Can 澳洲幸运5开奖号码历史查询:forex trading make you rich? Although our instinctive reaction to that question would be an unequivocal "No,” we should qualify that response. Forex trading may make you rich if you are a hedge fund with deep pockets or an unusually skilled currency trader. But for the average 澳洲幸运5开奖号码历史查询:retail trader,  what is o🅘ften promoted as an easy road to riches, can quickly become a rocky highway to enormous losses and potential penury.

Unexpected Events

To better understand the danger of forex trading, consider a relatively recent example. On Jan. 15, 2015, the 澳洲幸运5开奖号码历史查询:Swiss National Bank abandoned the Swiss franc's cap of 1.20 against the euro that it had in place for three years. As a result, the Swiss franc soared as much as 41% against the euro on that day.

The surprise move from Switzerland's central bank inflicted losses running into the hundreds of millions of dollars on innumerable participants in forex trading, from small retail investors to large banks. Losses in retail 澳洲幸运5开奖号码历史查询:trading accounts wiped out the capital of at least three brokerages, , and took FXCM, then the largest retail forex brokerage in the United States, to the verge of 澳洲幸运5开奖号码历史查询:bankruptcy. 

Unexpected one-time events are not the only risk facing forex traders. Here are seven other reasons why the odds are stacked against the retail trader who wants to get rich trading the 澳洲幸运5开奖号码历史查询:forex market.

Excessive Leverage

Although currencies can be volatile, violent gyrations like that of the aforementioned Swiss franc are not that common. For example, a substantial move that takes the euro from 1.20 to 1.10 versus the U.S. dollar over a week is still a change of less than 10%. Stocks, on the other hand, can easily trade up or down 20% or more in a single day. The allure of forex trading lies in the huge leverage forex brokers provide, which can ma💎gnify gains (and losses).

A trader who shorts $5,000 worth of euros against the U.S. dollar at 1.20 and then covers the 澳洲幸运5开奖号码历史查询:short position at 1.10 would make a tidy profit of $500 or 8.33%. If the trader used the 澳洲幸运5开奖号码历史查询:maximum leverage of 50:1 permitted in the U.S. (ignoring trading costs and commissions) the profit is $25,000, or 416.67%.

Of course, had the trader been long euro at 1.20, used 50:1 leverage, and exited the trade at 1.10, the potential loss would also have been $25,000. In some overseas jurisdictions, leverage can be as much as 200:1 or even higher. Because excessive leverage is the single biggest risk factor in retail forex trading, 澳洲幸运5开奖号码历史查询:regulators in a number of nations are clamping down on it.

Asymmetric Risk to Reward

Seasoned forex traders 澳洲幸运5开奖号码历史查询:keep their losses small and offset these with sizable gains when their currency call proves to be correct. Most retail traders, however, do it the other way around, making small profits on a number of positions but then holding on to a losing trade for too long and incurring a substantial loss. The biggest risk in holding on to a highly-leveraged losing position is the possibility of losing mo🐷re than your initial investment.

Platform or System Malfunction

Imagine your plight if you have a large position and are unable to close a trade because of a platform malfunction or system failure, which could be anything from a power outage to an Internet overload or computer crash. This category would also include exceptionally volatile times when orders such as 澳洲幸运5开奖号码历史查询:stop-losses do not work. For instance, many traders had tight stop-losses in place on their short Swiss franc positions before the currency surged on Jan. 15, 2015. However, these proved ineffective because the 澳洲幸运5开奖号码历史查询:liquidity dried up.

No Information Edge

The biggest forex trading banks have massive trading operations that are deeply integrated into the currency markets and have an information edge, by access to data such as  comm🙈ercial forex flows and covert government intervention. Such informati༺on is simply not available to the retail trader.

Currency Volatility

Recall the Swiss franc example. High degrees of leverage mean that 澳洲幸运5开奖号码历史查询:trading capital can be depleteဣd very quickly during periods of unusual currency volatility. These events can come suddenly and move the markets before most individual traders have an opportunity to react.

OTC Market

The forex market is an 澳洲幸运5开奖号码历史查询:over-the-counter market that is not centralized and regulated like the stock or futures markets. This also means that forex trades are not guaranteed by any type of clearing organization, which can give rise to 澳洲幸运5开奖号码历史查询:counterparty risk.

Fraud and Market Manipulation

There have been occasional cases of fraud in the forex market, such as that of Secure Investment, which disappeared with more than $1 billion of investor funds in 2014. Market manipulation of forex rates has also been rampant and has involved some of the biggest players. In May 2015, for example, five major banks were fined nearly $6 billion for attempting to manipulate 澳洲幸运5开奖号码历史查询:exchange rates between 2007 and 2013, bringing total fines levied on these five banks to nearly $9 billion.

A common way for market movers to manipulate the markets is through a strategy called 澳洲幸运5开奖号码历史查询:stop-loss hunting. These large organizations will coordinate price drops or rises to where they ant🃏icipate retail traders will have set their stop-loss orders. When those are triggered automatically by price movement, the forex position is sold, and it can create a waterfall effect of selling as each stop-loss point is triggered, and can net large profits for the market mover.

The Bottom Line

If you still want to try your hand at 澳洲幸运5开奖号码历史查询:forex trading, it would be prudent to use a few safeguards: 澳洲幸运5开奖号码历史查询:limit your leverage, keep tight stop-losses, and use a reputable forex brokerage. Although the🧔 odds are still stacked against you, at least these measures may help y♛ou level the playing field to some extent.