With so many traders losing in the markets, there are many traders out there who believe in the rigged theory. But is it true? Are the forex markets actually rigged? Can you make money if the market is manipulated to do your bidding? Let’s find out.
The forex market is not rigged against us. If you take 100 random trades with a 1:1 risk to reward, you will win 50% of your trades and lose a small amount on brokers fees. Forex trading itself is completely zero sum and with an edge in the markets, it’s possible to be consistently profitable.
The Forex Markets – Are They Rigged?
The reality is that the forex markets are not rigged, at all. It’s easy to feel that forex is rigged. You’ve spent years taking trades, to lose money. You’ve tried every forex strategy under the sun and nothing works. If you go to a forex forum
, there are traders saying the exact same thing…
- The markets are rigged.
- You will never make any money in forex.
- Stop trading and find another job!
Of course, it is easy to blame the market for your own failures. If you think the markets are rigged, it means that you believe there is at least one trader out there who is making easy money trading. And if he can make easy money, then surely you should be able to do the same.
But most traders fail because they don’t have a clear strategy or plan with precise entry and exit points. They simply hope that they will make money whether the market goes up or down.
The reality is that the forex market is not rigged and it can actually be proved by you!
Proving That Forex Trading Is Not Rigged
Although unprofitable forex traders would disagree, the markets are completely zero sum. This, in short, means that the market is just as likely to move up, as it is down. This happens randomly (to us), but as a result of fundamental factors and large financial institutional order flow.
Regardless of the reasoning, how can we prove that the forex markets are completely fair?
We can prove this by taking 100 random trades. Both buys and sells. If you use completely random trades, or an EA to do this, using a 1:1 risk to reward, you’ll realise that your win rate is 50%.
Your account will be at a small loss due to spread, fees and commissions – this is where the house wins. The market itself is completely fair and zero sum but brokers will make a small amount of money per transaction, for facilitation of the trade.
Why Forex Trading May Feel Rigged Against Us
Forex trading is not easy, at all. In fact, somewhere around 80-90% of forex traders fail, so it’s easy to feel like the market is rigged against us.
The market seems rigged and if we lose, it feels like we’ve been outsmarted and it hurts even more when we know we could have stopped ourselves from entering a losing trade if only we had used better judgement or had more information.
If you’ve ever felt like the market is rigged against you, here’s why that may be. If it is, what can we do about it?
It all comes down to your trading strategy and information at your disposal. Do you have a profitable trading strategy? Do you understand how the forex markets work? If you feel that the markets are rigged, it may be because there are aspects to it that you do not understand, or vital information you’re missing.
There are many websites out there dedicated to giving forex traders the information they need to make educated decisions about their trades. There are also books on the market written by some of the world’s best traders who have spent their lives learning how to make the forex market work for them.
The Forex market is not rigged, it’s just that some traders are trading at a disadvantage to others because they don’t have all of the information available to them, or are using an unprofitable trading strategy that isn’t working.
The Only Time The Forex Market Is Against Us
There is one exception where the forex market is not fair. Well, it’s not actually the market. It’s your broker. Offshore and unregulated brokers are able to trade against their clients and rip them off. They are able to manipulate the prices of currency, as you aren’t trading the actual market.
The B-book brokers know that 90% of traders lose, right? So all they need to do is trade against the 90% and they will win 90% of the time! Not only that, they manipulate prices and spreads to ensure that stop losses get hit even more frequently and they get even more money from their traders.
There is an easy way to spot these scam brokers – by checking out reviews online, or by asking your peers or other forex traders about their experiences with a particular broker. Once you’ve done your research, you should feel much more at ease when trading. I’d highly recommend trading with a regulated broker if you can as they’re much safer.
I’ve just published a fairly useful guide on how to identify if a forex broker is legitimate, which maybe useful for you in this context!
In Conclusion – Is Forex Trading Rigged?
In short, the forex markets are not rigged. If you are unhappy with losing trades, it’s likely due to some aspect of information or knowledge that you’re missing.
This goes back to the saying that forex trading is like looking into a mirror – if we don’t like what we see, then more education is required. Let’s not forget that over 80-90% of forex traders fail. So there is 10%-20% of traders making some kind of money, right?
So let go of the belief that the market is rigged against us, educate yourself fully about the forex marketplace and start using a profitable trading strategy so you know without any doubt that you are being treated fairly by the market.
Of course, forex brokers are in business to make money so they will charge fees and transaction costs for trading, but this does not mean that the market is rigged against you. There are also many different types of brokers out there which offer different levels of service – these range from no-dealing desk to full DMA (direct market access) brokers.
These days, having DMA means you have more control over your trading than ever before. With the broker out of the equation, you can manually enter orders and fix your risk on each trade so there’s no motive for the broker to rig the price against you.
With this level of control, forex trading is less rigged against us and more in our own hands. All we have to do now is make sure we are educated on how the market works and use a profitable strategy, so that when you place a trade, you know it’s a fair one with a positive outcome.
If you have any questions or opinions on this topic, please do let me know in the comments down below.
