![]() They portray Forex trading and the ability to profit as something quick and easy. Because Forex is a massive goldmine, unethical businesses attempt to attract unsuspecting customers with promises of making big money round the clock. Forex trading requires a great deal of knowledge, skill and experience but because anyone can start trading in an instant, vulnerable people are attracted to the opportunity without due consideration to the inherent risk. Technology has literally democratised the Forex market, and there are almost no barriers to entry in the retail scene. That staggering figure, coupled with the magic of leverage, always means that there is immense opportunity to make profits in the Forex market, even though this comes with a lot of risks as well. So, why are there Forex scams? Forex Scamsįorex is by far the largest financial market in the world, with over $6 trillion traded daily globally. So essentially, Forex is a high risk, high reward activity. But herein lies the danger of leverage – losses on unsuccessful trades are also boosted. This effectively means that profits on successful trades are amplified. That is, traders only need to place a little margin with the broker to control a much larger position in the market. A key attraction of trading CFDs is leverage. When trading CFDs, investors are speculating on the price changes in financial assets, which means they can profit from both rising and falling prices. ![]() Retail investors mostly trade Forex as CFDs (contracts for difference), where there is no obligation to own the underlying currencies traded. Forex as an investment opportunity, has long existed in the world, but it has only become widely available to the retail trading community in the last decade or so. When you buy one currency, you are simultaneously selling another, and vice versa.įor instance, when you go long on EURUSD, you are buying the euro, while at the same time selling the US dollar, with the aim that the euro will strengthen relative to the US dollar. This is why currencies are traded in pairs. In Forex trading, money is the commodity traded between participants. Decentralisation also means that the market is not controlled or supervised by any single entity or institution, but rather by regulators or authorities in different regions. The Forex market is decentralised, which effectively means that there is no centralised physical location where investors can go and buy/sell their favourite currencies. As such, Forex trading is a legitimate endeavour where investors buy and sell different currency pairs. Forex (Foreign Exchange) is essentially a financial market.
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