May 2015, four major banks were fined nearly $ 6 billion for trying to manipulate trade prices between 2007 and 2013, bringing the well-known fines imposed on seven banks to more than $ 10 billion.
Lowest line
However, if you still need to try foreign exchange trading, please take some protective measures, such as: limiting your leverage, retaining strict loss prevention, and using good foreign exchange brokers. Although these percentages are important to you, at least these measures can help you achieve a level playing field to some extent.
