Why did people stop doing forex?
Ineffective risk management strategy
Why does trading get halted? Trading is halted when there is an order imbalance, which can be bullish or bearish in nature. They're usually the result of regulatory concerns, the anticipation of significant news, or an excess of buy or sell orders for a specific asset.
Poor risk management
This is because the Forex market is highly volatile and unpredictable, and even the most experienced traders can experience losses. One common risk management strategy is to limit the amount of capital you risk on each trade.
According to research, the consensus in the forex market is that around 70% to 80% of all beginner forex traders lose money, get disappointed, and quit. Generally, 80% of all-day traders tend to quit within the first two years.
Counterparty Risk
In forex trades, spot and forward contracts on currencies are not guaranteed by an exchange or clearinghouse. In spot currency trading, the counterparty risk comes from the solvency of the market maker. During volatile market conditions, the counterparty may be unable or refuse to adhere to contracts.
If you are not consistently profitable, and your wins and losses are both the result of chance, or your system is not working, it is definitely time to quit trading with real money, but it is not necessarily time to quit trading FX altogether.
Forex is the currency exchange. Each economy has its own currency and uses it to trade with other economies. So in order for it not to last… the world must be one country / one economy and have only one currency. Short answer: Yes, forex trading will last forever.
Poor Risk Management
Improper risk management is a major reason why Forex traders tend to lose money quickly. It's not by chance that trading platforms are equipped with automatic take-profit and stop-loss mechanisms. Mastering them will significantly improve a trader's chances for success.
Absence of risk rewards skills
Many traders don't follow their plan due to their emotions. When their trade starts going in a negative trajectory, people will place their stop-loss lower in hope that their trade will bounce back up. Traders need to know that it takes time to estimate trades before initiating them.
There are reputable and regulated brokers, as well as fraudulent ones seeking to exploit unsuspecting traders. The negative reviews often stem from people who may have experienced losses due to lack of understanding, poor strategy, or dealing with unscrupulous entities.
Is forex illegal in USA?
Are Forex Brokers and Forex trading legal in the U.S.? Yes, forex brokers are legal in the U.S., but they must be registered with and regulated by the Commodity Futures Trading Commission (CFTC) and be members of the National Futures Association (NFA).
The answer is yes! Forex can make you a millionaire if you are a hedge fund trader with a large sum. But forex from rags to riches for the majority is usually a rocky and bumpy ride which often leaves some traders in their dreams.
Forex trading, an essential cog in the wheel of global finance, is unlikely to witness an end in the foreseeable future. The speculative notion of “when will forex end” is not underpinned by tangible evidence; instead, it emanates from the uncertainties typical of any financial market.
Is Forex essentially gambling? Yes. With every trade placed, a trader is a attempting to predict moves to get profits. Statistically speaking the higher the risk reward ratio, the higher the chance of the trade turning into a losing trade.
Trading the financial markets is notoriously difficult and many wonder what percentage of forex traders fail. Using official data from 32 ESMA regulated brokers, my research shows that an average of 72.2% of forex traders lose money.
On average, a forex trader can make anywhere between $500 to $2,000 per day. However, this figure can vary significantly depending on market conditions, trading strategy, and risk management techniques. Some traders may make more than $2,000 in a single day, while others may make less or even incur losses.
Common Forex Trading Time Frames
Day Trading (1-hour to 4-hours): Day traders hold their positions for a day or less, closing them before the market closes. Swing Trading (4-hours to daily): Swing traders hold their positions for a few days to weeks, aiming to capture larger price movements.
There is a simple fundamental rule that follows the moving average stop: When the price of the currency pair goes below the moving average, it's time to sell. This can be used to identify an exit from the open position for maximized profits.
The forex market is far more volatile than the stock market, where profits can come easily to an experienced and focused trader. However, forex also comes with a much higher level of leverage and less traders tend to focus less on risk management, making it a riskier investment that could have adverse effects.
So, while many regulations are set to prevent it, market makers manipulate forex through various means to increase their profitability. Market makers employ several strategies to achieve their goals through market manipulation.
Can forex trading be illegal?
Forex trading is legal in the United States, but it is highly regulated by several government agencies. The Commodity Futures Trading Commission (CFTC) and the National Futures Association (NFA) oversee the forex market and enforce strict regulations to protect investors from fraud and manipulation.
Forex trading may make you rich if you are a hedge fund with deep pockets or an unusually skilled currency trader. But for the average retail trader, rather than being an easy road to riches, forex trading can be a rocky highway to enormous losses and potential penury.
Forex trading typically involves short-term potential but also entails higher risk when compared to stock trading. Forex market requires daily attention, so the traders must devote more time in learning concepts like currency pairs.
Risk in forex trading is the same as risk in any other market. If your positions go against you, you may have to close them at a loss instead of a profit. No trader gets it right 100% of the time, so learning how to manage and mitigate risk is a key part of achieving success.
This is one of the most important reasons why most people fail to make money in the markets. Unrealistic expectations. First of all, you're misquoting Zerodha (Nithin). The actual stat was - 99% traders on Zerodha (mostly retail traders) fail to earn more than the risk free rate of return (FD returns used as proxy).
