Forex trading usually requires a broker for retail accounts and here are 3 things that your broker doesn’t want you to know.
1) Leverage – You see brokers offering leverage like nobody’s business. The highest i saw was 1 to 400. Seriously, if anyone goes with the broker that offers the highest leverage, you’re better of parking your money in the bank.
Assuming you have $1000 and you buy $400000 worth of EURUSD currency. And assuming EURUSD average a 1% movement a day (which is not unreasonable). Thus 1% of $400000 = $4000
If that 1% were to go against you, your account is wiped out and you’re down NEGATIVE $3000. So much so for leverage huh!
So now you know why your broker loves to offer you massive leverage?
2) Emotions – Humans were never born to trade. Our emotions are counter productive to trading given how we are programmed biologically. We like to hold on to our losses, HOPING it will come back to breakeven. We cut our profits short FEARING it would run away from us. Hope and fear are the 2 killer emotions that destroy most accounts.
3) Biggest casino in the world – Yes that’s right! The forex market is the biggest casino in the world. And you can open up an account for as little as $100. Wait, in fact it’s even more convenient then going to a casino. At a click of a mouse, you can buy or sell! Wow, what better way to lose your money at the comfort of your home!
You’re challenging against the smartest, most hardworking people who have access to deeper pockets than both you and i can imagine.