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The Top 6 Challenges in Forex Trading

The Forex market is a unique beast, and presents some unique challenges to the new trader. How can you be sure you're going to have a successful first day? Here's what everyone should expect.

In this article, we will talk about the top 5 challenges in forex trading and how to overcome them.

Preparation:  At first glance, the Forex market appears to be a 'free for all'. There are no restrictions on who can trade, where they can trade from, and how much money you need to get started. Loads of people acting as one, exchanging bits of paper with numbers on them in a vast arena.

However, this is a false impression. The Forex market is a highly regulated and professional environment. This means you need to approach it as such, if you want to have any chance of being successful. So take your time, do your research and go in prepared – know what markets are available for trading, how they work and what factors can influence their prices.

Trading Hours: At first glance, this might not sound like much of an issue. After all, if you're making money then the time of day is completely irrelevant. However, there are two major downsides to trading around the clock: information and competition.

Competition : Because the Forex market is open 24 hours a day, it means there is always someone else trading – and that means there is always someone else to compete against for those sweet, sweet pips. If you're looking to make a long-term career in forex trading then this isn't much of an issue, as it's the overall trend and direction over longer periods that matter. However, if you want to make some quick cash then this can pose a serious problem. You'll find it difficult to recognize opportunities in fast-moving markets, and the price might just keep on rising before you get in.

Information : As online trading has become more popular, news sources have struggled to expand their coverage of financial markets. They simply aren't able to provide 24/7 updates anymore. This means your markets and prices can be out of date, which again will make it difficult to make informed decisions.

Exchange rates:  The Forex market is unique in that currencies are traded as futures. They're not actually exchanging any cash – they're just moving from one bucket (or account) into another. The problem this poses for the new trader is that these buckets are in different countries, with different time zones.   

Forex Trading Platform: Finding the best forex trading platform can be difficult. You can easily get started with the most popular Meta Trader 5 platforms if you're ready to do forex trading.

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