Disadvantages of Forex trading

It is not nice, but one discussing a topic has to look at it from different angles. The same should be said about Forex trading. Being the biggest financial market in the world it attracts scams, spam and other quick rich scheme lovers from all corners of the world.  Even Forex brokers are guilty in promising easy profits and excellent opportunities. It is not like that at all. I do know that. I lost my first deposit account trading currency market and can speak to you with authority.

What Forex dealers and brokers should write at the top of their websites, not at the bottom of them is that it is a very risky business. Beginner traders often lose their money in a few months, some even in a few weeks. Anyone coming to trade Foreign Exchange Market should understand that. There are no short cuts, secret formulas or the Holy Grail in Forex business. You learn to trade with time and it takes away a lot of patience. Not good news? But it is the truth.  

Leverage, which is often considered a huge advantage, can really become one of the greatest disadvantages if you increase your risk in trades. I have recently read about a guy who was able to make one million dollars with only one thousand bucks in his account. And the most amazing thing is that he did that in a matter of two weeks. How? He would risk all of his capital every single day and was successful. However, after reaching the sum of one million he lost it back in a matter of one week. Lady luck was not smiling to him anymore. Why should it? You learn to create success and you won’t need this luck. Discipline is far more important than luck.

So, as you may see failing to control risk and using too high leverage are two biggest disadvantages in Forex trading. The same can be said about stock trading and trading Futures markets.

How can you improve on that? Decide not to risk more than one percent of your capital on a trade. And do not open more than one trade! Following these two simple rules can save you from emotional type of trading and preserve your capital till you learn how to trade and develop your own trading strategy. For the time being be armed with patience and do not deviate from your rules!