#4400

Matthew Holtz
Moderator

Some think it is a cash machine yes, but you’ll find a huge amount of information on the web about retail trader profits and losses. The often banded-about figure is that 90% of new traders lose money. The reasons behind this are a bit debatable but think about this:

** Many FX traders start out after watching a TV commercial or something drops in their inbox. Most don’t have any existing knowledge about economics, finance or preparation to interpret the news flow and technical data one way or another. They are marketed the idea that it is an easy way to make a fortune.

** Some over-leverage their accounts after hearing the fantasy stories that they can turn $100 to a million in a few weeks. Brokers are to blame for this in part – in the U.S. leverage is limited but outside the U.S. you can leverage up to 1000 times your investment. That’s a bit like getting into a jet powered drag racer when you’ve never driven a car before. This adds to the myth of easy quick riches.

** The FX markets are well-known for showing enough of a pattern that the movements in currency rates look far more predictable than they really are. In other words, it looks much easier than it is.