The past few weeks have sparked a level of FX activity that many traders have never experienced, at least not in developed markets. While the dollar is close to an all-time high, the crazy ride the sterling has been on has brought it to a historic low.
Indeed, the focus is currently on currencies. A sector that has struggled with stagnating volumes for the past 10 years is seeing a 30% spike in trading and unprecedented moves as a result of rapidly rising interest-rate concerns around the world and rising geopolitical tensions.
Can a typical investor become wealthy through FX trading? Well, though our first instinct would be to answer with an affirmation, the narrative shows how difficult it is to establish consistency in forex trading. If you are an exceptionally good currency trader or a hedge fund with huge pockets, forex trading might make you wealthy.
When currency markets are this volatile, bankers who help businesses manage their foreign exchange risk enjoy moments of prosperity. But you should note, however, that the risks forex traders face are not limited to unforeseen one-time occurrences.
Meanwhile, for the typical retail trader, forex trading can be a difficult path that can potentially lead to massive losses and destitution rather than an easy path to riches. So, it’s important to be cautious.
Although currencies can be erratic, ferocious swings like the one experienced by the Swiss franc are uncommon. For instance, a significant adjustment that reduces the euro’s value relative to the dollar from 1.20 to 1.10 over a week is still less than 10%. Conversely, stocks can readily fluctuate by 20% or more in a single day. But the large leverage offered by forex brokers, which can increase profits, is what makes forex trading so alluring.
Experienced forex traders limit their losses and make up for them with big gains when their currency predictions turn out to be accurate.
On the other hand, most retail traders go about it the other way, achieving modest gains on a lot of trades while holding onto a lost transaction for too long and suffering a significant loss. Additionally, you can lose more than you invest as a result of this.
To succeed as a forex trader, you must utilize well-thought-out trading strategies, market analysis, relevant reading, and free broker-provided online forex education. Use adequate risk management strategies at all times, too. Instead of “instant and rapid money,” long-term, hard-earned earnings will be made.
The biggest financial trading firms have substantial trading operations that are integrated into the foreign exchange market to access information (such as commercial forex flows and covert government involvement) which ordinary traders do not have.
Forex trading requires a different trading strategy from the one many people use when trading stocks. Forex traders trade by minute, hour, and day, as opposed to most stock dealers who acquire and keep their investments for months or even years.
Leverage makes the intervals significantly shorter and increases the impact of price movements. A change of 1% in stock is not much, but a change of 1% in a currency pair is significant.
If you decide to continue trading currencies, it would be wise to take a few precautions:
- Restrict your leverage
- Maintain tight stop-losses and
- Work with a trustworthy forex brokerage
- Even though the odds are still stacked against you, at least these steps might assist you in somewhat levelling the playing field.
It takes work to earn money. It takes a lot of time and energy for successful currency traders to grow intellectually, psychologically, and mentally.
Adjusting or redesigning isn’t our poblems in Nigeria. We need capable and resourceful hand ✋ in our economic sectors. Nigeria government has choosen you this CBN governor because of embezzlement and extortion of Nigeria funds. You people have mismanaged this country for the past 7years. With this changes coming to the money you will want trillion of naira to be allocated for the design. This is another way of extortion.
God will judge you all and curse your generations..