There Are Other Markets Besides Forex
Don’t believe those who say that the FX market is your only way to make real money quickly. In addition to Forex, there are other equally profitable options that are popular among professional traders:
- Stocks
- Commodities
- Indices
- Metals
- Cryptocurrencies, etc.
There is a whole set of reasons why the FX market is that popular:
- High volatility, and therefore the possibility of quick profit
- Trading is available round the clock 5 days a week
- Small commissions compared to other markets
- Low minimum capital required
Traders come to Forex for quick and easy money. They want to get the maximum profit at minimum cost. At the same time, they don’t take into account the fact that Forex is one of the riskiest markets due to trading leverage.
An inexperienced trader often chooses the highest available leverage and uses the maximum trading lot which leads to huge losses in each trade. In order to stay in the currency market, a trader needs to develop a strong risk management system and clearly follow it. The most important is the leverage and lot size.
Financial markets will open up a world of opportunities for you if you act wisely. For a novice trader, Forex will be the best option with the right risk management. When you reach a professional level in the FX market, you can expand the field of action. However, it is important to add one market at a time. This is the only way to thoroughly understand the topic and reduce your risks.
Market Makers Are Not Absolute Evil
The Forex market is always attended by large players that act on the other side of the market. Often, they are considered to be the bad guys as they are able to turn the market in the direction they need. They are able to intentionally knock out millions of Stop Loss trades knowing the habits and strategies of retail traders.
It is strange that banks often deserve the respect of customers while brokers are called deceivers who seek to rob traders. At the same time, it is large banks that are the main Forex market makers. That essentially makes them simply the largest brokerage companies.
It is believed that for a broker, the losing client is the best client. But let's take a look at the benefits you will get using the services of a brokerage:
- Brokers strive to offer the best market price from trusted liquidity providers.
- To remain competitive, brokers try to provide the best trading terms: tight spread, fast order execution, low commissions, etc.
- Thanks to leverage, you can enter the global market with small capital.
- Some brokers offer access to several financial markets at once, including stock, metals, and more.
Without market makers, trading on Forex would simply be impossible, at least because of the low liquidity. Therefore, don’t fight them. We need to learn how to live with them, taking into account their basic methods.
Don't Base Your Choice On ECN Only
Many traders choose a broker solely by the availability of ECN or Interbank accounts. When trading from such accounts, your orders are sent directly to the world market without intermediaries, which allows you to trade at the best prices.
However, it is worth remembering that Forex prices are set by traders themselves. The major players or market makers, to be exact, as they are able to rule the market. Forex doesn’t have a central exchange. The price of one trade is not compared with another. Currency pairs are over-the-counter (OTC) products. That is why, even when your transaction is sent directly to the world market, this will not necessarily provide you with the best available price. Base the choice of an account type on other indicators:
- Spread and commission size
- Minimum lot
- Order execution speed, etc.
It is also worth noting that not all brokers really offer direct access to the market from their ECN accounts. Unfortunately, for some companies, this is just a marketing ploy.
Therefore, pay attention to other things when looking for a broker:
- Market presence and trader confidence
- Trading conditions: spread, leverage, swap, etc.
- Available payment methods
- Local representatives in your country and more
Trading Is Never Easy
I mentioned in this blog before that simple strategies bring the most profit. The easiest to find trades have the highest chance of success. But with all this, Forex trading is never simple.
If you set for success, prepare yourself for challenges:
- Constantly accumulate knowledge and learn from your mistakes
- Train self-discipline
- Face losses and frustrations
- Scrupulously follow set plans
- Develop emotionally and mentally
In order to really start making money on Forex, you will have to invest a lot: finances, time, strength, and emotions. It won’t be easy but with the right approach, it's worth it.
That’s it for today. I think you already got enough stuff to think about. I hope you won’t be disappointed after my words. On the other hand, if you are not ready to accept the currency market as it is, it will be difficult for you to achieve success.
In the next article, we will talk a bit more about Expert Advisors, Forex mentors, and learning. See you!