Is Forex trading a scam?
As with most financial products, the Foreign Exchange sector started with the objective to hedge currency risk in international transactions. Where industrial buyers in the Eurozone had to purchase supplements, parts or inventory in Asia or Latin America, the currency risk and fluctuations in financial value had an impact on the manufacturing costs. To anticipate on the market volatility, complex derivative products such as options and futures were invented. Also, market players could buy and sell foreign currency for future needs when the price was considered attractive.
Whilst high quantity currency purchases are common in international trade, and market players can cut out middle man and financial institutions, the Forex market, also referred to the FX market advanced. Due to the volatility of currency and the daily changes in its value, day trading can earn profits. When the investment is leveraged with external funds, these profits may exponentially rise. As such, investment advisers attract potential investors with above market returns.
Like most investment opportunities, the core foundation of Forex trading is legitimate. Yet the execution of the assignment might be unacceptable. Adverse risk may result in a total loss of the initial investment. Prior to the engagement with an advisor and trading platform, investors must realize that the objective of the platform is to keep the investor aboard and trading, while the purpose of investing for the investor is to earn a decent return on investment while being able to collect this investment whenever they want.
Accessibility of a Forex investment via an online trading platform is often a difficult task. Whilst the platform wants investors to stay on board and send money, the individual investor often wants to cash in at any given moment. The earnings and profit model of the platform and its advisers is to sell the users additional products like insurance or loans disguised as leveraged profit accelerators. Investors must acknowledge the gap in objectives between supply and demand and make their decisions accordingly.