Can you get rich with Forex?
Most online traders have had contact with Forex trading in one way or another. And we don’t mean the technicality that you’ve likely exchanged currency, so you’ve participated in foreign exchange markets. We mean that you’ve either traded Forex, know someone that did, or have been suggested to do so. And many of them ask themselves the question if they can get rich with Forex?
In the first case, you may have a formed opinion already, but in the other two, there may be vagueness. A lot of traders misconstrue Forex as something it’s not. These warped images range from currency trading being a quick moneymaker to an entirely safe trading method, or even a road to disaster.
Today, we’ll try and clear that up for you.
The Dangers of Trading
Keep in mind that this text is from a trader’s perspective. Most opt to become Forex traders rather than investors due to the simple reasoning of there being better investments. Forex markets are usually relatively safe, but yield lesser gains and are more prone to freak events than, for example, indices. As such, most of those that seek to dump their money and watch value amass opt for indexes or ETFs instead of Forex.
On the other hand, the constant incremental shifts in value make Forex lend itself well to traders. But there’s another caveat in that trading is much more difficult to become successful at than investing.
If you’ve ever visited an online broker, you may have spotted a disclaimer near the bottom. It says something like, “xx% of traders lose money while trading.” The xx is usually a number of 80 or upwards, and the brokers aren’t lying. That means every fifth person manages to make any money, and that’s not even accounting for what’s the amount and how much time they put in.
So while it’s true that you can make money, it’s also self-imposing that you need to be exceptionally skilled. And that’s what takes us to the most dangerous Forex misconception – that it’s an easy way to make money.
Is Forex Easy?
In truth, Forex markets are among the most difficult to track. For starters, there are two currencies for each pair, so there are at the very least two assets to track. And then, you need to take in the massive scope of information that goes into determining currency values.
Take the Euro, for example. It’s a currency that 19 countries use. To determine what’s going to happen, you’d need to take into account events in all 19. But let’s say you don’t want to do that and decide to look at the top 5 economies that use it. There’s still the EU’s monetary policy and overall legislation that you need to worry about.
Then you also need to peg it against another currency that’s as complex.
Why the Misconception?
The malformed opinions about Forex usually come from brokers or referral fishers online. They promise you can earn huge amounts of money with small investments, which sounds as great as it is utterly deceptive.
It’s not straight-up untrue, as you can earn a lot of money if you take a massive leveraged position, get lucky, and get out in time. That’s quite the perfect storm, especially for novices. At that point, you may as well bet your money on the spin of a roulette wheel.
Is Forex a Scam?
No. Like any trading method, it has the ability to earn or lose you money. However, you need to rid yourself of the ridiculous notion of Forex being a get-rich-quick method.
If you want to invest the time and effort to become a competent trader, Forex can be lucrative for you. But if you expect to become a millionaire as a complete newbie, spend a few nights at a casino and see how much money you have in your pocket.
So, Is It Possible to Get Rich with Forex Trading?
Forex trading can make you rich if you have a big sum of money to invest and with the help of a highly skilled currency trader. Still, for an average retail trader, forex trading can be a rocky highway to huge losses without a good strategy and trading education.
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