I have been working in this industry for a long time and I often ask myself what motivates a person to begin to trade.
The obvious answer is the potential to make money.
Trading has risk but also reward. More people than ever are trying it, some winning big, some losing big. So the question that a potential new trader should consider is:
Is trading online for you?
My initial answer is that if you haven't tried it you wouldn't have an idea.
Therefore I've put together some reasons why some people should and shouldn’t be trading Forex ,for your consideration. All aspiring Forex traders should be asking themselves their reasons for getting into Forex trading before they get started.
If you can honestly say its for the right reasons, and not the wrong reasons you’ll have a much greater chance of making a success of it.
5 reasons why you shouldn’t trade Forex
#1 You trade with money you can’t afford to lose
Because the market can be volatile, there is always the risk of losing money when trading a currency pair.
In addition to the inherent risk linked to trading, with Forex trading you need to add margin trading and leverage, which means that you can trade large amounts with little initial capital.
So, this high level of risk means that you need to be sure that you do not use money that you need to live on – it sounds an odd thing to say, but make sure you always trade with money you can afford to lose!
#2 You don’t know what you’re doing
Before even considering trading, you need to know the basics of the markets, what influences them, and how trading works.
… you need to have a trading strategy that suits your trading style Another important aspect is you need to have a trading strategy that suits your trading style, with strict money management and risk management rules that govern how you allocate your funds to trades.
If you have no trading experience, and you do not know how markets work and relate to each other, Forex trading might not be right for you – at least not yet.
#3 You can’t handle when you’re wrong, or when you’re losing
When making trading decisions, you can be right and make money, but you can be wrong and lose money.
That’s fine – as long as your profits are higher than your losses. Losing trades are part of the trading game – you need to be prepared for this and not take it personally!
In Forex trading, you need to quickly recognise when you’re wrong, and close losing trades as early as possible. It’s important to develop your ability to accept your losses and learn from your trading experience.
But do remember, it’s ok to be wrong – you can’t be right 100% of the time in every single trade you execute. And if you can’t handle losing, you won’t be able to be profitable in the long run.
#4 You’re risk-averse
Fast-changing market conditions, high volatility, and leverage can make Forex trading a high-risk activity.
You can make huge returns in the FX market, but these kinds of returns do not come without risks, especially when using leverage.
So, if you’re generally a risk-averse person, Forex trading is not going to fit your personality.
#5 You don’t have time
There are several trading styles you can use when trading currencies, each requiring a certain amount of time in front of the screens.
For example, you can use a trend following method, or position trading strategy, which will require less time than short term trades, like scalping or day trading.
Keep in mind that learning about trading, the Forex market and how to develop the right trading plan takes time. You’d better be sure you have time to dedicate to this activity before starting to trade in currency pairs.
5 reasons you should trade Forex
#1 You like the idea of trading at any time you want
The Forex market is open round the clock, which allows you to trade whenever you want.
It provides great flexibility for traders who want to trade part-time and as there are no market opening or market closing times the opportunity for potential profits is 24 hours per day, 5 days per week!
Of course, trading volume varies depending on how many sessions overlap, and it often decreases when there are bank holidays in major sessions such as on Wall Street.
#2 You like technical or fundamental analysis
Forex trading is often geared towards technical analysis, so if you have sound knowledge of price study, charting and technical patterns, For