Part I. Dispelling the Myth about Forex

We are starting a new section on learning to trade in the Forex market. If you have thoroughly studied the material from the previous sections of the website and have reached this section, it means that you have a strong desire to multiply your funds through Internet trading. By now, you have probably already tried your skills on a demo or even a real mini account opened with one of the existing dealing centers in the market. If so, you have surely realized that money can be lost much faster than it is earned, and that in practice, things are not as simple as they seem in theory.

As you begin reading this section, you are likely feeling frustrated about the time you have spent on learning, seemingly in vain. The efforts you have made so far have not yielded the desired returns on your investments. You now have many questions, few answers, and some resentment towards the reality that surrounds you. The material in this section of the website will fill the main gap in your knowledge - a gap that has been hidden behind rose-colored lenses of trendy glasses.

Many of you may know that only one side of the Moon is visible from Earth, despite both celestial bodies rotating at tremendous speeds. Imagine the Forex market as the Moon, which most traders only see from one side. Such traders never achieve success, and sooner or later they lose all their money. But there are a few traders, "astronauts," who have had the opportunity to see the Moon from the other, reverse side. These traders have turned currency trading into a constant source of income – within the framework of our metaphorical reasoning, an "astronomical" income.

"In much wisdom is much grief, and he who increases knowledge increases sorrow," says the famous saying of the biblical king Solomon in the Book of Ecclesiastes. It would be naive to think that this saying would bypass those who have once decided to explore the world of Internet trading and amass a fortune quickly and without risk. In this section of the website, you will encounter many disappointments and illuminations, and you will have to look at many things differently than when you first learned the foundational terms of market trading.

So what does Forex really represent? Is it possible to make money on it? Does the "holy grail" exist, which, once found, allows for profits in geometric progression? Do the wave oscillations of currency exchange rates lend themselves to mathematical description? Is there regularity and cyclicality in these oscillations? We will try to provide answers to all these questions in the following chapters of this third section. Pour yourself a cup of coffee, get comfortable – we are embarking on a journey into the real world of currency trading, and this journey holds many interesting things.

Part I. Dispelling the Forex Myth / Chapter 1. Risk, Risk and More Risk

As you may have already understood from the title of this chapter, it will be about risk. We all live in a world where any event can be associated with the probability of its occurrence, and any action is accompanied by an associated risk. In English technical literature, the term "tradeoff" is often used, which can be translated as the relationship between a desired outcome and its opposite negative phenomenon. The most common example that can be given here is the tradeoff between price and quality. The higher the quality, the higher the price, and vice versa.

When it comes to the risk of trading in the Forex market and other financial markets, there is a tradeoff between expected returns and the risk of losing invested funds. The higher the risk of loss, the higher the expected profit. This rule applies in other areas of business as well.

You have probably asked yourself the question, "If we look around, there are many wealthy and successful people, so why do we talk so much about risk? After all, these people have achieved success, so what makes me any different?" In mathematics, there is a field called probability theory, which is closely related to the theory of large numbers. In simple terms, this theory can be explained as follows: there is a certain probability of becoming wealthy and successful, and it is small. However, if you take a sample from the entire population of planet Earth (which can be considered a large number), the number of wealthy individuals will be proportional to the probability of becoming one.

We see wealthy people around us, but they are just the "mathematical outcome." It may seem like there are many of them, but in reality, there are only many because we focus on them and overlook many simple truths. Becoming a wealthy individual is associated with a certain degree of risk. We only see the "result of the mathematical sample," but we do not see the vast number of people who took risks and ended up below the poverty line. And if we recall the not-so-distant 90s, there were also those who ended up on the other side of life.

You must clearly understand that Warren Buffett, George Soros, Bill Gates - they are just the individuals who "passed the mathematical sample." If it weren't for these people, there would be others in their place. Let's imagine that there are slightly less than 5 billion people on Earth. Then, according to the theory of probability and large numbers, among them, there will be one person who correctly predicts the outcome of 32 consecutive coin tosses. From the outside, it may seem like this person is a predictor and visionary, chosen and able to see the future. But in reality, they are just a "random variable" in our chaotic world.

Therefore, if you, as a "random variable," want to participate in the mathematical sample of becoming a successful individual, you must understand that your chance of success is infinitesimally small. But it exists, and it attracts more and more "fortune hunters." You have chosen the Forex market as a path to becoming wealthy and successful, which means you have chosen the riskiest but potentially most profitable path. We do not know who ultimately determines the outcome of our choices - ourselves, fate, or simply chance. All we can do is make an attempt. Perhaps you are the person who will soon be featured on the front page of the Wall Street Journal? Who knows...

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