Is Forex Trading Really Dead?
Is this the final nail in the coffin for the forex market estimate announced that they are going to be cutting the leverage allowed on forex trading, is it a good thing or a bad thing let’s discuss
Depending on where you are in the world and what broker you are using, you may have heard of some big changes that are going on in the forex market over the next few weeks certainly if you are in Europe and it’s all to do with what’s known as ESMA, ESMA stands for European securities and markets authority in short what they are doing is they are changing the amount of leverage that’s permitted to be used by retail traders and in particular in the European forex market now in my short words this is one of the best things that can happen to our industry
Certainly if you are an aspiring trader rookie trader out there trying to make it in this business now I know many of you are listening from outside of the Eurozone and these direct rules won’t apply to you but you should also stick around for reading this article because I think it is important wherever you are in the world these lower leverages are going to be happening all over the place and it’s sooner you get to learn to understand and appreciate that you don’t need high leverage then the better as long as you think about leverage in the same mindset as the European trader you are halfway there
There as we know the forex markets been a breeding ground for the market is over the years feeding off the gambling mentality if we all know gambling is one of the most popular pastimes out there you only have to look at the huge number of online casinos sports betting companies that have emerged over the last decade or so, so this gambling mindset that has been so prevalent has now been exploited by parts of the finance industry mainly by making available insane amounts of leverage to the retail trader
That is basically you and I now leverage for those that are unfamiliar is basically a loan or trading of trading funds that the broker provides you in order for you to trade the markets and the more money that you are able to borrow or the leverage that you are able to use the higher your potential returns as you guessed it the higher the potential returns the bigger for your potential and higher losses
So you get to start to see how here now why so many people are attracted to the forex market most of us gambling is a hobby, not a money-making exercise as the odds are always stacked against us in the house’s favor, so this insane leverage is designed to entice the gambler into the markets I can tell you now no matter where you are in the world insane leverage for the rookie trader is very dangerous