- “The forex market is rigged.
- “You cannot become profitable trading forex.”
- “The forex market is manipulated in favor of some people.”
You’ve probably heard a lot of these and have made either a positive or a negative decision concerning forex trading.
Again, I know a lot of you fall into this category.
And you know what? It’s nobody’s fault.
The negative impression that beginners tend to have about forex trading is due to the limited information that is easily accessible to them.
This often results in a discouraging perception, causing them to lose interest in the market.
But are these theories true?
As an experienced trader who has traded with investment companies, trading firms, and even governments of other countries, I will divulge to you the information that you need
In this article, you will find out what is true about the “forex market being rigged“
Key Takeaways
- The forex market is not rigged; it’s just a common misconception.
- Factors contributing to the belief that the forex market is rigged include market manipulation by major players and misinformation.
- Market manipulation and Fx fixing can occur, but the market is generally considered highly liquid and difficult to manipulate on a large scale.
Is The Forex Market Rigged?
The simple answer to this question is no.
With the foreign exchange market having a daily trading volume of more than $7 trillion, it makes it difficult and impossible for a bank, let alone an individual, to rig the forex market.
Hard to believe, but that is the truth.
It is quite easy for retail traders, especially inexperienced traders, to fall into the trap of believing that the forex market is rigged, which is certainly not true.
And it could be categorized for the following reasons:
And it could be categorized for the following reasons?
- The market makers (market manipulators)
- Fx Fixing
- Education
- Trading Strategy
- Unreliable Brokerage firms
I’II cover them in a bit.
Why Does The Market Feel Rigged?
After having tried almost all the strategies under the sun, taking trades without gains, making continuous deposits without withdrawal, and moving from one Forex webinar to another.
It is very easy to believe that the forex market is programmed to favor some “elite” group of major players (major players central banks, hedge funds management, etc.), which is not true.
I had a file that contained 750 different strategies, but all to no profit.
Aside from all these factors that directly have involvement with trading, there is a psychological aspect to it, which is in relation to the discouragement you get from people, some say–
“You will never find success in the forex market” or
“Do not trade again and find another job.”
I know these are the issues many of you reading this are currently facing or would face.
Do you have to give up? No!
It is easy to find faults in the market and blame your failures on the market.
But as a trader, this should never be your mindset.
In addition to some of the reasons I gave earlier, statistics have shown that around 85-90% of forex traders are unsuccessful in the business.
No wonder why the vast majority of people conceived the notion that the forex market is rigged.
Hope you now have an understanding of why many think the forex market is rigged.
Trust you do.
But the question now is, why do many people think this way, and what can be done about it?
Before then, do you have an idea who controls the forex market?
Who Controls Most Of The Forex Market?
The financial market is decentralized, meaning that no single entity or group controls the majority of trading activity. Trading is conducted between a variety of participants, including banks, hedge funds, corporations, and individual traders.
Why Do Many Think Forex Is Rigged?
Many fall into the trap of believing the theory that the forex market is rigged, but it could be a result of the following factors.
- The market makers (market manipulators)
- Fx Fixing
- Education– The information at their disposal
- Trading strategy– Whether their chosen trading strategy is profitable.
- Unreliable brokerage firms
Let me break it down for a little bit.
The Market Makers (market manipulators):
Ever been in a situation where you get into a trade?
Only to find out later on for the price to hit your stop loss before moving based on your anticipation.
This can usually be called market or chart manipulations or stop hunting.
and when traders experience these, they feel they have been rigged by the market.
but here is the truth, the market doesn’t know your trade exists.
Who manipulates the forex market?
As a retail trader, you should also realize you are not just the only player in this game, the big players are in it as well.
Who are these players? the massive hedge funds and the big banks.
Do banks manipulate the forex market?
Yes, banks mostly manipulate prices most often. These tend to happen on most major currencies because of liquidity and patterns.
So if you are trading a currency pair, the big players like the banks are also on it, they see the same support and resistance as every trader does.
But they wouldn’t want to enter the same region with retail traders because they are looking to get in at the best possible price, so they tend to manipulate the price to hit the stop loss of most retail traders and then they move based on the original direction.
They are traded with huge amounts of money much larger than that of retail traders and we all know the markets move based on supply and demand, volume. which are usually the central banks.
Is the FX market manipulated?
The forex market can be subjected to market manipulation in cases where there is a lack of transparency or regulatory oversight. However, the market is generally considered to be highly liquid and difficult to manipulate on a large scale.
Fx Fixing:
What does this mean? How did this come about?
Some time ago, the issue of FX fixing was in the headlines of popular media coverage and it posed a great threat to the fairness of the market.
Here’s what happened,
Most institutional players, the Popular banks such as Jp Morgan, CitiBank, Citigroup, HSBC, and some other large banks, which I call the big players conspired together to change the course of the market and its movements.
These banks came together to alter the normal course of prices during a specific time of the day.
At 4 p.m. London time, these banks do is that they freeze prices (Reuter bank benchmark rates) which helped these banks to able to make moves just before they froze prices which resulted in small fluctuations that were not that noticeable overall.
You know what?
These small fluctuations in price turn out to become big turnovers for these banks.
This usually resulted in ignorant investors not knowing where their money had gone.
Due to this occurrence, it has been long advised for traders not to place trades during 4 p.m. London time or 4-6 EST for the New York Session.
Education:
In trading as with other aspects of life, the information you feed yourself with is what forms you and upon which, you make many of your life’s decisions.
With the forex market flooded with loads of wrong information, I have put together the Mastery program that has helped hundreds of traders have a very standard education when it comes to trading forex.
Here is a sneak peek into the Forex mastery course:-
Module 4: A Guide on How to Develop a Very Consistently Profitable Forex Strategy.
Module 5: Helps you to understand when exactly to place a trade and also, importantly, when to exit a trade.
Do you now see how these factors sum up to what makes people continue to think the market is rigged?
But, there are some special occasions when the market is rigged.
Trading Strategy:
This is another factor that causes traders to think the way they do.
Many forex traders do not have a profitable trading strategy that can consistently help them scoop money out of the market.
They find it difficult to have a well-defined rule as to when to enter and exit a trade.
Also, it is not about having the best trading strategy because you can learn a strategy from a profitable trader and still not be profitable.
Forex trading is beyond having the best strategy alone, there are other factors involved as well.
- the right mindset
- Proper education
- discipline etc
When The Market Is Against A Trader
You might be wondering,
Ooh! But you just explained that the market is not rigged. If that is the case, then how come the market can be against a trader?
The market is at times against some traders because they have allowed themselves to be controlled by the market.
When does this happen?
This only happens when a trader uses Unregulated or Offshore brokers, enticed by the huge bonus given on the first deposit or depending on the promo they are doing to place trades.
Here’s what these unregulated brokers do.
They do not give the trader direct access to trade the actual market, which makes it easy for them to manipulate prices.
Not only that, they most times, open the spread against their clients which makes them hit stop loss and you know what that means– more money for the brokers.
You might be forced to ask,
“Is there any way out of this trap”?
“How can you differentiate a regulated broker from an offshore broker”?
Well, this is simple.
This only requires a bit of research from you.
When you have a desired broker, check the following;
- Check out their reviews on blogs or Trustpilot
- Consult other experienced traders, especially those who have been or are still a client of your proposed broker.
Conclusion
At this time, you should be able to understand the following:
The forex market is not rigged
The factors creating the belief that the forex market is rigged
When the market feels rigged
Fx fixing and so on.
To cap it all, you must understand that many Forex Brokers are just out there to collect your money from retail traders.
You must be disciplined enough to do thorough research on the type of broker you want to use.
Learn More: 5 Tips for Selecting A Good Broker By Investopedia
These days, brokers now offer DMA (direct market access) for their clients which allows them to become more in control of their trades, where they can set up their trades manually.
With the level of control given to clients, the forex market becomes less rigid.
All that is left to do is to get the right education and have a profitable forex trading strategy.
If you have any questions or experience on this issue, comment down below to share your experience.
Good luck With Trading.
