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Why you should not trade forex

Forex VS Stocks

By Mariam PagavaPublished 3 years ago 4 min read
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Why you should not trade forex
Photo by rupixen.com on Unsplash

Forex is one of the biggest industries in the world. Trillions of dollars are the daily turnover of the forex market and millions of people worldwide are actively engaged in trading. While all of this is very much true and forex has gained recognition and popularity on the global scale, there are still many reasons why you have made a wrong choice while trading forex, or why you should avoid engaging in this industry in general for the future.

First of all, let's define what the forex market is and how it works. Basically, everyone who is trading forex is making some predictions regarding the changes in the currency values. Obviously, those predictions are not simply a dream come true, but valid argument opinions, but still count as a prediction, as no one really knows which side will be favored by odds.

The Forex market is one of the most dynamic markets in the world. While it keeps evolving and growing insanely within an extremely short period of time, it is also very sensitive towards the changes in politics, economics, and society. It is simply because all of the social and economic changes usually have a negative impact on currency fluctuation, and the currencies, as well as national economics, fall into the crisis.

There are multiple reasons worth mentioning which describe why you should not trade forex and why for example stocks are way better options than FX.

Don't burn your money

Usually, people who trade forex, spend money which they can not afford to lose. Because of the volatility of the market, there is a huge risk of losing money when trading a currency pair. This risk is not present in the stock market though. While stocks are changing in value just like currencies, they are more stable and rigid towards the changes. Thus, they are more reliable.

With forex trading you need to add margin trading and leverage, which means that you can trade a large amount of money with the small initial; capital, which can be increased further. Thus, the money which you are trading with is not yours, and you can not afford to lose it either. Even if so, make sure to spend only the amount of money, which is not crucial for your living.

Are you in control of your actions?

Up until the very moment you start trading, you should understand the nature of the market. For this, you have to have some background knowledge in order to trade responsibly. But, the hard part about forex trading is that you can never know everything, regardless of the experience you have. Figure out the right strategy for you, which you consider successful.

If you don't understand the nature of the trading and have had no previous experience this might not be the right activity for you either.

Can you handle it when you are wrong?

Forex trading has become popular in countries of low economic stability and relatively low social standards. These are mostly the Asian and African countries. Places, where people have poor living conditions, have specially developed risky markets as forex. The reason behind it stands on the chance of earning money for a living. Thus, many South Africans invest in forex, and despite the fact that some of them might actually be successful others lose a lot and have a hard time getting their wrongness.

On the other hand, the brokers understand the potential of markets such as South Africa and never hesitate to offer some bonuses and promotions to people in the hope to get more customers. The IQ option South Africa broker is one of the clearest examples. The bonuses and promotions, especially the no deposit bonuses for the customers, is the activity which delivers the most of the clients, and also the activity which makes people invest as much as possible, in hope of winning money.

The risky market

The extremely fast-changing market makes the trading opportunity even harder and the high volatility of the market adds some extra risks for trading. It is true that the FX market can bring huge rewards, but this kind of return does not come without risks, especially when using leverage. Some brokers offer extremely high leverage rates.

Thus, if you are not a risky person overall, the forex industry might not be for you at all.

Time management

Time management is something crucial while trading. Depending on your trading style, the right time management is crucial. Though, in any case, trading overall required a crucial amount of time in front of the screen. If you already have full-time work, it might not be the right decision to take up trading.

The additional complexity of the trading lies where the trader should be conservative towards the market and every change occurring in the market.

So make sure that you are the trading type person, who can stay concentrated for a long time and is capable of taking the responsibility for the actions.

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