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FX Trading: Barriers to Success

Traders Magazine Online News, February 21, 2019

Mohsin Siddiqui

Forex trading can be a complicated business. Many people simply donít have the time to sit in front of a computer all day, looking for well-judged market entries, figuring out what their ideal spreads are, and managing their exits. And not all retail traders are adequately prepared to manage the potential risk that comes with trading the financial markets either.

I strongly believe that new retail traders need access to easy-to-follow educational resources to help them develop the rigor and discipline required to trade efficiently. Without these resources, I feel new traders face three key barriers that could prevent them from reaching their full potential.

The first barrier is structural. Obviously, retail traders cannot trade at the volume and scale of large financial institutions, and most donít have access to technologies that could make their forex trading a more simplified and automated process. Entities such as banks have institutional know-how and sophisticated systems that enable them to stay abreast of market trends and help inform their decisions. By contrast, the average retail trader is less likely to have access to this depth of information or may not yet have found the tools that will help them trade effectively and profitably.

This leads to the second barrier: Many retail traders are self-taught. While this hasnít prevented thousands of people from making profits in the markets, they are also potentially at risk of developing habits that are detrimental to successful long-term trading. As it is, there are relatively few reliable resources for traders looking to learn more about how the process works, or what they should be doing to maximise their effectiveness.

For example, websites such as Investopedia are great for understanding the mechanics of forex trading, but they can sometimes be difficult for the average layperson to understand, which could make it less likely that those insights will actually be put into practice. However, while it may take newcomers some time to sift through several often contradictory sources and decide on the most trustworthy, there is still enough information in the public domain to level the playing field and allow them to trade profitably at a retail level.

At OANDA, we aim to help our clients reach a point where they are self-sustaining and able to develop a trading strategy that works. The best way weíve found of achieving this is to give them access to a number of tools such as advanced charting applications, technical analysis, open order books, and economic overlays that can help educate them, not only about best practices in trading, but about the markets in general. For example, our MarketPulse blog allows anyone to access news stories, quality analysis, and commentary on the latest forex trends, free of charge. We believe easy access to information and advanced trading tools can help redress the balance between retail traders and their institutional counterparts.

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