A fundamental aspect of Forex

Joined: 10 Jul 2008 Posts: 2

Hello. Iâ€™m new to Forex, I have actually never traded so far, but I am considering to start investing in the Forex market. Although I donâ€™t know how exactly Forex works, I was thinking about a fundamental aspect of it that I wanted to consult with you.

Please tell me if I'm wrong:

The forex market is a closed system, which means all the trading takes place amongst the people and entities (like banks) who take part in it. So, in order to gain earnings there most be another person or entity loosing money. Those who are able to foresee the future of the market will win and those who arenâ€™t able to do it will loose. Am I right?

So, this gets me thinking that much of the financial input of the Forex market that allows some entities or people to make money comes from inexperienced participants that are loosing money.

Thus, there is a sort of hierarchical structure of knowledge in the forex market. The more experienced make money out of the less experienced (with the occasional exceptions of what it could be considered as â€œpure luckâ€). Important bank corporations have a very important advantage because of all the information they have.

There is therefore a very important temporal dimension to be considered by the newcomer. If you want to really make profits you will have to learn how the market works, gain experience and loose money before starting to make important profits. When you start making profits it will be because there are now other less experienced users than you.

A more provocative idea: If being an experienced user over other less experienced users is an important aspect for making money in the forex market, why should we think that there is free information widely available online that will truly help you to gain knowledge about the forex market? Why would forex experts would want to give that info away?

This is basically the way I see it, the forex market is a very risky one for the newcomer. Tell me if you, who know more about forex, agree with these ideas.