Myths and Realities Forex Market

As in almost all subjects there are certain widespread and accepted beliefs about certain aspects that are often myths, falsehoods or half-truths. Then we will analyze whether they are myth or truth some popular beliefs about the Forex market, such as: 

the broker operates against me, Forex is to buy currency in the bank, the ECN are better than market makers, the Forex is a system to get rich overnight, need $ 20,000 to start, volatility is my friend, the Forex gives a return or monthly interest, the Forex market is not regulated, among other statements more.

The broker works against me Myth or truth?

This is a myth, but like everything in life can be some exceptions. Some traders do not feel comfortable with your broker if the counterpart of its operations, as they feel it represents a kind of conflict of interest. These conflicts can arise in the Market Maker. This is a reasonable concern, but actually most currency brokers are forced by competition to remain honest and legal. There is no way a broker survive in the business unless the company fulfills its part of the bargain. Broker is not interested to operate against his client because a part of the income of brokers commissions come for their customers, therefore not interested anger them.

Forex is to buy currency in the bank

It is a myth. The Forex market is much more than exchanging one currency for another in a bank. The National Commission for the Protection and Defense of Financial Services Users (Condusef) provides that in the Forex market one currency is traded for another large-scale, is completely electronic and operates 24 hours a day through financial centers around all the world. So you do not have a stable physical place of operation to participate must be done through a consultancy that offers some platform or through a broker.

The ECN are better than market makers

This statement is Ni-ni because it is no myth or reality, is a half-truth because not all cases are met. There is a widespread opinion that a broker without operating table or ECN is more likely to be honest and transparent about

operations because it sends his orders to the interbank market. There is also the idea that an ECN allow a retail customer save some money by setting limit orders within the range. Both ideas are true, but not always the ECN always represent an advantage.

The Forex is a system to get rich overnight

It is a myth, it may happen but it is very unlikely. It is true that anyone can access this market, but in order to get returns is very complicated and requires a level of expertise in high-risk investments. Leverage, or debt purchases, which allows this market makes it even riskier. Chances are that a person who has no knowledge of the market can lose all your money in one day.

I need $ 20,000 to start

This is a myth. The initial investment to get started in the Forex market is very flexible, for example Alpari allows market from $ 1, however, the higher the lower amounts will be the conditions. According to the Condusef, National Commission for the Defense of Users of Financial Institutions, the average amount that brokers and platforms are requested to enter $ 1,000.

Volatility is my friend

This statement is Ni-ni because it is neither myth nor reality. Volatility implies profit opportunities and risks at the same time, it all depends on the degree of experience of the operators and their decisions.

The Forex gives a return or monthly interest Myth or truth?

This is more than a myth a lie capitalized. As in the stock market, profitability or interest received by the person who invests depends on the price movements of currencies to buy the person. So there are possibilities to win big money, but also lose everything.

The Forex market is not regulated

This statement is true. Companies that offer this service do so only as advisory and operations are carried out in international markets that are OTC, protection of this activity is outside the law.

Also, because companies are not financial institutions is not competition Condusef National Commission for the Defense of Users of Financial Institutions, determine its constitution and legal operation and therefore it is not possible to defend the interests of customers making transactions with these companies.