Hitting the Forex Trading Jackpot
Forex Blog Articles
Is it actually possible to get rich in forex trading?
Scroll back far enough and you’ll find a partial answer to the question of “getting rich in forex trading” in one of our previous articles. In that article, we stressed that anyone who gets into trading solely for the purpose of making money is probably going to lose.
Trading is not gambling and anyone who sets out to make a living in this business needs to be ready and prepared for the daily grind. This is constant work that accepts and embraces failures as necessary stepping stones to success.
Rather than seeing trading as a quick way to make money, look at it as a long term commitment, like a business you’re planning on growing from the ground up.
Having put this disclaimer out there, we can dive into the question this article proposes. Can forex trading make you rich? Short answer: Probably not. Well, most definitely not.
Sure there are outliers that buck this sentiment. Hedge funds with almost limitless funds and incredibly skilled individual traders are always possibilities for windfalls. But for the average trader, that’s just not possible and isn’t what forex trading is all about.
The Numbers Don’t Lie
If you’re reading this and thinking “I’m different and can buck the trend,” there are numbers to support the cold hard reality of failure in forex trading.
In a 2014 article in Bloomberg, two of the biggest publicly traded forex companies reported a net loss from 68% of investors trading currency in each of the previous four quarters. Even if a third of investors did not lose, it’s an indication that the forex market is not churning out incredibly rich individuals.
To make matters worse, these numbers were reported two months before an incredibly impactful hit on the market. After these numbers were reported, the Swiss National Bank ditched the Swiss franc’s cap of 1.20 against the euro. In response, the franc soared as high as 41% against the euro and up to 38% against the US dollar.
While funds may be able to handle these massive waves, retail investors are most often helpless. News and events like this wipe out entire forex trading accounts within minutes or seconds.
Still think forex provides a quick, easy path to riches? Here are some specific reasons why it’s not so realistic.
Very High Leverage
On the one hand, this may seem very attractive to certain traders. The appeal of excessive leverage is simple. More leverage equals more money to play the market with. But it also means more money to lose and to lose very quickly.
Be very careful with leverage and don’t be seduced by the maximum leverage allowed. Be comfortable with small, modest consistent gains, and don’t obsess over the one-time windfall. Forex trading is about risk management and no competent risk management plan would include utilizing maximum leverage. It’s a sure-fire way to blow up your account.
Bottom line is, just because it’s available, doesn’t mean you should take it.
Unbalanced Risk Versus Reward
To continue the point above of not taking maximum leverage, most successful traders manage to keep their losses tiny while balancing them with the occasional big win. However, the majority of retail traders often fall for the trap of making small profits but then holding on to a loser longer than they should. This results in heavy losses which can often be too much for a small account to bear.
Setting aside all of the ways you might blow up your account on your own, consider for a moment the variable of technology. Imagine you’ve got a really big position when suddenly you can’t trade anymore. Maybe the system froze or crashed, and you’re stuck without any options. Whether you’re trading on an old or new computer, have the fastest internet available, or are subject to a neighborhood power outage, tech problems happen and they can really harm your account.
An Information Void
While the big players will be tapped into certain information networks that give them a leg up while trading, these networks aren’t available to the average retail trader. This means that forex trading is an uneven field when you set out every day to grow your account.
The forex market is an over the counter market which means it operates in a somewhat unregulated manner. Trades aren’t guaranteed by a clearing organization and it’s not nearly as regulated as, let’s say the futures market.
Not confined to the seediest corner of the market, some of the biggest banks have been caught trying to manipulate exchange rates in order to profit off the market. This is high risk because after all, banks are left to set their own rates in this decentralized system.
The Bottom Line
While trading for the5ers program is not an escape from the above problems listed, the key difference is that with the5ers, you will be fully funded, and therefore risk-free once you’ve validated your strategy.
In this risk-free system, growth opportunities are exponential for those who are consistent and losses never come out of your own pocket. This is the freedom to look forward towards growth without worrying about financial ruin.
Best of all, the cost for entry is substantially less than self investing with a retail broker.
WE FUND FOREX TRADERS!
The5%ers let you trade the company’s capital, You get to take 50% of the profit, we cover the losses. Get your trading evaluated and become a Forex funded account trader.Get Your Forex Funded Trading Account