Why you shouldnt trade forex

This thread is inspired by @FrugalLocal, a follow-up on his tweet. First reason is CAPITAL. Forex moves less than 1% best times & 1% of $1,000 is equal to $10. Who wants to make $10 in a month? Nobody does, it's too small to motivate a hungry soul. 


If $1,000 isn't attractive how about being loaned 100 times that to trade with? $100,000. Suddenly 1% is $1,000 double your capital? How cool is that? Well not so cool considering 1% can easily be -1%. The loan condition is you must've $1000 of your own at all times. 


Further to the loan condition, if your capital goes below $700 the broker will ask you to top up. If it continues to go down your forex position will be closed at a loss, broker takes back his loan ($99k). So if 1% can move against you so fast you lose all money 


Forex platforms can be rigged against you. This is a space of many unregulated brokers & introducing brokers. They earn when you sign up. Forex has many small moves, as little as 0.3% move can cost you your account, unless you watch like a hawk, you'll be rigged. 


In trading you need room for risk managing, small capital means very tight stop-loss to prevent blowing account. Your SL will be hit many times depleting your capital soon you go to zero. A trade has room for "what if I'm wrong?" FX doesn't have much room. 


In conclusion, try FX when you got maybe $20,000 capital, you get room to breathe or start with shares, you get large %tage moves good enough for smaller capital to grow without feeling the need to go big on leverage. Shares are less volatile too. Be wise. 

Read also : Three investment "instruments" to avoid.


Tags: Forex

Author : Kekeocha Justin

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