Foreign exchange trading is all about going forward with a transaction and coming up with profits from it in spades. It’s easier said than done without a shadow of a doubt. Even professionals end up losing a fair share of their trades every now and then. An interview with a Forex trader however reveals quite a few facts, glaringly interesting facts.
The Leverage Story:
The continuing success of this financial market has a lot do with its successful ability to continue increasing the number of individuals trading in it. Losses are part and parcel of any financial market investment but there is no doubt that this can easily be a profitable investment at the end of the day.
Coming back to what makes this financial market the best one around, it all comes down to leverage. It plays big in attracting newbies into this market setup promising a wall street of profits.
There’s one thing which every single interview Forex trader commonly reveals. Leverage can weigh heavy with just as much losses.
To explain simply, leverage applies directly on an investment before it goes live onto the Forex market. Multiplies is a better word instead of applies, leverage literally multiplies the investment proper. After going live, the huge probable profits are only possible if the transaction itself is a profit. If instead, it’s a loss, the trader ends up losing just as much as the probable profits would have been in the first place.
This happens more often than not in case of newbies than pro traders. Newcomers obviously increasingly end up playing on the market instead of analytically trading. Aiming for huge profits with sky-high leverages, they often end up losing their whole initial investment straight up. Incidentally, they rarely set foot in the market again.
Experts’ Suggestion – Newbies should aim small when starting up in Forex. They should go for low leverage accounts but even if they do go for high leverage ones, they’ll be better off with additional risk management setups functional.
Do Brokers Play Fair?
There’s a quite a storm ruffling up the feathers of top brokers with allegations that they hinder in proper profits. Brokers apply spreads on transactions which a trader initiates on the market. Spreads are simply difference between buying and selling prices which apply from the brokers’ end. What happens, from the traders viewpoint, they end up getting profits across minimal pips due to high spreads. This is the basics behind how brokers, allegedly, come in between traders. Market experts can neither confirm nor deny that this happens on a regular basis.
Experts’ Suggestion – Newbies can also refer to a trader Forex with an ECN account for getting fixed spreads.
Additional Experts Tips for Newbies:
Demo accounts provide a real-time simulation of the live Forex market along with virtual currency to trade. Newbies are better off learning trading from its very basics with these demo accounts before even thinking about going live into the market.
Excerpts from the an interview with a Forex trader – “Profits are there to be made if you know how to find and get them. If you know.” So, all newbies need to do is know.
The content of this article reflects the author’s opinion and does not necessarily reflect the official position of LiteForex. The material published on this page is provided for informational purposes only and should not be considered as the provision of investment advice for the purposes of Directive 2004/39/EC.