What is the truth about forex?

Beginner Questions
1

I saw this question online and I’m very interested to see how forum members here will respond to it.

What is the truth about forex?

I traded succesfuly in a demo account for 3 months, now if i can make a 10 % monthly accumulated, then it seems like i can score a million in 4 or 5 years. now what’s the catch ??

i use scalping and also trade in 15 min frame trading, use several indicators, now there are several miths (or truths i dont know) out there about forex: it’s a zero sum game !!! ecn dont manipulate your prices like market makers do!!! forex is a scam they hunt your stops and or manipulate prices, they delay your orders !! when you start making a lot of money they close your account !! they dont let you withdraw your money!!

It takes a little comon sense to realize that it is not a zero sum game since a currency pair that moves 100 pips in one direction from 1.2810 to 1.2910 ten guys can make ten pips each buying and selling each other. and even the last guy could probably buy for a longer position and hold for days or weeks with larger stops.

I also heard that things changes when you move from a demo to a real live account: with slippage and other problems.
Now with so many scams it is hard to make a desicion about what broker to choose.
FXCM, CITI, SAXO, CMC, CMS, OANDA, ETORO, FOREX.COM, GFT. Seems to be the best rated, but then again is so easy to fake a review, plus i found all of them to have negative reviews in some websites.

My question is what is the technical difference between a real and demo account, not the emotional of course when you trade a real one you risking hard earned money. i also found this link in wikipedia: Foreign exchange fraud - Foreign exchange fraud - Wikipedia
CFTC investigated more than 80 cases involving the defrauding of more than 23,000 customers who lost $350 million.

So im looking for somebody out there that has been trading succesfuly for more than a year, and tell me his/her experience regarding all this matters. What is the best broker, ecn and so on and on.
I appreciate any help and comments, best of luck.

2

Thanks for this thread. I am at the verge of opening a live account. With all these doubts is it really worth it? Also how do you rate the brokers and their trading terminals? Alpari, FXCM, etc

3

i know a few full time traders -using FXCM with no problems

4

Whoever said it was “common sense” that forex trading isn’t zero sum doesn’t know what he/she is taking about. Every retail trade is a contract between two parties whereby one is long and the other is short (like a futures contract). By definition, if the market is going in favor of the long then it is going against the short, and vice versa. The net result is zero, negative once spread/transaction costs are factored in.

5

Quite, I mean if we were all to start winning, where would the money be coming from?! This is one area where trading [I]is[/I] like gambling - for someone to win, someone else has to lose.

6

Oh You little lovely noob :slight_smile: 1 year ago i was exactly in same position as you, when i first came across word Forex. First of all i was thinking that forex is a scam and my first 2 words that i typed in google was forex scam, then i read lots of funny stuff from funny ppl, but i didnt believed them and i stumbled upon babypips, so i went to newbie island and started to read all the stuff was there :slight_smile: then i realised i need to read more stories from mediocre traders i did that too, then i realised i wanna be succesfull trader and started to ready only successfull trader stories and theyr trading methods :slight_smile: Its tough journey but forget about forex, if trading fascinates you there is other markets that you can trade :slight_smile: Just do your research and ull find what u want to find, dont trust other ppl because 95% of them lose money so from 100 only 5 will be willing to help you and guide you to the right direction. You will find everything here on babypips just take your time. Myself i work in banks for over 5years now, and i personaly know lots of sucessfull traders, if there was no sucess in trading how do you think investment banks would make theyr money? Good luck

7

i remember I saw a really funny quote not sure who said it it went something along the lines of, in the market one person buys and one sells and both feel smarter than the other, and I think it exemplifies this concept really well. Also a lot if companies are going into Forex to lose, in the sense that a European company wants to do business in the states so they have to change their euros to usds and they’ll hedge their exchange by putting a bunch of leveraged buy orders on the eur/usd so that they don’t lose as much on the sell of euros for business and some businesses don’t hedge so they go into Forex to lose

8

Accounting for the spread and other costs, trading is actually a negative sum game. Even from a larger perspective there always has to be losers even if it’s just large corporations finishing out of the money on options and futures.

It’s interesting you mention the multiplier effect. That usually refers to change in gdp as a function of governement spending. It can also refer to how often a dollar gets spent locally before leaving the community. I’m not sure if or how it applies here but it is an interesting question.

9

Well not all is true and some are exagationg away from truth. Do as I do, asumme as it all was true and act in concequence, use daily charts, don’t overtrade, be disciplined, less is more.

10

Not this crap again. :18:

11

lets make it simple, if in doubt then don’t! I don’t want to even think about it, let there be scam,let there be hidden agendas, let there be whatever! I’m still going to trade and make more money as we speak! you don’t have to listen to anybody, all you have to do is believe (does it sound like a script from a movie or something? LOL)

I trade I earn I get my money… that’s my forex truth and its enough for me to keep going :slight_smile:

12

Most of the points you shared here are true but another true is forex market in one of the biggest financial market of the world. There are lots of fraud despite it most of the people like forex trading.

13

True. You just need to make sure that your broker is NFA certified and check if it has a huge database of customers on their belt.

Don’t be blinded by their huge promotion but check the broker first.

Numbers Never Lie.

14

Hey thread starter, whats your opinion now?