The currency market, more popularly known as Forex, is the largest financial market in the world, with an estimated $8.1 trillion daily trade volume. In the past, only large multinational banks and other big financial institutions could invest in, and profit from the foreign exchange market.
Fast forward to our time; however, advancement in technology has made it possible for virtually anyone interested to invest in the forex market, and compete freely with other investors around the world.
Still, some factors could put people away from investing in the forex market despite the massive profit opportunity that it presents to investors. We’ll discuss some of these factors in this article and profer solutions for anyone who is yet unconvinced that they can win in the forex market.
Before we do so, however, let’s briefly define what forex trading means.
What is Forex Trading?
Forex, also known as foreign exchange, FX, or currency trading, is a term that defines the decentralized global market where all the world’s currencies trade. The market is mostly dominated by banks and financial institutions, with everyone, including retail investors hoping to profit from price fluctuations in currency prices globally.
Now that we’ve established what the FX market stands for, let’s go over the primary factors why people hesitate to invest.
Reasons Why People Don’t Invest in Forex Trading
- Lack of Knowledge
Not having sound knowledge of how the forex market works is one of the primary reasons why many people decide that it is best to stay away. These persons likely have had horror stories about how people lost a fortune trading the market and thus have no interest in even try to get started.
A primary reason that contributes to the deficiency of mainstream knowledge about how forex works are that most brokers or traders advertise the market as a way to get rich quick. Others even compare forex trading to gambling, and for moral reasons, they do not like to get involved.
But there’s a saying that “facts do not cease to exist because they are ignored.” Thus a better approach would be to spend some money and resource on getting oneself educated about how the forex market operates.
Although there is a tone of videos on the internet claiming to provide the needed knowledge, the best step would be to invest in a paid course, that way there is more motivation to practice what you learn.
Another step could be to visit the pages of brokers like Duxa Capital. The broker provides a wide range of educational tools that cater for both beginners and expert traders. Note, however, that you would still need to invest more time in practice before you can go beyond the underlying trading strategies.
- Inability to Find a Reliable Brokerage Service
While some people have succeeded in understanding at least the basics of how the forex market works, another factor that often hinders them from investing is the abundance of shady forex brokers.
There are several stories regarding investors who lose funds to these brokers, and also those whose funds are not adequately accounted for. But still, that should not be enough reason for anyone to ignore the profit opportunities that exist.
Perhaps, one could be better off using brokers like Duxa Capital either for trading the financial market themselves or depositing funds that they want expert traders to invest on their behalf for profits. The latter is a more viable option for those who wish to earn passive income from the forex market without doing any of the tedious work involved.
However, for active traders, being able to access the right tools for analysis and a vast range of assets (including CFDs) to diversify their portfolio can make a significant difference in the number of winning and losing trades.
Many have discovered that finding the right brokers is not as difficult as it seems initially, meaning that it should be a reason not to invest in the forex market. Most brokers also offer diverse account types depending on the trading experience and styles of their prospective clients (retail or professional)
- Lack of Capital
After getting a clearer understanding of the forex market, and also finding a reliable broker, another factor that could keep people away from Forex is not having enough capital to invest either directly or with a broker.
The only way to solve this challenge would be to save up until one has enough money to spare. Besides, the highly volatile nature of the forex market is the reason why investors are not advised to put in an amount that they can’t afford to lose.
It is also interesting to note that the liquidity and depth of the forex market mean that retail investors can invest as low as $5, even though more significant profits result from investing more substantial amounts.
- Scared to Lose
Continuing on the last principle we highlighted about not investing more than one can afford to lose, many still hate the very idea of Forex simply because they’re scared to lose money in the long run. However, this kind of person forgets that life itself is a risk, and no one has ever gotten wealthy by avoiding risk-taking.
Although, it is recommended that investors have a healthy fear of the market, appreciating the risk/reward ratio and getting the mind in the right frame could delete any concerns that a potential investor has achieving success.
- Fund Security
Once again, this factor is a function of failing to find a reliable broker.
However, once an individual or professional trader has found a trusted brokerage service to invest with, fund security is guaranteed. Additionally, the fund deposit and withdrawal process are seamless, as long as the broker is authorized to serve the jurisdiction where the investor resides and uses the right payment gateways.
As we’ve discussed so far, there are specific reasons that can prevent anyone from investing in the forex market including, the lack of knowledge, not finding the right broker, lack of capital, and the fear of losing.
But as we’ve also discussed, these are not tangible reasons for anyone to despite forex trading. They could take other steps such as acquiring the needed knowledge, saving up capital, and trading with the right broker.
Eventually, anyone can get used to riding the forex wave. There will be a few minor and major losses here and there, but with time, anyone could get the needed experience and capital to win more times than they lose.
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