What Makes Forex Trading Market Difficult For Investors?

Forex Trading markets

What Makes Forex Trading Difficult For Investors: Forex Trading Market is the world’s largest financial market, and it is home to millions of investors worldwide. One can find all kinds of investors and traders in the market. The forex market has served as a foundation for a billion dreams.

It has made fortunes for many people around the globe. The forex market is accessible by almost all people, whether they are professionals or absolute beginners.

The forex market has always been a matter of fascination for a lot of investment enthusiasts. All these enthusiasts aim to make a quick buck or create a fulfilling career. Besides, they might be saving for retirement. There can be a lot of reasons.

Some Legitimate Queries

As there are many investors in the foreign exchange market, but few have what it takes to be the best. Now a question must be arising in everybody’s mind. Why is the forex trading market so hard? What makes it so hard for people to understand it? Why do people lose money when they are following the best advice?

If such questions bother you, so in this post, we are sharing reasons that make forex trading difficult. But why are we doing this? It is because by knowing the reasons, one can achieve their financial goals with ease and without worries of damages. Who wouldn’t want that to happen?

Top Reasons That Make Forex Trading Complicated

Reasons #1 Inadequacy In The Level of Financial Education

What we are trying to convey over here is that it does matter what sort of degree or qualification, one might have. A person could be a PhD holder or might be a graduate of a prestigious university.

In the forex market, real education comes from experience. The more time one spends in gaining knowledge, the more efficient it will be. The best way to gain experience is by journalizing. Maintaining a trading journal and writing all the observations made by you about Forex trading is the best way to learn.

Doing this for a longer time will make you master analyzing forex market trends and charts. One will be able to identify forex entry and exit points. But here we would also like to point out that one should also not forget about books and other mediums. Please do not ignore them completely.

The trial and run methods are based on which observation methods stand. Trial and run methods of learning might not always produce desired results. Practical and theoretical knowledge always go hand in hand. They are not separated from each other as there is a saying that the readers are leaders.

Reason #2 Trying To Control The Market

The Intention to control the market arises out of emotions like fear, depression, and greed. When most people are trading forex, they become very addicted to forex trade. They tend to form an emotional connection with the market.

They start to think that they can control the market and can get the desired result. It leads to trading on rumors and impractical forex strategies. These methods might work and might not work.

Prediction and timing also can be challenging to make regarding the market. Beginners should not try to forecast trends and conditions that might affect the market without an adequate amount of training.

One valuable advice that is given by the veteran forex trader is that one should embrace the unpredictability and randomness of Foreign exchange trade. We should always plan to deal with every outcome that can occur. One should not come up with hacks or try quick ways to gain profits.

Reason # 3 No Trading Plan To Set Rules and Limits

In offices, we have managers and bosses that establish some boundaries and ground rules for our conduct and smooth functioning. They function as a guide, or sometimes they work as a school principal. Their motive behind governing us is that we do not end up making mistakes and blunders in the organization.

Without a forex trading plan, an investor will not be able to adapt to the market. The forex market is a very dynamic kind of financial market. It keeps on changing in seconds and minutes. Before you commence trading in the forex market, you should have plans to take care of any contingencies.

Most successful traders have a well-crafted plan. They regularly conduct scenario analyses to find out if their plans require changes or not. They always stay up to take advantage of opportunities and also to fight threats.

In the same way, the forex trading plan works; they lay the ground rules for us to work accordingly. It is prevalent among forex traders to have a trading plan to trade forex. The bottom line is that all investors require rules, strategies and processes to follow to be successful.

Reason #4 Absence of Risk And Money Management

If a person’s risk and money management skills are not competent enough, they are not likely to succeed in forex. Forex trading market is full of risk. One can encounter dangers such as exchange rate risk, interest rate risk, credit risk, liquidity risk and so on. Some ignorant individuals will trade without protection. They refrain from using stop loss and similar tactics.

That is what separates expert traders from novice traders. The expert knows when they are supposed to use a stop-loss order to stop loss of money. The trader that knows how much of its capital is at risk will win in the forex market.

As far as money management is concerned, there should be a well-planned investment budget. The budget that one will set must mention the allocation of funds among various financial instruments. As one goes deep inside the forex market capital preservation becomes a must for them.

The traders should not invest all their funds in single currency pairs instead. They should look into diversifying their portfolio; diversification can shield your trading account from severe losses.

The superior traders always use a small portion of their funds for high-risk forex investments. They will invest the rest of the funds very conservatively to survive for the long term in the forex industry. The point here is that one should not spend that much that they can afford to lose.

Reason #5 Perceiving Forex Investing As Getting Rich Quick Scheme

Many Beginners want to get into the forex industry because they perceive it as a get-rich-quick scheme. They think that by investing in forex markets, one can make millions and billions in a few weeks or months. Though one can become rich in the short term, it requires one to have a high level of expertise.

To earn money in the short term, one needs to be very thorough with the charting and analysis techniques. Most forex trading uses charts and graphs and requires one to analyze specific indicators. One should consider forex trading as a long-term game and should invest in it for a very long term.

Reason #6 Not Making A Judicious Choice Of A Forex Asset

In business, whenever one asks for advice to start a business, people often quote choose your battles wisely. Success and failure of any business venture depend on the type of business; one put his hands in. If one makes a wise choice of business, the reward will be very high. If one makes the wrong decision of business, even the gold will turn into dirt.

The same principle applies to forex trading as well. Forex investing is a kind of business. Who would want to make the wrong business decision? There are a lot of forex trading instruments available. One can invest in currency pairs like USD/Aud, USD/ EUR, etc., by forex CFDs and By Spread betting.

Spread betting is where investors bet on the price movement of currencies. If they think that the prices of currencies will rise, they will speculate on the bid price. If they believe that the prices will fall, they will speculate on the asking price. Forex CFDs are contracts between investors and brokers where they agree to exchange the difference between the entry/exit prices of the currency.

All these instruments have a specific risk attached to them. These risks can be both rewarding and can be very punishing. If one made a smart choice of financial instrument, they are sure to make a decent profit.

Reason# 7 Ignoring Portfolio Investment

In point 4, we have informed you that one should know about proper risk and money management. In point 6, we have notified you how important it make the best choice of financial instruments. Here we discuss Portfolio creation and management.

Portfolio investment is also a very crucial factor whose absence creates a situation of disorder while investing in forex. Creating a portfolio will enable the trader to allocate its funds properly. It can also create a steady income stream for the investor.

Reason #8 Making A Hasty Decision Regarding Financial Broker

You must pick the right financial instrument for investing. In the same way, it is equally important to choose a suitable broker. One cannot afford to make a hasty decision when it comes to choosing the best financial broker for oneself.

For a profitable investment, the brokerage service should align properly with your needs, goals, and objectives. The financial broker that one chooses should be affordable. It should provide you with the best-in-class platform and tools. Most importantly, they should not be fake or have a lot of hidden information. If these things, a significant amount of money will go into paying charges and deductions.

Choose a broker that works with full transparency and has all the required licenses and regulations. Most of the brokers have the facility of a demo account, where you can start the brokerage services for a while.

Always before opening a live trading account with the broker, persist with the demo account. That way, you will get to know the brokerage service very deeply and will also not lose money in trading. Also, check the experience level of the financial brokerage firm. As a rule of thumb, choose a broker that has more than ten years of experience.

Reason #9 Financial advisor is not highly skilled

A financial advisor is a person or company that assists established and beginner investors with making investment decisions. They help people in formulating the best investment plan and strategies for the long and short term.

These individuals or organizations are academically and administratively qualified to assist people with a smart investment. They can be a beneficial medium for maximizing profits and managing losses.

Sometimes these financial advisors can also become a roadblock in one’s trading journey. If one did not choose an experienced financial advisor, he would not be able to give the right advice on time. Make sure you select the best financial advisor that can completely understand your financial needs and work accordingly.

Most of the experts advise that if there is no proper communication and coordination with the advisor. Then one should refrain from moving forward with investments in the foreign exchange market.

Reason # 10 Working On Rumors or Friendly Advises

Whether it is the forex market or it is the stock market, all these financial markets work on assumptions. Every trader, analyst and broker, try to predict the market conditions. They use a lot of statistical and analytical methods and techniques.

These predictions and assumptions can lead to the creation of rumors that spread like wildfire. These rumors can create false enthusiasm or panic in the market. Do not believe everything one hears, research it and form your own opinions.

Also, we can say that one of the biggest that makes forex difficult is working on friendly advice. One may think that since friends, family members, and colleagues are in the forex industry, they might be knowledgeable. So without any investigation, money is injected into the investment, which may prove to be good or bad.

But most of the time, friendly advice results in investment disasters. Therefore, experts advise not to follow any trend or advice blindly if one wishes to safeguard it, hard-earned money from getting disappeared in thin air.

Reason#11 Getting Emotional With the Ups and Downs of the Market

While trading, one can come across a lot of ups and downs. The market does not remain fixed; it keeps on fluctuating. There’s no room to be emotional. Be efficient, all-around expanded, and mindful of your risk tolerance.

Investing in forex should be logical and not emotional. Being emotional will make one get depressed quickly and will hamper sound investment decisions. It will lead to buying hastily and selling in panic.

Reason# 12 Compromising With the Quality of Financial News

There is no shortage of financial news. The forex expert, Warren Buffet who is a notorious headline reader; he brushes off almost all of the information pushed his way. Warren Buffet has created an 80-20 rule where he claims that around 80% of outcomes can regard to 20% of the causes for an event.

When it comes to financial news, he argues that it’s more like the 99-1 rule. He states 99% of investment actions are taken are based on just 1% of the financial news we consume.

Most news headlines and conversations on TV are there to generate buzz and trigger our emotions to do something. As investors, we need to analyze the off chance that a news thing genuinely impacts our organization’s drawn-out income power.

If the appropriate response is no, we ought to likely do something contrary to whatever the market is doing. The securities exchange is an erratic, dominant power. We should be particular with the news we decide to tune in to, significantly less active.


Many of the aspects that fail forex traders are identical to that influence traders in other financial markets the straightforward way of avoiding perils to form a rapport with successful forex traders. Forex trading market indeed has delighted in an arrival altogether above different sorts of investments while additionally giving pure liquidity. It is all out perceivability, and dynamic guidelines to guarantee a level playing field for all.

Investing in the forex trading market is an extraordinary chance to construct tremendous resource esteem for individuals who are eager to be reliable savers. Who makes the fundamental interest in time and vitality to pick up understanding? Who fittingly deal with their risk, and are quiet, permitting the enchantment of exacerbating to work for them.