The dark side of forex markets | Forex Forum by Myfxbook (2024)

FAQs

What is the dark side of forex trading? ›

Among the myriad risks that traders face in the Forex market, market risk stands out as the most significant and unpredictable. This risk directly impacts the potential for profit or loss, stemming from fluctuations in market prices driven by economic indicators, geopolitical events, and market sentiment changes.

One of the worst mistakes new traders make is averaging down: investing more money in a losing trade in the hope of a turnaround. More often than not this amounts to throwing good money after bad and can exacerbate your losses.

There are two main risk factors that come with forex trading: volatility and margin. Let's examine what each is in turn, before we take a look at how to mitigate them.

The forex scandal (also known as the forex probe) is a 2013 financial scandal that involves the revelation, and subsequent investigation, that banks colluded for at least a decade to manipulate exchange rates on the forex market for their own financial gain.

The reason many forex traders fail is that they are undercapitalized in relation to the size of the trades they make. It is either greed or the prospect of controlling vast amounts of money with only a small amount of capital that coerces forex traders to take on such huge and fragile financial risk.

One of the most famous examples of a forex trader who has gotten rich is George Soros. In 1992, he famously made a short position on the pound sterling, which earned him over $1 billion. Another example is Michael Marcus, also known as the Wizard of Odd.

If your goal is to take a buy-and-hold approach for positions in the long-term, then the stock market is a safer and regulated option that can result profits in even larger profits over a period of time, if that stock is successful.

George Soros is undoubtedly one of the most successful forex traders in the world. His bold and aggressive trading style has earned him a place in history, and his philanthropic efforts have made a positive impact on many lives. However, his controversial reputation may not sit well with some investors.

If you trade 5 full Lots on each trade, that is $50 per pip. 200 pips per month will net you $10,000. That's only 10 pips per day for a 20 day trading month. It's not only probable, it's highly likely.

Well, this depends on how much you're risking per trade. If you risk $1000, then you can make an average of $20,000 per year. If you risk $3000, then you can make an average of $60,000 per year. If you risk $5000, then you can make an average of $100,000 per year.

Who is the richest forex trader in the world? ›

Ray Dalio – The Richest Forex Trader in the World

Through his disciplined approach to trading and investment, Dalio has achieved remarkable financial success. Dalio's journey to becoming a millionaire in forex trading began with his early investment ventures.

Toxic traders employ strategies that exploit inefficiencies or imbalances in the market to gain an unfair advantage. Common toxic trading behaviors include: 1. Latency Arbitrage: Exploiting the time lag between price feeds to profit from price discrepancies.

Revenge trading is a natural and emotional response when a trader suffers a significant loss. Before taking time to think about their next move or looking at their strategy, they enter another trade after their big loss. The idea is to recover from the loss immediately.

The first and perhaps the most glaring red flag is the promise of high returns with little to no risk. The Forex market, by its very nature, is unpredictable and involves significant risk. Any entity that claims otherwise is likely blowing smoke. Remember, if it sounds too good to be true, it probably is.

Forex trading vs. gambling: Forex trading may appear similar to gambling, but there are key differences. While gambling relies on chance and randomness, forex traders can use strategies and tools to tilt the odds in their favour. Importance of self-control: Successful forex trading requires discipline and self-control.