Misconceptions about Forex | Forex Myths
1. "Forex is a roulette game when someone wins a lot and the rest ones lose."
Forex is not a roulette because in the core of currency price fluctuations there are certain principles. First of all, currency price depends on its country's economic performance. Secondly, it is linked to preferences and expectations of the Forex players. It is all a subject of prognosis which is proved by the market analysis containing objective factors rather than casuality.
It is commonly accepted nowadays that risk is an inherent part of any business activity. You may not always have the result you planned from a deal. But it is especially risky to be involved in financial markets trading. Due to the complexity and unpredictable nature of market's behavior it is easy to suffer losses and there is never a 100% confidence that the result is going to be positive. Many are put off from work in the financial market despite the much easier access to it thanks to modern communication technologies and powerful analytical software packages.
It is also well known to everyone who has ever taken part in any of business activities that divergence between planned and actual results is inevitable. There are all sorts of unforeseen but still highly influential factors like economic or political changes, natural disasters, unfair business practice, default on commitments by your counter-agent – there are plenty – are all there to put your project down – not only to test your nerves. Risk is an inherent part of any activity. The only way to avoid risk – is to do nothing but even in this case there is a risk of some sort.
2. "One trader's win is another's loss."
By no means all players in the Forex market are seeking advantages in price fluctuations – there are large groups of players using currency exchange operations for other purposes (exporters, importers, large investors and others) to whom such a short-term changes are not significant. Exporters sell products for the currency of the country-importer, to invest into production they need currency of the country of location therefore broker companies execute currency exchange orders. It is because currencies can be converted one into another easily at the floating market rate, such operations may become a source of profit themselves. Nevertheless, financial markets are redeployment of resources site in the first place.
