I have identified 4 main reasons make this market more difficult for me than other markets.
So, not everyone agrees on this already, but you need to know that I have talked about this with other people who trade and we have come to an agreement on several reasons why the forex market is more difficult than other markets. Therefore, I have identified 4 main reasons that still make this market more difficult for me than other markets.
But after I've said it, but that doesn't mean it's an impossible market where you can't be profitable, not at all. It's just a market that is perhaps a little more difficult and a little more demanding. But it is still a market that you can still profit from and that you can still trade and invest in, so this does not mean that you should leave the forex market away from it. But I just think there are a few more reasons why this market is a bit more demanding than other markets.
Forex Market Structure
So the first reason I make this market a little special is because of the pair system. So, this is market structure, meaning if you trade in the Forex market or invest in Forex, you know that there is a certain system. The market structure is different because there is a pair system i.e. we don't trade a currency against anything else, but we always trade a currency against another currency so it creates currency pairs, and this is the real structure of the forex market. When we trade forex, we trade currency pairs, not currencies and that's quite different, one of the markets we find is the cryptocurrency market and also the commodities market. These are markets where pairs are also traded.
However, in terms of market structure, the players and objectives of the players in the forex market are different, since there are of course many more players in forex than in other markets, since this is a market whose volume absolutely huge compared to the stock markets.
Inevitably, therefore, many more players appear with different goals, and in the forex market some come simply to make changes and therefore provide liquidity, and not necessarily speculate. So all of a sudden there are different players with different goals and it's still very different from other markets, especially stock markets, where we still have most of the players with the same goal, then eat to raise shares . While this is not the case at all in forex, the goal is not at all to make the pair move up or down, there are some for whom the goal is simply liquidity and easy exchange, while for others it is speculation or investment. So suddenly there are many more players in the forex market, and the players have different goals, which fundamentally changes the structure of the forex market.
Forex market volatility and hours
Then the second, which complicates the forex market a bit. This is at the level of volatility and trading hours because at the level of volatility this is a decentralized and OTC market. As such, volatility can sometimes be extreme as this is an unregulated market. So sometimes we have periods of very high volatility and sometimes we may have periods of very low volatility. But in general this is a high volume market and suddenly it has become very volatile compared to other markets. So this changes the structure of the market as there is a lot of volatility in the markets and therefore it is a market that moves a lot and above all all the time because it is a market that trades 5 days a week and 24 hours a day. Thus, it is very different from other markets, which often operate from 8:00 to 18:00 or from 8:00 to 22:00 on the trading floors, since forex is not located next to the markets as it is a market that is not centralized or regulated. Suddenly it is quoted 24 hours a day and 5 days a week. So it's not only a very volatile market, but an always volatile market. So for me it really adds a bit of complexity to the forex market. But it's more than complexity, it's really more requirement of the forex market than complexity. So the fact that quotes are uninterrupted 5 days out of 7 also requires monitoring the market all the time during the week. So it doesn't necessarily leave too much time to be off the market during the week as it is a market that moves all the time and a lot. Thus, all week, all the time, even in the evening, even in the morning, even at a time when the stock markets and the classic bond markets are not quoted, the forex market is quoted, and this side is another place on the planet. So that you still have to keep an eye on the market, and it is certain that during the week you do not have much time to disconnect from the market. It also makes the forex market more demanding.
The third thing that makes the forex market difficult, especially in the beginning, is the neutral averaging system. That is, in the forex market we have a bias that will be neutral. We are not in a stock market that will rise over time. For example, if you buy a stock and hold it for 50 years, there is still a good chance it will go up if it is a stable and quality stock. While this is not at all when we exchange pairs. We are trading two currencies that will compete on the chart, so we have an averaging system. This means that when the price of a pair goes up, at some point it will inevitably go down, since there is an averaging system. That is, in 10 years the forex market will stagnate. This market will not grow in the long term, but will generally stagnate. This radically changes our approach to the market. This is why I always say that the forex market is more viable in the short to medium term, but not necessarily in the long term. In particular, this is due to the neutral averaging and the neutral bias system. You have to understand that in the long run, this is a market that will stagnate and not grow, like an index, which rather represents the country's economy. Thus, the economy of a country necessarily improves if it grows, and this is the goal of all people living in the country. If things improve in the economy, the index will rise, this is obvious, and this is the desired goal of all people involved in the economy. this country. But in forex this is not the case at all, since we trade in pairs, and therefore the pair will stagnate more likely in the long run. That is why, in my opinion, this market is not at all attractive in the long run.
Forex market reputation
Then the fourth reason why the forex market is more difficult than other markets, is not related to the forex market itself, but rather to what is happening around. So this is a market that has a false reputation for me, and especially a very bad reputation. Why ? Since this is a market associated with fraud, it is a market associated with easy money and fast money. So there are a lot of people who are selling forex scam and trying to impress people who think they can make money very easy and very fast in the forex market. Although this is not true at all, there are several reasons why the forex market is already a market that is a little more complicated than other markets, and you need to know that in any case, in the stock markets that we are going to trade in which we are going to investing, anyway you have to practice, you have to know what you are going to do and you have to have a strategy.So sure that 'in no time stock markets and financial markets in general way to make easy money and fast money , especially when you don't know anything about it, and especially when you're just starting out. The forex market gets a bad reputation by scams that make people invest haphazardly, without training, without following signals and without any knowledge. These are just scammers who will try to sell people's dreams by making them believe that the forex market is fast and easy money. While this is not true at all, all of a sudden it creates a false reputation and a particularly bad reputation in the forex market, which has no place for me. This is an independent financial market, which simply has its own characteristics, like any other market. In financial markets, all markets have their own characteristics, the forex market also has its own characteristics. But this is not a market where you can make easy and quick money, except for the fact that it is more accessible to beginners, and certainly, when you start in the financial markets, it is more attractive. Especially when you have little capital, this is undoubtedly an attractive market, and I myself, when I started working in the financial markets, chose this particular market, because in Forex you can start with very little capital. But just because you can start with little capital doesn't mean it's a market where you make money quickly and easily, it doesn't at all! > All those who sell dreams by making you believe in this, I advise you not to listen to them, because this is not at all the case. You will never hear someone who is a professional and understands the financial markets tell you that in the financial markets you can get rich overnight by taking an absolutely insane risk with all your money and risking your whole life in the markets. . In particular, never a person who is even a bit of a professional will tell you that financial markets rhyme with easy money and fast money, especially when you are just starting out. So don't fall for the dream sellers bait, it really affects the reputation of the forex market and really creates a bad reputation which shouldn't be there for me if you do everything right.
So, should you trade on the forex market?
Thus, it is undeniable that the Forex market is even more complex than other markets. Especially because there are differences compared to other markets, but I personally like this market also because it is a special market, and it is still a market where you can make money< /strong>. We must not forget that it is still the basis for investing and trading. It's all about making money, so it's definitely a market where you have to know how to operate, you have to know the market, you have to understand the market. strong> to know how you are going to trade and how you are going to invest. You must have a real strategy, understanding the market and knowledge of the market, this is really important if you want to be successful in the forex market and in all financial markets around the world.