1. Retail Traders do not have enough Information.
" The foreign exchange market is a zero sum game in which there are many experienced, well-capitalized professional traders (e.g. working for banks) who can devote their attention full-time to trading. An inexperienced retail trader will have a significant information disadvantage compared to these Traders."
2. Retail Traders are a victim of the so called "Gamblers Ruin"
" Retail traders are, almost by definition, undercapitalized. Thus, they are subject to the problem of gambler's ruin. In a "Fair Game" (one with no information advantages) between two players that continues until one trader goes bankrupt, the player with the lower amount of capital has a higher probability of going bankrupt first. Since the retail speculator is effectively playing against the market as a whole, which has vastly more capital, they will almost certainly go bankrupt"
3. The spread
The Spread is the trader's biggest enemy for mathematical reasons. It's unlikely that a retail trader can beat the spread over a long-term period of time. If the spread is 0.2 pip, that puts the trader to a severe disadvantage - let alone if the spread is 1 pip or higher.
4. The higher the Profit, the higher the risks.
It is NOT possible to earn a high profit with a low risk.
5. Unrealistic expectaitions
Professional Traders have a profit target of 10-20% a year. This is very high, because with a starting balance of 1 Million you will earn 100k per year, which is 8'300$ per month. Retail Traders however have unrealistic Targets of 10% or higher per month, which of course automatically leads to extraordinary risks, since the higher the profit, the higher the risks. Becuase of the high risks involved, retailers are therefore much less likely to win money on a long term basis.
" The foreign exchange market is a zero sum game in which there are many experienced, well-capitalized professional traders (e.g. working for banks) who can devote their attention full-time to trading. An inexperienced retail trader will have a significant information disadvantage compared to these Traders."
2. Retail Traders are a victim of the so called "Gamblers Ruin"
" Retail traders are, almost by definition, undercapitalized. Thus, they are subject to the problem of gambler's ruin. In a "Fair Game" (one with no information advantages) between two players that continues until one trader goes bankrupt, the player with the lower amount of capital has a higher probability of going bankrupt first. Since the retail speculator is effectively playing against the market as a whole, which has vastly more capital, they will almost certainly go bankrupt"
3. The spread
The Spread is the trader's biggest enemy for mathematical reasons. It's unlikely that a retail trader can beat the spread over a long-term period of time. If the spread is 0.2 pip, that puts the trader to a severe disadvantage - let alone if the spread is 1 pip or higher.
4. The higher the Profit, the higher the risks.
It is NOT possible to earn a high profit with a low risk.
5. Unrealistic expectaitions
Professional Traders have a profit target of 10-20% a year. This is very high, because with a starting balance of 1 Million you will earn 100k per year, which is 8'300$ per month. Retail Traders however have unrealistic Targets of 10% or higher per month, which of course automatically leads to extraordinary risks, since the higher the profit, the higher the risks. Becuase of the high risks involved, retailers are therefore much less likely to win money on a long term basis.
Forex is a losers game.
Yet, you do not think increasing investment can teach you how to trade? I thought to spend a little at first and every investment to grow by 10 percent. What do you think?
What do you think about starting investing in small and each time increasing the investment? Is it generates experience that pays off later? or maybe its a waste of money
