Thread: Is Forex trading a scam?

Why did we even start trading?

One of the common reactions we get from our peers and family when they know we are trading the Forex market is usually “Where you find the capital ah?” They often have this misconception that without a big amount of capital, we cannot do any form of trading. Forex trading separates itself from typical stock trading because all we need is $250 to open an account with a local broker with the possibility of earning $250 or more in less than a month. This gives many people the notion that it is a scam as returns of 100% a month is almost impossible with traditional stock investing.

How is this achievable?

The main draw with Forex trading is that the brokers allow incredibly high leverage. This means that you only need a small amount of deposit to control a huge position in the market. In Singapore, the usual leverage most brokers allow is 50 times which means $100 deposit can in turn let you control $5000 worth of positions. Leverage is a double-edged sword as losses can also be magnified up to 50 times. Therefore, a 1% gain or loss can mean 50% win or loss in your account balance if we do not set a stop loss target.

Most day traders agree that it really takes a lot of patience and dedication to make a living from the Forex market.

As young adults with limited capital, we never regretted venturing into the dangerous Forex market as we know that is one of the few ways we can get ahead in life faster than our peers who are mostly still schooling.

Other benefits of Forex Trading

We make money even when the market turns down because we can do short selling unlike SG stocks trading
Low commission (Spread)
Advance order types to limit our losses and maximize our gains with pre-set stop loss and take profit targets
It builds character – Market never forgets to punish us when we let our guard down
Plenty of movement everyday with a 24hr market 5 days a week
Free intra-day charting softwares
If Forex trading is really that good, why are most people still not doing it?

Statistics has shown that there has been a growing number of retail Forex traders over the years worldwide. Singapore is now ranked 2nd behind Japan as one of the most active Forex players in the region. Of course, what has not changed is that 90% of the players still do not make money or lose money in Forex. There are also cases where fund managers who quit their job to trade Forex also lose their life savings.

The idea to broadcast here is that, trading is not anyone’s game. (Especially those who have weak hearts) If you want to trade, please do put in the effort for education first. Education can come from books, courses, mentors and most importantly market experience. This is a lengthy process which will burn out most players before they become the 10% who wins in trading.

For all the youngsters out there who aspire to be like us, always ask yourself whether you have a sum of money that you can afford to lose first before venturing into the market. This helps your psychology and can aid you in your journey to be a successful trader.

A 5 figure salary before the age of 25 is what both gump and I aspire to achieve and I hope more youngsters with similar vision as us can join us.

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Forex is not a scam! You must understand that

You know, you wouldn't ask this question regarding stocks or commodities? It's just for forex which is as risky as the other securities. While Forex gets a bad rap and in many cases it's deserved, I think that with the regulations and other new developments, many scammers are knocked out of the game, and today it is much safer to trade forex.