In fact, about 80% of all transactions in Forex market consist of speculative operations, which aim at a profit from foreign exchange rate differences, the rest are commercial or investment type. Definitely, speculators or private investors are mostly interested in changing exchange rates which provide solid profit.
Forex market operates 24 hours, five days a week. In 2013 Forex market daily turnover was several times greater than monthly turnover of all of U.S stock exchanges. According to the survey made by the Bank of International Settlement (BIS), was identified a record of 5.3 trillion dollars daily turnover in 2013 April.
Aite Group forecasts that FX marketplace will continue to expand and become recognized as a stand- alone asset class. Since 2013, FX market has sharply risen and it is supposed to reach volumes of $8 trillion a day in 2019. The mass of the growth is assumed to come from spot trading and swaps.
There are cases like previous reaffirming of the commitment to the “floor” for the EUR/CHF executed by the Swiss National Bank which induced huge losses for a lot of people. Such unpredictable change in the market almost bankrupted FXCM and cost nearly $150 million in losses for Citibank. Of course such a big and well known broker as FXCM can borrow money to survive and provide its services in the future. However, there are brokers that pursue negative balances against their traders and such volatile changes in the market can lead to their bankruptcies.
Definitely every trader or investor should think about diversification of their portfolio. Experience shows, you should not deposit your savings in one bank or trust one broker. Search for a few biggest and most known brokers and mix your trading capital. Clearly it is a much lower possibility to see them all bankrupt at once.
Never ever think of “secure” trades and 100% guaranteed profits. There is no such thing as guaranteed profit in finance and especially in Forex because the central bank of a certain country has fixed the exchange rate at a particular level. Do not trust every secure trade concept.
It is always worth to think about the trade size you want to enter the market. Every trader should not forget 1% rule which claims not to risk more than 1% of your own capital on a chosen trade. Of course, most of us are attracted to a dream to get magnificent returns as long as big leverages allow that. However, there is also a dark side, which reminds about possible huge losses. Profits will come as the account grows, and even a small average pip profit in FX market can conduct significant percentage returns.
Most new traders with small accounts forget that professional fund managers generate 10-20% profit per year, and expect to double or even triple their accounts. That’s why more that 90% of new traders burn their accounts within 6 months.