Guarantees of earnings on Forex - myth or reality?

Forex is the largest and most famous market where transactions related to the purchase and sale of currencies take place.

The colossal sums that are in circulation on this market, as well as its wide recognition even among people far from financial transactions, attract many new players to Forex.

Often inexperienced and without a strategy, perceiving it more as a kind of casino or lottery, and not as a professional field.

Most of these “accidental” traders quickly lose their investments, after which they begin to trumpet at every corner that Forex is, if not one huge scam, from which it is simply impossible to make money. 

Is it so? In no case. Why? Let's figure it out.

Not a casino: why you can’t come to Forex blindly

The basic principle of making money for Forex traders is quite simple. In general terms, it can be reduced to one algorithm: buy cheaper, sell more expensive. Like many other types of trading, Forex trading takes advantage of fluctuations in asset prices, which have always been and will be an integral part of the market.

Because of this feature, many inexperienced beginners begin to perceive Forex as a casino, where your winnings depend on whether you guess in which direction the price of a certain currency will move, and whether you have time to buy it at the lowest point in order to later sell it at the highest .

In reality, everything is much more complicated. Successful traders never play blindly, relying only on random luck or innate luck. Decisions to open and close trades are made based on a consistent strategy and high-probability forecasts. In turn, these aspects greatly depend on the most important activity for a Forex trader: market analysis.

Fundamental and technical analysis - guarantees of earnings on Forex

Everyone knows the concept of analysis. It is applicable to a wide variety of areas of human activity. In the context of Forex, its meaning does not change: analysis is the study of certain aspects and the generation of conclusions based on the information received.

In order to correctly predict the dynamics of value in certain currency pairs, Forex traders use two main types of analysis: fundamental and technical.

Fundamental analysis is based on the study of informational events that can lead to changes in the value of currencies. Such news can concern a wide variety of areas, from politics and economics to social reforms or even cultural events. Experienced traders are able to predict how certain events may affect national currencies and open appropriate positions if the forecast conditions are favorable for them.

Technical analysis can seem more complex, especially to beginners. His tools look quite intimidating - a lot of different graphs that, at first glance, make no sense, can scare anyone. However, having understood them, the trader will learn to discern 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 the main trading platforms, one of which the trader should choose as his main field of activity. For example, the Forex broker Evotrade offers its clients the MetaTrader 5 platform, which supports many technical analysis tools and is currently considered one of the best tools for trading.

Strategy is the key to order

The ability to analyze the market is, of course, one of the most important guarantees of making money on Forex. However, it alone will not be enough to achieve this goal. Strategy is also an important component of success. A trader should not act at random, but also should not make decisions at random. Therefore, in order to really make money on Forex, you should have a clear and consistent strategy for dealing with certain circumstances.

What specific actions will you take when analysis shows you that the price of a certain currency is about to rise by several points? What should the expected growth be to open a sell position? Under what circumstances should you buy currency? What to do when the forecast turns out to be false? You must have a clearly planned plan of action for each of these situations, as well as for the many other circumstances that may arise during the trading process.

Strategy is the key to order and consistency of your actions. In its absence, you risk panicking and plunging into the abyss of chaos at the most crucial moment. And this is clearly not what you need.

Final Thoughts

The opportunity to make money on Forex is not a myth. This is reality, but it is only true for those who approach this area wisely. You will not make money in Forex by relying on luck and luck. You will not make money by having a strategy, but at the same time trying to guess price movements by tossing a coin or telling fortunes with a daisy.

You will not make money even if you learn to correctly analyze the market, while you will not have a consistent strategy as such. Only by correctly combining these two key components - analysis and strategy - will you receive guarantees that will help you fully understand Forex and earn as much as you see fit on it.