Does one’s profit in forex depend on another’s loss? Must someone lose for others to profit? If not, what is the source of funds profited?
It can be that way - or it can be likened to pyramid selling - or indeed to buying and selling goods - If you get more for your asset than you paid - who actually cares ?
The risk ratio needs to be maintained to make a profit in trading. If a trader does not trade by maintaining risk, he cannot be a profitable trader.
Yup. A zero sum game… at least for forex.
As most traders fail, Brokers will often put traders on what is known as a B book. Meaning they actually provide the liquidity/take the other side of your trade and not someone else in the market. Knowing that over 90% of new traders will loose - the brokers then make that money.
Controversial yes but is all part of the game.
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Losing in forex is the part of forex trading and it is a zero-sum and very risky market. Always try to minimize your risk and loss with a good strategy and plan when you enter in the trading field.
Yes, but I wouldn’t concern yourself as the financial institutional traders, not us poor retail traders, trade the bulk of the market.
And FX trading is a negative sum game, not a zero sum game when you take into account broker spreads, commissions, and fees. Even on a 0.06 lot size my broker prop firm charges $0.54 per trade.
This is fine. Does it mean there’s a platform where all the brokers connect?
There is no central exchange like the stock market if that is what you are asking?
@TraderEvolved I really need to understand something here. So, where is the source of funds paid as profits in stock market?
If you’re a hedge fund with deep pockets or a very good currency trader, forex trading could make you wealthy. However, rather than being an easy road to riches, forex trading may be a rocky road to massive losses and potential penury for the average retail trader.