The ways you see Forex trading systems and courses advertised these days you would think that trading Forex is the greatest thing since sliced bread. Everywhere you look there seems to be some young, successful-looking person standing next to either a mansion or an expensive exotic car. You're supposed to think that the super-successful person acquired these things using their extreme Forex trading acumen.
Okay, now that I sound like I'm such a Forex trading pessimist let's do a little myth busting if you don't mind. When you think of income opportunity, what comes to mind? If you ask me, I would think of something like selling Amway or maybe Avon or Tupperware or perhaps Mary Kay. If I'm not mistaken each of these requires a modest capital investment and has real, tangible products to sell. This isn't to say that an income opportunity can't be service-oriented, these are just some common examples.
So how did Forex trading come to be thought of as an income opportunity in the first place? Is it the fact that you can start trading Forex with as little as $25? This small amount money would certainly not be a huge barrier to entry and is also something that most anyone can afford. The fact that it doesn't cost much to become involved in Forex trading may have a lot to do with the high level of appeal that it has. Along with this we would have to include the almost bottomless pit of hype surrounding Forex trading. Basically, everywhere you look it appears that people are getting rich and making their financial dreams come true simply by trading Forex. Does this happen for some people? Absolutely, I'll be the first one to acknowledge that some people do extremely well in Forex trading… but let's dig a little deeper into what Forex trading really is.
I'm not here to discourage anyone or to burst anyone's bubble about Forex trading, not in the least. I may sound like I am against Forex trading, I most certainly am not. In fact, I love trading Forex, always have and always will. So what exactly am I here to say? Good question! I'm here to say unequivocally that Forex trading should not be viewed simply as an income opportunity. This skews the expectation levels of beginning traders to the point that they believe they can simply place money in an account and instantly become a successful Forex trader. Let me set the record straight. Forex trading is speculation. Merriam-Webster defines the speculation as “assumption of unusual business risks in hopes of commensurate return”. The key word in that definition is “unusual”. In the world of the global financial markets we can translate the word “unusual” to basically mean “high”. In other words, Forex trading is a high-risk venture any way you slice it. This is evidenced by the extremely high percentage of individuals who enter into Forex trading, but lose money by doing so.
So your expectation level should be that Forex trading is high risk. For those who trade without the proper training and skill level trading is not only high risk it is a virtual impossibility for them to make money.
Now that you have your expectation level adjusted the prospect of Forex trading may even be a little bit scary to you. Actually, that's a good thing, because if you are scared or nervous it simply means that you are unprepared for the risks of Forex trading. If you feel unprepared then you have two choices; 1 – either prepare yourself or 2 – don't trade Forex. If you decide to take the first option, then it's time for you to start to learn how to trade Forex. By learning to trade Forex you will increase your probability of success simply by increasing your level of preparation.
Leave a Reply