Surprising as it might be, many people are still under the impression that Forex trading is nothing but a scam. This is so albeit the continuously escalating number of both traders and markets. That said, it is an irony that something is popular and done by many people, yet other parts of the society simply think of it as a sophisticated scam.
Considering the phenomenon, people might be skeptical for they do not really understand what Forex trading is and how it operates. The preceding reaction, furthermore, is forgivable for it truly is not easy to believe something that has no physical form, yet it generates money.
Thus, in order to answer the question of whether Forex trading is a scam, it is wise to discuss what it is and how it works.
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What Forex Trading is
By definition, Forex is a foreign exchange market. Identical to its name, it is a venue where corporations and government banks trade currency for international transactions.
Forex trading is old. Since the late 70s, it has existed as a replacement for gold as a trade standard. At that period, gold was the standard of global trade.
However, as the people of the world was considering its practicality, they moved on to something easier, which was Forex.
Forex used to be exclusive resources for huge corporations and banks only, but that changed due to the rapid advancement of technology. To date, individuals can trade Forex through the Internet.
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How Forex Trading Works
Identical to all forms of transactions, Forex is basically all about selling and buying. In the current era, the transactions can occur between anyone at any time and place. Most transactions, particularly for individuals, require a broker for it costs a lot without the presence of a broker.
Since it is dealing with currency, the law of supply and demand applies here. Each time a bank demands more currencies than what is available in the supply, the price automatically skyrockets. The contrasting thing, in addition, occurs if the supply is more than the demand.
With this in mind,governmental banks and, sometimes, huge corporations shape up the markets. However, individuals, or smaller player, are able to calculate when the price will rise or drop. For that reason, Forex trading is, therefore, not a scam.
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