Most people lose money in Forex trading?
I'm new to trading, but someone suggested me to give Forex a try. I also read that most of the people lose more money trading Forex, than they are actually making, is it true?
The currency markets are a very different beast than the equity markets which in the past, save recessions here and there, have accrued at very steady rates. On the other hand, currency markets act much like commodity markets in the sense that there is high volatility and no pervasive trend.
In the end, they are a business and have to make money. They do this through transaction costs. Like a casino, if the markets are dice with three 0s, and three 1s you would expect to win/lose 50% of the time. However, the inherent fees in every transaction take the probabilty of making money below this 50% breakeven threshold.
The size of your account works against you unless you're swinging hedge fund sized bats. Too easy to get squeezed, volatility spikes wildly, not for novice...the short version.
If you're talking about retail, then maybe, though I don't think that's so strange for most asset classes with regard to retail trading. The leverages often can cause amateurs to lose money quickly.
Retail forex trading is one of the biggest scams there is. You cannot fathom how much more you are paying to trade than everyone else. On top of that, it is completely stacked against you in every way, as Midas appropriately laid out.
I want to do some paper trading but I don't want to trade something that has everything stacked against me.
If you trade retail FX: do NOT use the chop-shop American brokers. They do not have access to the interbank market that turns over absurd amounts of currency and make their money by being an unnecessary middle-man. They are also often your counter-party, creating perverse incentives to delay orders etc. However, I wanted to get into retail FX over the summer, spent days researching the best retail broker, and ultimately decided to go with Dukascopy, a Swiss broker. They have direct access to the interbank market and a really, really small spread as a result. They are also not your counter-party. The only caveat is that, since they're Swiss, you need to provide extensive identification and the process takes weeks. Sorry for the shameless plug, but it just pains me that chop-shop American brokers have stymied retail FX for so long. I used Dukascopy this summer as an amateur retail trader and made some pretty solid gains, the FX market is much nastier, more volatile, and overall more stressful than equities though.
most people lose money in every form of trading.
I think you need a better reason for jumping into forex trading than someone suggesting you do so. Making money in any form of trading generally requires a high level of knowledge, skill and resources, or failing all of that: blind luck.
better be lucky than skilled
Thanks for all the great replies. I have made up my mind and I will start playing with equity markets instead. I will open up a new thread shortly since I have many questions I'd like to ask.
I don't understand the people saying FX is more volatile than Equities. No way is that true. A 2% daily move would be pretty significant in FX. In Equities? Not so much. You see 2%+ moves all the time.
Even Equity Indices are more volatile than FX. Reason retail traders get burned is due to the redunkulous leverage available to retail FX traders, much more so than you can get trading Equities.
FX isn't volatile at all--most people are stupid though. The only thing less volatile really is the FI stuff and that really depends still. The reason why people see high volatility in their PnLs of stupid speculative retail trading is because they are levered 50-200x and make completely directional trades.
And to be fair, if you don't understand your leverage and cannot risk manage properly, you probably shouldn't be trading to begin with.
The overall consensus seems to be that I should stay away from Forex trading. I have visited a couple of sites coparing Forex to Equity markets and 1 point was that there are no brokerage fees in forex trading, but as I later found out (I didn't buy into the stuff that someone in the financial world do something just for free), forex brokers indeed take a cut from the buying/selling price of the currency so basically instead of a flat fee, they take a percentage!
well u can make money trading anything if your are 1.lucky or 2. very skilled
if you think like that it only shows you haven't done enough research in any of the markets to gain an edge
having said that the different asset classes are like women
if you don't tame them they bite and bitch
but if you learn more about them they will reward you
No I don't know much about the markets and I have a lot to learn, that's why I'm here. I just needed to know what should I learn - Equity, Forex or something entirely different.
Forex is now advertised left, right and centre, which means that it must be a great business for brokerages.. I am not so certain about individual small time traders. FxPro sponsors Fulham from the money they make on people hoping to get millions in no time.
Polish financial authorities surveyed brokers operating in Poland and it turns out that 90% of their individual clients are loosing money. Is it a case all over the world or are Poles so rubbish in Forex trading?
Everytime I need help with my forex trading, I always go to this site. Mario Singh of FX Primus provides daily answers to different questions. Big help for forex trading for beginners.
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