I got an email a short while ago from a reader of my blog that wanted to know whether or not forex trading was a good business opportunity. I thought this was quite an interesting question because I had never heard forex trading talked about in this way before. However, if you search online you will often find the terms ‘forex trading’ and ‘business opportunity’ discussed in the same sentence. I don’t necessarily believe this is a good thing because it is giving people the wrong idea about forex trading. It is not really a business at all. You are not buying or selling any products or services. You are simply trying to make money from speculating on which direction the various currency pairs are going to move. The more the price moves in your favor, the more money you make. Describing it like that makes it sound like a form of gambling, however, it is not pure speculation because you can put the odds in your favor by using technical analysis to help you find winning positions. Furthermore, if you create a trading system which applies certain technical analysis rules (which places probability firmly on your side), it’s possible to make consistent profits in the long run. However, it’s dangerous to classify forex trading as a business opportunity, because it’s more of a profession. Indeed it could also be regarded as a skilled profession because out of the thousands of people who take up forex trading, only a tiny majority of these people will make any money at all. Most will lose some if not all of their trading capital. Furthermore, unlike many businesses, which you can often set up in a short period of time, forex trading requires an awful lot of time just to learn the basics. Then once you’ve done that, you need to try and come up with a profitable trading system, which is extremely difficult to do. Indeed a large number of traders will never manage to come up with a winning system. Even if you invest in one of the commercial trading systems, or pay money for a forex signals service or a forex robot, for example, you may still struggle to make any money. This is because, despite some of the appealing sales pages which promise huge profits, many of them will end up losing money in the long run. So the point I want to get across is that forex trading should not be referred to as a business opportunity. It is more of a profession than anything else, and it’s a very challenging one at that.
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