Many people hear about Forex or Forex Trading, mostly reading information online, often contradictory, regarding the possibilities of earning money easily or about the scams that have been suffered with the attraction of false promises of profit. Well, Forex Trading is a very complex topic, which requires some preparation before it can be fully understood. That's why so many people fail in their experience with Forex, blindly throwing themselves into the arms of an unknown market and relying on
brokers (CFD Service) and management companies (which, however, never lose, we'll talk about that in a moment).
According to some statistics, only 15% of people who invest their money in Forex actually earn something, so it's clear that the remaining part, a good 85%, loses and, very often, their failed investments end up right in the liquidity of those who have been successful. It's obvious then that following or believing in certain slogans that promise to earn 200% of your investments in just four days, or that invite you to buy their automatic trading software, or that offer guaranteed earnings, is not a good idea: they are false promises, false but above all easy to make and believe. Dazzled by the earning opportunities that Forex offers, many fall into this trap, thinking that they can finally abandon their job, live "off income" leaving an algorithm or a company to make them millionaires in a short time.
Real Forex is quite different: first of all, even before evaluating the earning possibilities, the risk possibilities must always be calculated beforehand, and only then proceed to the next step. Only by knowing what the opportunities to "win" or "lose" are, you will be aware that intelligent Forex is absolutely not a scam, but a big earning opportunity, mainly in the long term, using the tools that the market makes available.
What is Forex?
Forex Trading is a speculative activity that exploits the fluctuations in market currency quotes to make profits. It is possible to choose a currency pair and invest by "betting" on their rise or fall, buying the currency that is thought to rise and selling the one that is about to be devalued. The currencies invested in the Forex market are always in pairs: an example pair could be the Euro and the Dollar, but it is possible to invest in other currencies, including the Japanese Yen, the Pound, the Swiss Franc, the Australian and Canadian Dollar, the Swedish Krona, the Mexican Peso (and so on)
Is it really possible to earn?
The answer is: it depends on the methods you choose to use. Let's start by saying that for each trading operation you pay commissions to the broker, a sort of "hook" to the company that allows us to carry out operations on the Forex market. The difference between the cost of buying and selling a currency is in fact the broker's profit. What does this mean? Assuming a purchase cost of 1.25 and a sale cost of 1.26, that 0.01 corresponds to the broker's profit, and until the acquired value exceeds the value of 1.26 we, in fact, will not have earned anything yet. If it reached 1.30 we would have earned 0.3. Brokers, in fact, never lose, as their profit consists only of the commission (here too, watch out for scams: professional brokers only require one commission, but some smarter ones try to apply others). If you bet on a currency at random, choosing one from the available pairs, in the long run you will only lose, or at best break even due to commission deductions, which is why relying on luck and investing randomly is not the most suitable solution.
Advice, market elements, traders
You should not look at this market with distrust, which hides high possibilities for those who approach it with the right dose of common sense. The first rule to respect, which also flows into common sense, is to distrust the idea of being able to make money quickly and safely and from anyone who promises us these possibilities. In Forex you can earn a lot with a bit of luck, but you can lose everything very quickly if you are not careful. One element to consider is the financial leverage, a concept difficult to apply and which can be very dangerous and unprofitable for most people, but which shows its full value if you can manage it correctly. Another element to study is the concept of trading system, which industry professionals create, effectively appropriating slices of the market that protect their capital in case of losses and guarantee profit if the trading has achieved positive results.
Some platforms provide simulations of Forex trading, a sort of demo mode where you can use virtual money to become familiar with market concepts, but for which some advise against prolonged use as it lacks the "psychological factor" linked to the investment, the loss or the gain of real money: in short, useful for short tests, but only initially. There are also alternatives that allow, not in a literal sense, to do automatic trading: it is possible to let another person, a company, make your decisions, or rely on the so-called Forex Robots, computer algorithms that through their calculations decide which operations to do on the market. The main problem with these automation software is that not all of them work as they should, some are responsible for money losses, others work better but are paid and, in any case, must be periodically checked to ensure that they are doing their jobs well. One of the guarantees of quality is the choice of the best brokers "on the market", which also allow you to download MetaTrader, one of the most widespread software for earning with Forex: the main names are Markets, AvaTrade, XM and MaxFX.
Finally, one of the strategies most applied by the market is to follow the great traders who, often and willingly, publish and spread their operations on the web. Here too, you need to choose carefully.
