The financial industry is the real driving force of the global economy. With some of the biggest companies and high employment rates, this sector supports tens of millions of jobs and families all around the world. Thanks to this service-based industry, global financial hubs such as London, New York, or Tokyo have become extremely rich and popular, attracting millions of visitors each and every year. However, with the digital technology advancements making new breakthroughs regularly, the world is becoming more and more interconnected. The distance is no longer an issue and as a result, remote workers, including within the financial industry are spreading beyond traditional financial hubs.
Living in the era of digital transformation, the financial industry has adapted almost completely. The change is inevitable and irreversible. It is transforming the sector that used to be quite a traditional one into something drastically different. Thanks to the widespread use of smart devices, particularly smartphones and their easy access to the internet, billions of people around the world are engaged in the online exchange on a daily basis. Social media, news, and entertainment are all on the internet.
For a few years now, online banking has become an increasingly popular niche in the financial sector. Today, every commercial bank, as well as other financial institutions, come with their very own online web or mobile platforms. Through these pieces of software, one can perform financial transactions, take loans, or use even some more complex services. All of these comes without the need of visiting a physical branch of a bank. We have gotten so used to the new reality that going back is simply not an option.
The banking sector is not the only one that went forward with the introduction of digital tech innovations. After all, fintech is the future of the financial industry as a whole. Trading with different kinds of assets has been one of the most profitable businesses for a long time now. Famous stock exchanges in different parts of the world have revenues of hundreds of billions. One of the frontrunning niches of the trading sector is Foreign Exchange trading. The latter implies trading with different currencies, benefiting from the spreads between the values.
Many famous business personalities who have a net worth of billions started their careers in Forex. Notably, one of the most famous Hungarian businessmen, George Soros, made the initial parts of his astonishing $8.3 billion wealth out of forex. Today, he is a globally celebrated and acknowledged philanthropist with an enormous influence on numerous sectors. He invests in education and social projects, trying to erase hatred in different countries around the world.
George Soros is not the only example of how Forex can help people make billions. There are thousands who have become accomplished thanks to the sector. However, as much as this activity is legal and well-regulated in many countries all around the world, it can be quite dangerous in others. Due to many misconceptions and stereotypes around Forex trading, it has been rejected in some countries.
How is Forex regulated and acknowledged by nations?
The vast majority of countries around the world acknowledge Forex trading as a completely legal activity. The traditional way of regulating trade is having a certain authority responsible for the management of the entire process. There are quite a few types of such authorities, commonly known as regulators. They can be government-owned and funded, but independent, completely independent or completely state-controlled. Regardless of what their structure is, every regulator is responsible for registering, licensing and then auditing the firm operating within its jurisdiction.
Misconceptions about forex
Forex trading is linked to a number of misconceptions that prevent it from being more popular in certain areas of the world. To be fair, it should be acknowledged that forex is incredibly popular in some countries like the United Kingdom, the United States, Australia and Germany. However, these nations are relatively free of misconceptions and stereotypes in general, whilst their citizens enjoy more freedom. Another thing is that not every misconception is essentially negative. In fact, positive misconceptions often do more harm to forex trading than negative ones.
One of the biggest misconceptions about forex is that one can become super-rich by trading forex overnight. No one knows what led to the spread of this stereotype about forex traders, especially considering the fact that there is no one who has earned millions of dollars from scratch. Unfortunately, this is a very common belief among people, particularly in developed countries. As a result, without much knowledge of information about forex, they invest in the sector with hopes to receive big returns within a short period of time but instead lose their savings.
With so many disappointed people, Forex is then rejected by those who have heard stories of people going bankrupt by trading. This is one of the prime reasons why people in Europe and the Americas often are extremely cautious about Forex. What people fail to realize is that becoming a successful forex trader requires very extensive knowledge and experience within the field. It is not a video game one can play and win millions of dollars.
The other very widespread stereotype about Forex, and more particularly about Forex traders is its similarity to gambling. In fact, most people believe that Forex trading and gambling are practically the same. Most likely, the reason for this misconception is that once again, Forex does not provide instant returns in big amounts. The key is always to try out new mechanisms, models, and approaches. Yet. people that are now aware of how forex works in detail often claim that it is completely dependent on how lucky one is, similarly to gambling.
Last but not least, Forex trading is often linked to illegal activities and scams. The latter is somewhat true as it often occurs in developing countries where the market is not well-regulated. Scammers and dishonest firms try to make money out of people in emerging markets that have just started making savings and earning just over the necessary amount. The thing here is that making forex trading illegal does not solve the issue. For instance, in countries like Iran, forex trading is illegal but it still occurs but is hidden under the surface. Only a respectable and effective regulatory authority can resolve the issue of illegal activities and scams. A very good example is India, where the Reserve Bank of India (RBI), the official financial regulator of the nation, managed to drastically reduce the number of illegal forex firms and scammers. This was done through effective measures and regulations in the market.