Why Trade at All?
Trading can seem like a daunting challenge. The theory says beating the market is impossible. So why do people - retail and institutional - keep making money from it? Let us help you answer that question.
The Efficient Market Hypothesis
If markets are efficient, how does anyone make money?
According to the Efficient Market Hypothesis (EMH), the prices of financial securities reflect all available information about those securities. Because of this, the theory goes, it is impossible to undertake any analysis - technical or fundamental - that will help you generate excess market returns.
The theory seems to make a lot of sense and helps explain why trading is so hard. No one denies that trading is hard. But does this mean you should not bother, especially when making a profit is considered somewhat impossible by the EMH?
If trading were truly impossible, why would all the big institutions have trading desks and invest billions in algorithmic trading? Trading is profitable for people at both the retail and institutional level. That is a fact.
This may mean that the EMH is wrong. But it is not so much that the EMH is wrong - it is that the hypothesis is understated.
A more accurate version would be: given an infinite amount of time, resources, and people, the prices of securities reflect their true value and generating excess returns is impossible.
If you had an endless number of people spending an endless amount of time analysing absolutely everything, you would find the absolute truth about the value of an asset. However, there are only so many hours in the day, only so many people studying a particular market, and each person has their own life to lead.
There is only a limited amount of time, resources, and people that can be put into studying financial markets. This means it is not possible for everyone to know everything about the markets. And so, there are necessarily inefficiencies in prices that can be exploited for excess returns.
The Opportunity
It is through these market inefficiencies that people - retail and institutional - can and do make money trading. The question is whether you can too.
Why Trade Forex?
Leverage, liquidity, and the power of small moves
With many forex brokers you can leverage your account balance up to 500 times its value (500:1). In other words, you can enter into positions worth up to 500 times your deposit.
Consider this: you have a balance of $1,000 and enter into a trade worth $100,000 (an implied leverage of 100:1 - for every $100 in position, you had $1 in deposit). A reasonable price movement of 1% with respect to your position value equates to $1,000.
You could effectively double - or wipe out - your entire deposit with just a 1% move in the value of the underlying instrument.
The Leverage Effect
By trading leveraged instruments, it is possible to earn far more in a given amount of time than by trading the underlying instrument directly. Leverage amplifies both gains and losses.
So now that it has been established why trade at all and why trade FX, the next thing to determine is what to look for when trading.
It All Comes Down to Patterns
Every trading style is based on pattern recognition
Regardless of whether you trade based on fundamental or technical analysis, every trading style is built on pattern recognition.
Technical analysis is based on analysing chart movements and predicting future price movements from similar conditions seen in the past.
Fundamental analysis predicts future price movements based on market information. However, it is still based on predicting future human behaviour from expectations built on past behaviours.
In either case, past performance cannot guarantee future results. But what other information do we have to predict the future than everything that has already happened?
Find What Others Miss
The difference between successful and unsuccessful traders is whether they have found exploitable patterns overlooked by everyone else. Due to limited time and resources, it is not possible for all market participants to be aware of every pattern and inefficiency.
Hidden in Plain Sight
These patterns do not necessarily need to be complex. Think about all the times you could not see something right in front of you. An indicator that was all the rage in the past, fell out of fashion, now works again precisely because everyone forgot about it.
The Commitment Required
Trading is a personal skill that takes time to develop
Trading is a personal skill and at the end of the day, you need to find a strategy or system that works for you. There is no use trying to trade in a style that creates more confusion.
Trading is much like starting a new small business - you are trying to generate a new income stream - and it would be foolish not to treat your trading with a similar professional attitude.
Expect 1-2 Years
It can take at least two solid years of full-time work for a small business to become profitable. It is reasonable to expect trading requires a similar level of commitment and investment.
Find Your Style
Considering the commitment you are making, it is worth finding a strategy that works for you. It is almost like starting a new job where you get to pick how to do it - why choose a method you do not enjoy or understand?
Learn by Doing
FX trading is one of the few professional ventures that you can start as you learn. Making mistakes is one of the best ways to learn, and unlike brain surgery, you have the opportunity to make and learn from your mistakes as you go.
You can pick up a book on FX trading, fire up a demo account, and start today. There is no barrier to entry - only the commitment to learn.
Your Next Steps
Ready to start your trading journey? Here is where to go next
Common Questions
Can you really make money trading?
Yes. Retail and institutional traders generate profits from financial markets every day. However, it requires skill, discipline, and risk management. The majority of retail traders lose money, which is why education and preparation are essential before risking real capital.
What is the Efficient Market Hypothesis?
The Efficient Market Hypothesis (EMH) states that asset prices fully reflect all available information, making it impossible to consistently achieve excess returns through analysis. In practice, markets are not perfectly efficient because time, resources, and attention are limited - creating exploitable opportunities for prepared traders.
Why trade forex instead of stocks?
Forex offers 24/5 market access, higher leverage (up to 500:1 with some brokers), lower barriers to entry, and the ability to profit from both rising and falling currencies. A 1% move on a leveraged forex position can generate significant returns relative to your deposit.
How long does it take to become profitable?
Most successful traders treat it like starting a small business. Expect at least one to two years of consistent learning and practice before becoming reliably profitable. Starting on a demo account and treating trading with professional discipline accelerates the learning curve.
Do I need a lot of money to start trading?
No. Many forex brokers allow you to open an account with as little as $50 to $100. Leverage means you can control larger positions with a small deposit. However, starting with too little capital can limit your ability to manage risk properly.
What is pattern recognition in trading?
Every trading strategy, whether technical or fundamental, is based on recognising patterns. Technical traders look for recurring chart formations and indicator signals. Fundamental traders recognise how markets react to certain economic events. Finding patterns that others have overlooked is what separates profitable traders from the rest.
Should I start with a demo account?
Absolutely. FX trading is one of the few professional ventures you can start practising while you learn. A demo account lets you make and learn from mistakes without risking real money. Once consistently profitable on demo, you can transition to a live account.
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