Why the Forex market is being accused of being a fraud

The Forex or foreign exchange market may be perceived by some as a scam. This is because although currency trading is now available to everyone thanks to brokers and their trading platforms, it is not uncommon for inexperienced investors to lose all their capital in a short period of time.

Like any other investment, Forex is a risky venture and it is important to keep this in mind before taking the plunge. Websites that extol the virtues of Forex, saying, for example, that the market is accessible to beginners, may be perceived as fraudulent.

This is certainly not the case. Without market knowledge and experience investing in the stock market, it is difficult, if not impossible, to make money in the long term by speculating on currency rates. Some people use the argument that if you speculate on the rise or fall of a currency cross, then statistically you have a 50% chance of winning. But this statistic is also completely wrong, as investing in speculative stocks online is actually much more complex and is by no means a game of chance.

There is another aspect of Forex trading that can be called an advantage. It often attracts many novice and inexperienced investors. This is, of course, leverage. This tool is designed to allow you to bet more on a position than you have. It should be used with extreme caution because while it can increase your gains, it also systematically increases your losses.

Indeed, due to the large losses incurred by some unsophisticated traders, financial market regulators have recently introduced rules aimed at banning the use of excessive leverage. While in the past some brokers used leverage to increase the size of positions by 400 times, this is now limited to 30 in the Forex market.

In light of these arguments, it is easy to understand that the Forex market is by no means a scam. You just need to understand how currency trading actually works before you decide to invest your capital. If you choose a regulated Forex broker, you cannot be "ripped off" in the literal sense of the word - in the sense that the broker will not steal money from you or encourage you to lose money. If you lose money trading currencies, it's because you haven't mastered the methods of analysis and strategy.

What you need to know about Forex before you start trading

As we have just seen, Forex is by no means a scam, and some traders do manage to make winning trades in this market. But to avoid the risk of losing all your capital on the trading platform, you first need to know exactly how this type of investment works.

To begin with, let us remind you that Forex trading is speculation on the rise or fall of the exchange rate of a currency pair, i.e. one currency against another. These rates do not move randomly, but are the result of supply and demand for each of these currencies. Therefore, it is very important to have a good understanding of the mechanisms, information and data that drives traders to invest one way or the other in these crosses.

What you need to master

The first thing you need to do before embarking on this type of trading is to master technical and fundamental analysis. You will find plenty of resources for this on this site.

Once you have mastered these market analysis tools, you will also need to develop an investment strategy that you can stick to. Ideally, you should test these strategies before you invest your capital. Some brokers offer free demo accounts to their users. Finally, always choose a broker that is regulated and approved by the financial authorities and remember that trading is a risky business.

Johannes Röll

Johannes Röll was born 1978 in Brilon,Germany. Graduated RWTH Aachen University. Over the past ten years he worked as Head of the plastic card team, where he was mainly responsible for the development of the distribution, Head of sales Department and Financial Analyst,where he got experience in planning and support sales figures for branches. For the present he works as freelancer

• finance

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