The global Foreign Exchange Market (Forex, in short) is the place where currencies are traded. It has no physical headquarters, unlike the biggest stock exchanges of the world. It is home to over 4 trillion dollars’ worth of trades every day, which makes it a lot larger than the largest stock exchange in existence, the New York Stock Exchange (NYSE).

We have seen a growth in the popularity of the Forex market in recent years. Brokers have appeared from nowhere, trying to convince customers to invest their money with them. This market was only reserved for the very rich until not very long ago (think 1980s), but now it is available to anyone and everyone. You’ve all certainly seen the advertisements. “Start with as few as 100$”, “no hidden fees”, “tightest spreads in the market”, “social trading with the pros”. What do all of these mean? Is trading the Forex market a legitimate business and occupation, or are all these businesses just high-tech scams? Is it worth trading the FX (Forex) market? To what extent? These are just a few of the questions we want to tackle in this article.

We will, of course, begin with the pros of trading the FX market.

1. Non-stop working hours. The market opens Monday night, around 11:00 CET and closes Friday night at 23:00 CET. This means that there is always a trade to take and you do not need to wait for the market to be open, like in the case of stocks or bonds. Even if there are clear differences in volatility and the amount of currency lots being passed from one hand to another, one can trade the FX market all day, every day, from Monday to Friday.

2. Almost instant execution. The speed with which an order is executed is significantly higher than any other financial instruments. If you want to close a trade, this also happens instantly. There is always someone willing to buy where you are willing to sell, and vice-versa.

3. Very high leverage. Leverage represents the amount of money you can control using the money you have deposited in your account, to put it simply. Most brokers offer leverage of 1:100, meaning that for every dollar you fuel your account with, the broker lends you 99 more. That means that you can trade full currency lots with as little as 1000$. This is by no means recommended, but can be a source of good wins and quick capital gains that can’t be seen in other instruments.

4. Large array of knowledge available for free online. There are so many forex brokers, so many trading schools, and so many mentors which offer their knowledge for free. A novice trader can access very much information for free, which means he can enter the market prepared at any given time.

5. Volatility. High volatility means that the market moves significantly every day, every hour, even every minute. While this can also mean it is hard to predict, volatility can also bring big wins to the everyday retail trader.

These are just a few of the benefits of trading the Forex market, but we think they are the most important. We haven’t mentioned the mirage of big wins usually used by brokers to attract clients. They always say that it is possible to double your money in one month, to achieve 800% gains in half a year, and other such incredible feats. Nobody says these are not mathematically possible; we just haven’t seen anyone who can do it consistently. Or ever, for that matter. This is the starting point of our cons list, which starts with

1. Hard to produce consistent gains. This is closely tied to the volatility topic covered above. While brokers advertise that incredible gains are possible, they are practically not. Even large consistent gains are very rare. If you want to trade the Forex market, prepare for a long and bumpy road ahead.

2. Retail traders (like you or us) are just a small part of the market. You are participating at the biggest currency exchange in the world. The other players in this market are central banks, investment funds, pension funds, all types of funds, then medium and large companies, then retail traders with millions to spare, then you. Due to the large leverage you use (most probably), one of the big player’s actions can wreck your account. Be careful.

3. Large number of scams. It is very hard, especially for beginners, to separate relevant information from complete stupidity. People will promote bad brokers, bad indicators, bad trading systems; anything can that earn them even the slightest money advantage. There are lots of services connected to the Forex market, and some of them should be avoided completely.

4. Relatively high skill set. In order to trade the market effectively, one most poses technical skills as well as market experience. 90% of Forex traders fail in the first 3 years. There are a lot of reasons behind that statistic, but we cannot deny it.

The main purpose of this piece is to realistically map the skills necessary to trade the Forex market and to make the reader aware of its pros and cons. There are a lot of different markets which can be traded, think stocks, bonds and CFDs. Every trader must find their place.