Forex Indicators
Why is forex trading often said to be high risk?
I am always reading how wild the forex market is and how most trading forex never profit and stop trading forex. I am looking at various charts for usd to yen or usd to euro for instance and it doesn't look all that volatile compared to many small cap stocks.. am i missing something? When a currency dips it usually looks to be around a %5 - %10 draw back, I wouldn't call that very high risk. Do most people trade forex with margin accounts? From my understanding w/ trading stocks - margin can allow you to double your return or loss, is there typically more leverage allowed for forex traders?
Public Comments
- depends on the amount of leverage you use, forex you can lose your entire amount if you havent a clue on what your doing in the blink of a eye , takes a good 3 - 6 months practice before anyone should attempt trading forex
- The point here is that the high leverage and low margin associated with Forex can result in significant losses due to price changes in Foreign Exchange Contracts and Cross Currency Contracts. The amount of initial margin may be small relative to the value of the foreign currency so that transactions are 'leveraged' or 'geared'. A relatively small market movement may have a proportionately larger impact on the funds you have deposited or will have to deposit: this may work against you, whereby you incur a loss, or for you giving you profit. You can register to this site and get a Free Ebook for you to understand forex more.
- Great question. Many people who trade forex fail to succeed. Forex trading is similar to trading stocks, but the movements can be much larger hence loses can be much bigger as well. People think they can open a mini account with $250 and turn it into 100k in one month using 100-1 leverage, which just isn't true. The reality is, Forex is a very tough market to trade. The same emotions play in every trade, so a lot of people auto trade, which keeps the emotions out. Except when there is a lot of undecided news, the trends in forex can be favorable. If you are on the worng side, you will get hammered every time. You need a well tested system and adapt to change quick.
