First and foremost, forex is an asset class where you trade or invest in currencies of different countries based on market forces which most often, cause difficult-to-predict-situations around your decisions. But prior to diving into the forex trade, it is recommended to understand the factors that manipulate instruments and the associated risks.
Forex trading is gambling of a sort, but it is a matter of opinion as there are no clear lines between investing, speculating, and gambling. All of these activities require taking a risk on the outcome of a future event.
When you trade or take a position on a particular currency, you are betting on the price to either go up or down. Whether that’s fine, will largely depend on your goals, trading style, or tolerance for risk. Statistically, the higher the risk-reward ratio, the higher the chance of loss.
Forex trade is highly lucrative and overly risky because it is an economy with far less regulation than stock trading. Forex trading can make you rich but with a catch. You may become rich if you are a hedge fund with deep pockets or an unusually skilled currency trader. If on the other hand, you are only an average retail trader, forex trading can be a rocky highway to enormous losses and imminent penury.
But I have heard and read about the testimonies of young people making their millions all over the internet, you say.
Yes, there are testimonies and marketing gimmicks, but in navigating your path to wealth, you must identify your paths of risks. Get valid answers to questions like:
How do I know if a Forex broker is legit or scam?
You must visit the site, look around the forums, and note negative reviews of the broker. You should do this on both the site and third-party review sites like trustpilot.com.
You should be looking out for funds withdrawal complaints by users and response by support.
When you take time out to read through the fine prints before opening an account, it may save you from some future heartache.
Learn and study from other people’s mistakes.
Watch out and be wary of funnel scams luring you into buying courses, trading bots, or other expensive systems to learn how to trade forex, you’re opening your doors to scam.
For most traders, they need to stay on it for between 3 and 5 years to even come close to being consistently profitable.