Forex earnings guarantees – myth or reality?
Forex is the largest and most well-known market where transactions related to the buying and selling of currencies take place.
The colossal sums of money circulating in this market, as well as its widespread recognition even among those unfamiliar with financial transactions, attract many new players to Forex.
Often inexperienced and lacking strategy, they perceive it more as a kind of casino or lottery, rather than as a professional field.
Most of these "random" traders quickly lose their investments, after which they begin to trumpet from every corner that Forex is practically one huge scam, where it is simply impossible to make money.
Is this true? Absolutely not. Why? Let's figure it out.
Not a Casino: Why You Shouldn't Enter Forex Blindfolded
The basic principle of making money on Forex is quite simple. Broadly speaking, it can be boiled down to one algorithm: buy low, sell high. Like many other types of trading, Forex trading exploits the fluctuations in asset prices, which have always been and will always be an integral part of the market.
Because of this peculiarity, many inexperienced beginners begin to perceive Forex as a casino, where your winnings depend on whether you can guess which direction the price of a certain currency will move and whether you can buy it at the lowest point in time and then sell it at the highest.
In reality, things are much more complex. Successful traders never play blindly, relying solely on random chance or innate good fortune. Decisions to open and close trades are based on a consistent strategy and high-probability forecasts. These aspects, in turn, depend significantly on the most important activity for a Forex trader: market analysis.
Fundamental and technical analysis guarantee profits on Forex
Everyone is familiar with the concept of analysis. It is applicable to a wide variety of human activities. In the context of Forex, its meaning remains the same: analysis is the study of certain aspects and the generation of conclusions based on the information obtained.
To accurately predict price movements in certain currency pairs, Forex traders use two main types of analysis: fundamental and technical.
Fundamental analysis is based on the study of news events that can lead to changes in currency values. Such news can cover a wide range of areas, from politics and economics to social reforms and even cultural events. Experienced traders are able to anticipate how certain events may impact national currencies and open appropriate positions if the forecasted conditions are favorable.
Technical analysis may seem more complex, especially to beginners. Its tools can appear quite intimidating—a multitude of different charts that, at first glance, make no sense can be intimidating. However, once you understand them, traders will learn to spot certain regular patterns and indicators that indicate that the price of a particular currency is likely to move in a certain direction.
Technical analysis tools are built into major trading platforms, and a trader should choose one of them as their primary platform. For example, the forex broker Evotrade offers its clients the MetaTrader 5 platform, which supports a wide range of technical analysis tools and is currently considered one of the best trading platforms.
Strategy is the key to order
Market analysis is, of course, one of the most important guarantees of making money on Forex. However, this alone is not enough to achieve this goal. Strategy is also a crucial component of success. A trader shouldn't act at random, but neither should they make decisions at random. Therefore, to truly make money on Forex, you need to have a clear and consistent strategy for dealing with any given situation.
What specific actions will you take when your analysis shows that a certain currency is about to rise a few pips? What is the expected rise required to open a sell position? Under what circumstances should you buy a currency? What should you do if your forecast turns out to be wrong? You should have a clearly defined plan for each of these situations, as well as for the many other circumstances that may arise during trading.
Strategy is the key to order and consistency in your actions. Without it, you risk panicking and plunging into chaos at the most crucial moment. And that's clearly not what you need.
Final thoughts
The possibility of making money on Forex isn't a myth. It's a reality, but only for those who approach this field wisely. You won't make money on Forex by relying on luck and chance. You won't make money by having a strategy but simultaneously trying to predict price movements, flipping a coin, or reading a daisy.
Even if you learn to analyze the market correctly, you won't make money without a consistent strategy. Only by skillfully combining these two key components—analysis and strategy—will you be able to fully understand Forex and earn as much as you desire.
