I remember coming across a statement made in one of the various books on forex where it was compared to an ATM machine,"It's like you need some money and you go to your Automated Teller Machine, slot in your card, press the right buttons and voila! you can withdraw with a maximum pip limit of the range of pair you are requesting for!" WRONG!
After sitting my butt down and gyrating between trading a demo and live account for about 2 years, here's what i have to say about that statement.
This comparison is not absolutely true based on the following reasons.
1. You only need to be told how to use an ATM once and after that you can operate it on your own without supervision and it would work for you all the time (as long as you have an average IQ and you still have money in the bank!). However, forex is a weird kind of ATM that some have even been trying to get to work for years and have failed!
2. Imagine you slotting your card in the machine and instead of seizing your card for inputting maybe the wrong digits, it deducts money from your account! Well welcome to forex, that is exactly what the market does when you mess with it thinking you know where it is going.
3. You only need to operate the ATM for about less than a minute to get money from it but when it comes to forex, you would discover people sitting for hours in front of the computer to squeeze out as low as 20 pips (for scalpers) for 100x the time you would need to do that with an ATM!
I could come up with more reasons why this analogy is not the best to explain the market but since this is a forum i think we should all have our own share of the fun.
What dissimilarities do you see when you try to compare making money fro forex to withdrawing money from the ATM (or the cash machine as it is called in Europe)? You might be surprised what comes to mind.
After sitting my butt down and gyrating between trading a demo and live account for about 2 years, here's what i have to say about that statement.
This comparison is not absolutely true based on the following reasons.
1. You only need to be told how to use an ATM once and after that you can operate it on your own without supervision and it would work for you all the time (as long as you have an average IQ and you still have money in the bank!). However, forex is a weird kind of ATM that some have even been trying to get to work for years and have failed!
2. Imagine you slotting your card in the machine and instead of seizing your card for inputting maybe the wrong digits, it deducts money from your account! Well welcome to forex, that is exactly what the market does when you mess with it thinking you know where it is going.
3. You only need to operate the ATM for about less than a minute to get money from it but when it comes to forex, you would discover people sitting for hours in front of the computer to squeeze out as low as 20 pips (for scalpers) for 100x the time you would need to do that with an ATM!
I could come up with more reasons why this analogy is not the best to explain the market but since this is a forum i think we should all have our own share of the fun.
What dissimilarities do you see when you try to compare making money fro forex to withdrawing money from the ATM (or the cash machine as it is called in Europe)? You might be surprised what comes to mind.
Less is more...