In an environment of low yields as we are living, many people are attracted when they promise big profits with their investments. That is precisely the biggest selling tool companies operating in the Forex market.
On the Internet we can find several online trading platforms that allow access to this market with relatively small amounts. These companies in turn very intensively promote their services through advertisements that are present throughout the network.
WHAT IS FOREX?
Forex is simply an abbreviation of Foreign Exchange. In this sense, it is a market where there is speculation movements in the exchange rate between different currencies. It operates 24 hours because it is not in any physical location, is fully electronic. Due to globalization, all the time, somewhere in the world (eg, day in Asia and night in America) someone is buying or selling a currency, either because he has to make a payment in another currency, because it requires sell an asset, or for coverage.
WHAT IS REALITY RETURNS GET?
Let's start by saying that Forex is a very risky market. Indeed, you can get very large profits in a short period of time, but also very high losses (this is the part they do not tell us).
These returns (or losses) are generated because it is invested in highly leveraged manner, and depend on the broker and leverage the account allows. This means that if gambled $ 1,000 in an operation, we are actually participating in an operation by $ 100,000 (or more, as mentioned, it depends on the leverage ratio that allows us to platform operation).
So if we do well, do well: we win like we invested $ 100,000 (and thus the gain can be very high in relation to the money you invested) -less financial costs of leverage and, where appropriate, the broker's commission.
But if we go wrong, we can even lose 100% of our capital invested in this operation very easily. Or even more.
If our low investment and 1,000 dollars we invest are no longer enough to pay what is known as "margin", we will make a "margin call" which means we have to put more money into our account to maintain our current operation . If we do not do the operation at that time is suspended automatically; and if we really went wrong (we lost money), it may be the case that we lost more than we invest and stay with a debit balance.
Some brokers tell their customers that this does not happen, since the positions can be protected with a stop-loss order type to limit our losses. However, we must be aware that an order of this type is not always a guarantee, as it could not be executed.
For example, if you put a stop loss at 12.90, but on a day the exchange rate moves from 12.91 to 12.89 in no time becomes exactly 12.90, your stop loss will not run or will run a lower exchange rate and loss may be greater than we anticipated.
To counter this argument, sometimes brokers say that in this market billions of dollars move every second, which is not likely to happen, but it is a risk which we should be aware.
On the other hand, it is important to know that is a non-regulated market by the Mexican authorities, who did not protect in case of fraud or the like. Although there are some serious operators or brokers, it is also very common in Forex ghost accounts are opened or do not exist. If you want to enter this market, one has to look who operates. It has to be a serious company and whose personnel are adequately trained and qualified. And unfortunately it is not easy to know for sure, but can have a pretty good start website.
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