To understand the real reality of Forex Trading, you must first picture yourself in the shoes of four Traders. In Trader #1’s mind, they are rich, successful people who have a lot of money. But in Trader #2’s mind, they are poor people who have no money. And they are forced to pay the losing trader, while the winning trader is left to lose all of his money.
If you’ve ever been tempted by a multilevel marketing company, you’ve likely seen advertisements like this one. These schemes are illegal investment scams that focus on recruiting new members to fill the lower level of the hierarchy. In this scenario, Trader #1 has a swanky office, a top-of-the-line trading computer, multiple monitors, and dozens of charts loaded with technical indicators. Unfortunately, such a scenario is rarely true. Trader #1 is not alone.
When you picture yourself as a successful forex trader, you probably have an ideal picture of yourself: a large, swanky office. You have a top-of-the-line trading computer and multiple monitors. You have charts loaded with technical indicators. But what about the reality? What do you get to realize that your trading plan doesn’t work? Do you give up? Here’s a look at how a successful trader operates in the real world.
Imagine yourself in a posh office, surrounded by your latest software, your top-of-the-line trading computer, and dozens of charts loaded with technical indicators. What would happen if this was your reality? How about if your broker goes broke and you have to pay the winning trader? Trader #3 will have his or her head spinning in confusion. Let’s start by picturing the reality of forex trading.
Imagine yourself in the position of a Forex Trader #1: he works in an impressive office and has a glitzy trading computer, multiple monitors, and several technical indicators stacked on the screen. Then imagine that you are Trader #2, who works on a humble notebook computer. Rather than using the latest technical indicators and software, you simply display two or three charts with a tally of your winning trades. This operation is more like that of a successful forex trader.
When it comes to the real world, not everyone succeeds in trading forex online. For instance, not every person who signs up for an online forex trading program will be profitable. A common mistake is to think of forex trading as a specialized profession that is accessible only to financial experts. While there are numerous advantages to trading online, the reality is much more basic.
Currency pairs are the key. For example, if you decide to trade USD/EUR, you are telling the market to buy the USD with Euros and vice versa. Once the market confirms the trade, the exchange rate determines who made the profit.
The first attribute to understand about FX trading is that it is a game of odds, not fundamentals. Fundamentals are irrelevant because the prices are set by human perceptions, not the underlying facts. This means that you cannot predict the direction and course of events. The best you can do is to understand the odds and use them to your advantage. In other words, forex trading is a gamble but a very profitable one.
A typical office scene of a successful Forex trader will look nothing like the fantasy world pictured in Trader #7’s Instagram photo. It’s filled with ordinary desks and notebook computers, displaying a few technical indicators and a few trading charts. Trader #2’s desk is a little more realistic. He’s using a regular notebook or laptop computer, with two to three technical indicators on his charts.
It’s not all about young hustlers cosplaying as the Wolf of Wall Street in a slick commercial. Financial technology has become a trap, and social media has combined with the culture of Instagram to make the forex market seem like an impossible dream. In other words, forex trading is not all about hard work but about hyper-aspirational living. Unfortunately, these images are more often than not inaccurate.
Forget about the dream of becoming a millionaire by starting a forex trading business. The reality is increasingly complicated than it appears on the surface. Forex trading involves risk, and not everyone can profit from it. In this article, we’ll explain what happens to most newcomers in this market. There exists no magic formula for success in Forex trading. The key is to understand the nature of the market, how currency pairs are formed, and how they affect the price of currencies.
One of the best ways to visualize the realities of Forex trading is to imagine a giant lake. The lake is not empty; there are numerous boats of different sizes – they represent market participants. These market participants include banks, non-bank financial institutions, multinational corporations, and large institutional investors. Also included are algorithmic trading firms and high-net-worth individuals. But in reality, the forex market is far more complicated than this.