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by Finage at May 9, 2022 5 MIN READ
Forex
Many people come to me with questions concerning currency trading, forex trading, and forex trading tactics. They hear all kinds of rumors and form opinions about it that are either excessively "optimistic" or, on the other hand, "something truly terrifying and impossible." I'll discuss strong forex trading techniques and what a solid forex trading system looks like, as well as how currency trading works, what the risks are, and what the trader's obstacles are. Read on if you're interested, even if you know nothing about it, finance, or economics.
A Review of the Fundamentals
I won't go over all of the basics because they've already been discussed in an earlier post and are widely covered on numerous websites. I'll just offer a quick summary. To trade currencies, you don't need to be a financial guru or an expert economist, but you do need to be willing to learn and "understand what's going on" at the very least in order to generate long-term profits.
It is feasible to make money trading currencies, and it is possible to make a lot of money. On average, 90 percent of retail forex traders lose money... However, another 5% make respectable profits, and another 5% make unreal gains month after month, typically to the tune of 10% to 20% monthly returns, month after month (yes, you read that correctly, there is no typo) for the best and most risk-tolerant among them. This is not a hoax, a rumor, or an exaggeration; it is factual and verifiable.
You purchase and sell "pairs" in the form xxxyyy, where xxx is one currency and yyy is the other, such as usdcad, eurusd, or gbpaud, when trading currencies. You do this by depositing money with a forex broker, who then allows you to purchase and sell currency pairs. Forex stands for "Foreign Exchange," and it is by far the world's largest financial market, dwarfing all others by several orders of magnitude. There are trustworthy brokers and shady brokers; make sure you use a reputed broker like Oanda. The "spread" is supposed to make money for the broker.
In practice, most brokers also have a trading desk, and the broker's traders try to make money by taking the opposite side of their clients' trades and hoping that the clients will lose, on average (which is obviously true, based on statistics), which is similar to a casino: you're "betting" against the house, which means you need to be aware of things like "stop hunting" and other issues (we'll cover that later). Remember that trading is a zero-sum game (or even a negative-sum game) in which one's gains are offset by the other's losses. However, in comparison to the casino (and stocks), the "game" is significantly fairer and better in forex, and the odds of winning are significantly higher for good traders, because the price of the pair fluctuates mostly outside the control of your broker, and THAT is what is good about it, as the pair will follow the global market price quite closely. The currency market is a MACRO market, similar to a stock index, as opposed to a MICRO market on a single stock, which is vulnerable to a great deal of chaotic volatility and market manipulation. Currency pairs can also be "manipulated" and pushed in one direction or the other for a short time and a few pips.
I won't get into all the nitty gritty details because the "operational elements" of forex trading are quite simple to master and are not the main obstacle, so I'll just say this:
We hope that this blog post will be beneficial for you. We will continue to create useful works in order to get inspired by everyone. We are sure that we will achieve splendid things altogether. Keep on following Finage for the best and more.
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