investment
Finance

Do having more investors increase the competition?

This is a very logical question when you realize that more than millions are investing money every day. Despite being the largest sector in the world in terms of financial activities, forex is still the most mysterious industry. Not only people lose the capital easily, but there are also no ways to rectify an error once an order has been opened. It was as regarded as a second option for traders but with the recent global crisis, many are considering trade full time. This brings both joy and troubles as more people depositing equals to more liquidity in the market. Every day, literally trillions of dollars are exchanged. To get a small piece out of this cake would be life-changing. This also raises the doubt whether it hardens the process for the investors to generate profit due to increased competition. 

This article will try to provide a justifiable answer that will satisfy the readers. We will consider all the possible aspects and try to formulate an idea that might help to clarify the existing situations. Due to the recent pandemic, more people are rushing in to invest capital. Knowing if that poses a threat is an advantage that will help to tackle the problem smoothly.

Look at the signal provider

If you take a look at the signal provider, you will notice, more investors doesn’t mean the competition in going higher. The number of successful traders in the Forex market is so low, it’s hard to find a good trader. If you become good at trading, you can start using the copy trading service in mt4 and sell signals. Without even taking the trades, you can earn money. And when you become a trader, you don’t have any competitor since you are taking trades in the global market.

Digging into the details

In theory, this should have changed the equation. More clients trying to fight for the same cake would have increased exponentially but if you look at the number of winning investors, this becomes clear the sector has remained unfazed. Generally, only 5% of traders are successful in forex. The rest lose the fund swiftly before they even begin the career. There is an infamous saying, the 90-90-90- ratio which implies this meaning in a more illustrative way.

There are numerous reasons for the competition to remain unchanged. First of all, not everybody has an elementary knowledge of investing. Most come with a hunch in their mind and start live trading right away. This is no way to manage funds, especially in the volatile sector. Although the price trends may seem erratic, there is a very well-established reason for their behaving so. If the basic concepts have not been developed properly, the increasing number will only contribute to bigger the winning pot. They will simply add deposits, try some trades, and immediately exit from the market as soon as they have come.

The second reason can be a lack of proper mindset. As we have already brought up the issue of fast-forwarding trading, there is no time to strategically analyze the chart. The patterns that appear on the charts are the most crucial as they convey information about the future movement. A person should not get anxious while analyzing as this may lead to misinterpretation. Even if the number increases, only a few amounts of people spend quality time to predict the future trend. As a result, impatient novices lose funds quickly and it only contributes to making the pool bigger.

The third reason can be an evolving nature. People need to spend significant time before finally getting the hang of it. This sector evolves like a living organism, therefore, up-to-date concepts are essential to decoding the price movements. 

The above mentions reasons are only a few of the explanations why a sudden surge in numbers should not worry about the existing investors. It takes a lot of time, effort, and dedication to become a consistent trader in forex.