Forex trading has become more popular recently as more people ditch their desk jobs to become full-time professional traders from the comfort of their own homes. Whether you’re considering taking up trading or already trading in your spare time, your decision could be life-changing. However, there are some industry secrets you’ll need to know to have the best chance at success.
All Brokers Aren’t Trustworthy
It is a proven fact that some forex brokers cannot be trusted. Hidden fees, high spreads, insane withdrawal charges, complicated withdrawal guidelines, and customer support agents that are almost impossible to reach are a few common examples of shady practices that hurt traders. Fortunately, there are ways to ensure that you are choosing a trustworthy broker so that you don’t fall victim to this problem. Here are a few tips for making sure that a broker is legitimate:
- Check the broker’s website for a regulation status. Being licensed and regulated by a government body is the best sign that a broker is legitimate.
- Research any potential options and look for comments from real people. Take these with a grain of salt, as some may be angry that they lost money from their own mistakes, but multiple comments about the same problem shouldn’t be ignored.
- Check out the website to see if it is transparent. All information about funding methods, fees, and more detailed information about the company should be posted on it.
- Reach out to customer support to see how quickly they respond and what type of attitude the agents have. Even if LiveChat is available, agents might not be standing by as advertised. You’ll also want to check for professionalism when speaking with an agent.
Most Traders Fail
Another disappointing fact about forex trading is that most traders fail. Around 80% of traders wind up losing money in the end. We don’t list this fact to deter you from trading altogether, only to drive our readers to become more educated before starting a forex career. The main reason why these traders fail is that they are not prepared enough to start trading. You need a solid education and an in-depth understanding of more complicated trading topics. A good strategy, understanding of risk management, and being well-educated will help you to become one of the traders that go on to succeed.
Don’t Trust Every Signal Provider
Many websites market signals, indicators, and automated trading systems that can supposedly predict market moves with certainty or that are guaranteed to turn a certain profit. While some of these products work, many don’t. These companies want you to pay for their products, and if they don’t work, you’ll wind up losing even more money using them. These companies will never give you your money back and will instead blame you. All signal providers aren’t bad, but you need to be looking at proven results over years rather than weeks. Also, look for providers that have a good track record, whether they are a company or an individual trader. Don’t rely on forex robots thinking that they are the answer if you’re a beginner, always make sure you understand how the product works so that you’ll know when to interfere or stop using it if it proves to be a mistake. Using too many indicators on your chart can also lead to issues where a trader is tricked into thinking their trading decisions are based on enough information to be guaranteed winners or where a trader has too much information to analyze at once, which results in delayed decisions or failure to execute trades altogether.
Know About Dealing Desk Brokers
Often times, the best spreads are associated with dealing desk brokers. These brokers trade against you and make money when you lose. In some cases, this can lead to dealing desk brokers to manipulate prices and your deals. Many traders prefer brokers with STP or ECN execution for these reasons.
The Bottom Line
We’ve covered a few important forex secrets that have the potential to affect your trading career. Here’s a quick summary of what we’ve learned:
- Some brokers are trustworthy, while others aren’t. It’s important to do thorough research to ensure that a broker is trustworthy before opening an account with them.
- Many traders prefer STP or ECN execution over trading with a dealing desk broker.
- While around 80% of traders lose money trading forex, the problem usually stems from a lack of proper education and understanding of the market.
- Signals, indicators, and trading robots are not the magic answer to trading success. In many cases, these products will actually cause you to lose money.
- Using too many indicators on your charts can lead to analysis paralysis or cause you to become overconfident when making decisions.
- There are good signal providers out there, but it is impossible for these providers to “guarantee” you will achieve a certain profit.