Categories
3. Advance Questions

Does Anybody Make Money on Forex?

Meeting a profitable trader is like finding a needle in a haystack.

At the same time, there is no guarantee that a yesterday’s profitable trader will not become a losing one today. It is very hard to find a trader who makes money precisely because past success doesn’t guarantee future profit. In addition, temporary luck is often behind the income.

A well-known phrase, which people find necessary to mention quite often, states that 95% of traders lose their money. However, we’ll never know for sure the exact percentage: is it 95%, 99% or even 99,9%? We prefer the last option, since one profitable trader per thousand makes more sense than five profitable traders per hundred.

Plausible answer: for the most part, Forex market allows only temporary profit. For example, if we look at the traders’ profitability statistics on various brokers, we’ll see that a fairly large number of traders (~33%) manage to make money during a quarter. However, if we increase this period up to one year, the percentage would switch closer to 5% and then to 1%, etc.

You can ride the wave and make a certain amount of money; if you keep on going you’ll be “chewed up by a shark” , you’ll lose everything you’ve earned. So, if you hit the jackpot by, for example, opening a PAMM account and making a significant amount of money, it’s best to stop and not continue.

As for regular Forex earnings, it’s possible only if you’ve already learned how the Forex market works and thereby possess the information that most other traders simply don’t have.

Here is a simple example: imagine an organization willing to sell a very large amount of euro. Of course, it’s interested in selling it at the best price and saving a few hundred thousand dollars. To do that, it will play out a scenario (price movement) to reach its goal with the existing market liquidity – including our trades – and thereby not crash the market itself. And now ask yourself: “which indicator or strategy can predict what this organization is about to do and when it plans to move forward?“

Of course, the strategy of “trading against the crowd” is worth mentioning at this point, since it’s one of the few that takes these scenarios into account.

Conspiracy answer. The probability of any given individual to make money in the Forex market is close to zero, and those single instances where it seems as if someone has earned something are just to prevent people’s “faith in the money making” from dying. The Forex market itself is a better version of a Ponzi scheme where you don’t need to pay interest and there’s no need to return deposits.

The impossibility to make money is due to the fact that the price movement is almost chaotic and doesn’t have any regularities, and therefore, doesn’t make it possible to earn anything.

Leave a Reply

Your email address will not be published. Required fields are marked *