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Why do you think people are scared of investing in forex?

Discussion in 'General Forex Talk' started by galaxytrades, Apr 24, 2013.

  1. galaxytrades

    galaxytrades Recruit

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    Hey guys, I've asked around a bit and some of the common responses is that
    1) The registration process is complicated
    2) The idea of diving into the market without any prior knowledge is daunting
    3) "You require a lot of money before you can invest"
    4) "People always lose money in forex"
    5) "Whole thing is too complicated and scary"

    What do you guys think?

    note : I'm creating a site and this is one of the areas I'm interested in getting opinions on.
     
  2. TadS

    TadS Private

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    I would say people are very intimidated by the amount of information they think they need to know to begin trading. Especially when you start looking into fundamental analysis, the macroeconomics can seem very overwhelming.

    Other than that, I think people believe they need a lot of money to invest.

    What kind of site are you making?
     
  3. RahmanSL

    RahmanSL Major

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    1) The registration process is complicated
    Use ASIC regulated brokers as, based on my personal experiences, they are more clear on what personal data are required and pretty straight forward.

    2) The idea of diving into the market without any prior knowledge is daunting.
    Of course, prior knowledge is required & essential before diving into any business/activities/etc.

    3) "You require a lot of money before you can invest"
    That's very incorrect and gross misconception as some brokers (mostly/all unregulated ones) allow a wanna-be-trader to start off with USD1.00....and some even give the wanna-be-trader money to "get a feel of a live account"......and then, in most cases, skin them alive when the wanna-be-trader deposit any significant money into that account.

    4) "People always lose money in forex"
    That is pure BS....greed and over-trading a small account is the killer. I would go as far as to say that those who cannot or does not make money from trading the forex are all gamblers at heart.....or jinx.

    5) "Whole thing is too complicated and scary"
    Again, that's hogwash (trying to avoid using BS again).....Any first day (at school, work, anywhere) can be scary or exciting depending on the individual.


    To me, forex is about having the ability to make good money without having to work hard for it.
    It's one of the cheapest business (if indeed we treat it that way) with very little start-up capital, but with the potential to become a multi-million business entity.

    Often times, I have asked the question: "Where in this world can we make USD5 (and more) in a few seconds with one push of the computer keyboard?"
    That's exactly what happened when I first try out trading the forex some 3 years ago.

    One of the major problem I have come across is wanna-be-traders trying/wishing to make >USD300 daily profits on a <USD1,500 trading account.
    A sure account killer is a under-funded trading account.
    If a wanna-be-trader wants/wish to have USD300 daily profits, have a USD10k to USD30k account because you will only be risking a very small percentage of the capital to realize 3%-1% daily profits, which should be pretty simple to do.

    I think all your questions are/have been adequately answered in various forums posted by wanna-be-traders and replied by seasoned forex traders. Just do a google search and I am sure you will have ample material to work with.
     
  4. galaxytrades

    galaxytrades Recruit

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    Hi, thanks for the feedback, really appreciate it :)

    Do you think having an expert offer them straightforward advice on when to buy and when to sell would greatly alleviate this fear?

    Anyway, I'm creating a site that combines the best of zulutrade, myfxbook and collective2, offering automatic portfolio tracking for forex/stocks/options/futures all on one site and allowing people to follow each other's trades seamlessly. However, I have noticed that while there are many people with accounts in the world, a large portion of them seem to be paralyzed by fear of loss or something, and I'm hoping to discover that and help them overcome it.

    Thanks for the feedback, helps me gain greater insight :)
     
  5. galaxytrades

    galaxytrades Recruit

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    That's very true, greed is often the worst enemy and while it tempts you initially with a few gains, it consumes you later when you let it get the better of you. Good advice indeed.

    I have done searches and while I've found the reasons people want to trade forex, it is tough for me to pinpoint what are some of the major reasons why people do not wish to trade forex. It is such a lucrative business, as you mentioned, and given its huge profit potentials, it should be very very attractive to everyone for that matter. The funny thing is that sometimes I ask my uncles and aunties why they don't trade forex and they all seem to have a huge resistance towards doing so, perhaps fear of the unknown? Haha.

    In any case, I hope to discover and pinpoint the few main causes and do my best to alleviate their fears :)
     
  6. f-man

    f-man 4Xangels Representative

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    1. Generally, the process should be similar to the process of opening a bank account in the specific County that the Broker is based. The traders should be careful! If it's too easy, to setup an account and fund it, it is a very bad sign that something is wrong!!!!

    2. True! You should learn a few basic things, before starting to invest. On the other hand, you can run a Demo account till you feel comfortable trading real money. In other businesses, you do not get this option offered!

    3. Not true! There are Brokers accepting $1 deposit on cent accounts!!!!

    4. Yes and No. As previously mentioned, the traders who always lose, are in general the trades that do not know what money management is!!!

    5. Same with comment to number 2

    Good luck with your project!
     
  7. Pharaoh

    Pharaoh Colonel

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    1) The registration process is complicated

    With most brokers, it's no more complicated than opening an account to trade stocks or even opening a common bank account.

    I do worry about generic offshore brokers that try to get people to invest before asking for ID paperwork. In some cases, they just never accept the ID papers, so you can never withdraw.

    2) The idea of diving into the market without any prior knowledge is daunting

    Diving into ANY market where you make or lose money based on your own decisions should be at least a little daunting.

    You could always let an account manager trade for you, but finding a good one can be almost as difficult as learning to trade.

    3) "You require a lot of money before you can invest"

    It's possible to open accounts at many well-regulated brokers for anywhere from $100-500. If you plan to make an income from it, you need a bigger account.

    4) "People always lose money in forex"

    Exact statistics are debatable, but I think most people would agree than 80-90% of all traders in all markets lose money.

    5) "Whole thing is too complicated and scary"

    If learning how to trade and analyze the market is difficult, then don't do it. Not everyone has the right mindset to trade.
     
    4evermaat likes this.
  8. galaxytrades

    galaxytrades Recruit

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    Thanks for clarifying the areas, it seems that some worries of people are unnecessary and misconceived such as requiring a lot of money to trade and some other fears can easily be alleviated with proper guidance and education. This has greatly opened an invaluable insight for me, thank you very much, will make sure these are addressed as I continue working on my project :)
     
  9. galaxytrades

    galaxytrades Recruit

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    Thanks for the heads up Pharoah, I will ensure I filter out such off-shore brokers that do not have the long term interest of their clients. It is a good idea to let money managers do the trading for you, instead of diving in and losing a bulk of your own money. Are there any particular money managers you recommend?

    Also, it would be best for new traders to be educated on money management and trading techniques? I can't imagine a new trader ever earning money with some basic techniques though, is there any way to save them from that plight?
     
  10. RahmanSL

    RahmanSL Major

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    "....The funny thing is that sometimes I ask my uncles and aunties why they don't trade forex and they all seem to have a huge resistance towards doing so, perhaps fear of the unknown?..."

    That's the same on my side of the pond (upper North from your side).....but not with "uncles & aunties" 'cause, in my case, I am the "uncles & aunties" :p

    It seems to me that (again in my case) ALL my relatives & closed friends have been fed gross misinformation regarding trading the forex by some unknown entity.
    The closest I get to solving the mystery of the "unknown entity" is when I asked some of them: "Does your friend actually trade the forex?" and the reply is always "No!".....My reply to them is, "Then don't listen and believe what they have been telling you 'cause they know nothing about the forex market and talk co**".

    So, based on my experiences, these people have been listening to the wrong people who have psycho them to fear trading the forex.

    But so far, I have "0" converts and that "unknown entity", which I suspect its probably that ancient Egyptian god Seth (get it?...Pharaoh, ancient Egyptian gods, forex trader!!!;)), is on a winning streak.
     
: galaxytrades

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