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TABLE OF CONTENTS

Acknowledgement … … … … … … i

Abstract … … … … … … ii

Table of contents … … … … … … 1

Introduction … … … … … … 2

Background … … … … … … 3

Area of Research … … … … … … 4-5

Hypothesis … … … … … … 5

Methodology … … … … … … 6

Data Presentation and Analysis …. …. …. … … … 6-12

Summary of the findings …. …. …. … … … 12

Recommendations …. …. …. … … … 12

Conclusion …. …. …. … … … 13

References/Bibliography …. …. …. … … … 13

Appendix …. …. …. … … …

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INTRODUCTION

Unemployment is a great problem in Bangladesh. There are lots of people who completed

their graduation but after that they are jobless. In present world people are able to do lots of

works and businesses through online, and there are many people who are earning money through

online. FOREX is one of them, which is a very good source of earning but very risky business.

The foreign exchange market, which is usually known as “forex” or “FX,” is the largest

financial market in the world. In FOREX people trade with different country’s currency pairs.

There are many currency pairs, like EUR/USD, GBP/USD etc. The currencies paired with USD

are called major currencies. Other currencies like EUR/GBP, CYN/CHF these are called cross

currencies. There are lots of currencies like these. The major currencies are

Symbol Country Currency Nickname

USD United States Dollar Buck

EUR Euro zone members Euro Fiber

JPY Japan Yen Yen

GBP Great Britain Pound Cable

CHF Switzerland Franc Swissy

CAD Canada Dollar Loonie

AUD Australia Dollar Aussie

NZD New Zealand Dollar Kiwi

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BACKGROUND

We are in 21ST century; Internet makes our life easier. With the help of Internet, people

are able to do different kinds of business staying at any corner of the world. People just need a

computer or cell phone and internet connection. Online business is a very easier thing, people do

not need to go at anywhere, and they can just stay at home and do business. FOREX is one of

them.

Physically there is no market called the foreign exchange market. It is actually a

mechanism through which one country’s currency can be exchanged with other country’s

currency. There is no geographic location of FOREX. Foreign exchange market is known as an

OTC (over the counter) market as there is no physical place where the participant meets to

execute the deals, as like the stock exchange. The working hour of Foreign exchange market is

24 hours a day and five days in a week.

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AREA OF RESEARCH

At the beginning of the research, I identified four questions as my area of research. I worked

on it and got the answers from my primary and secondary data analysis. I have discussed about

all these inside my research paper. I summarized my findings and the questions along with the

answers are provided here.

a) Why forex is a safer place to invest in?

Forex is considered a safer place to invest in, because there is no chance of theft, robbery,

giving extortion etc. People can stay anywhere and can do their business, because here one

has to trade with electronic money so there is no chance of losing the money except from

having a loss in the business.

b) Why forex is easier comparing to the other businesses?

There is no physical hard work for this business, one can do it by sitting or while walking

or by lying on a bed. One just needs a computer and an internet connection.

c) Factors that influence forex market

FOREX actually depends on the condition of currency of a country. The currencies are

influenced by many factors, like economical factor, financial factors, social factors, political

factors, customer’s sentiment etc.

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d) Why most of the people are having losses?

Most of the people incur losses in forex at initial stage. It is only because of lack of

knowledge and lack of practice in virtual market. People should learn the basic things of

forex, and the three analysis: Technical, fundamental, sentimental analysis.

e) Is risk management very important?

Risk management is very important in this market. If people have a lack in risk

management, they would fail in most of the trade in overall business. A successful trader

follows a very good risk management strategy.

HYPOTHESIS

There are many people doing business in forex. Forex is very easier and very profitable

and also very risky. There are good opportunities of earning money through forex, but people are

having great losses at initial stage, they are not getting success from forex.

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METHODOLOGY

At the beginning, I prepared my research proposal and after the approval of my proposal,

I made my research outline and questionnaire which includes some multiple choice questions

and open ended questions. Though it was very hard to find out people who do business in forex,

but I was able to find very few people. Some responded to my questionnaire, some did not.

Secondly, I looked for books, articles, blogs, forums and databases on my research topic.

Websites were the major sources which I used for my research.

DATA PRESENTATION AND ANALYSIS

On the basis of my questionnaire survey, I did the analysis. I have made my research

questionnaire which includes some multiple choice questions and open ended question. I will

present those data graphically and then analyze it.

The participants were male in my survey, there were no female, most of them were 22-28 years

old and very few of 18-21 years old.

Primary Data Analysis:

On the basis of my questionnaire survey and interview I did the analysis. I have made my

research questionnaire which includes some multiple choice questions and open ended question.

I will present those data graphically and then analyze it.

The participants were male in my survey, there were no female, most of them were 22-28

years old, and very few of 18-21 years old. 15 questions was asked to them, I choose some of the

important questions among those.

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Analysis 1:

Why you choose FOREX as a business?

a. It’s easier

b. More profitable

c. I prefer online business more.

d. I will not prefer forex

a b c d0%

10%20%30%40%50%60%70%80%90%

100%

Series1

There are lots of businesses in this world, but forex is very easier business. But according

to the survey people responded that they choose it because forex is very profitable business. 88%

of the people said that they do business in forex because it is very profitable. 4% said it’s easier

and the rest said they prefer online business.

Analysis 2:

How do you think of investing in Forex Trading Market in general?

a. Very profitable

b. Good form of investment

c. Less profitable

d. Too much risky

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a b c d0%

10%20%30%40%50%60%70%80%90%

100%

Series1

People were asked how they think about forex trading. Most of them said it is very

profitable business, almost 92% said so, 12% respond was about risk in forex. And almost 0%

respond was about good form of investment and less profitability.

Analysis 3:

What about you income or loss in first 5 months?

a. Overall had a profit

b. Overall had a loss

c. I don’t business in forex

a b c0%

10%

20%

30%

40%

50%

60%

70%

Series1

In the first 5 months most of the people had a profit, almost 66 % people were

gainer and almost 34% was looser. But it is about the first 5 months, it cannot be

considered a short time period. It is little bit long term period. So, in the long run they are

gainer.

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Analysis 4:

Why you incurred losses in forex?

a. For being greedy- To make money in short time.

b. Lack of theoretical knowledge

c. Lack of strategy

d. All of the above

e. Others

a b c d e0%

10%20%30%40%50%60%70%80%90%

Series1

In my previous analysis I found majority people was gainer after 5 months time period,

but initially almost 95% people were looser in forex. They were asked the reason that why do

they incurred losses initially, the majority replied that they had losses because of being greedy,

having lacks in theoretical knowledge and poor strategy. They said that it is very easy to earn

money in forex so they became very greedy about earning money not considering the important

parts of forex, those are good knowledge and strategy.

Analysis 5:

. What is the most important thing one should follow while doing business in forex?

a. Fundamental analysis

b. Technical analysis

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c. Sentimental analysis

d. Money management

e. All of the above

a b c d e0%

20%

40%

60%

80%

100%

Series1

Most of the people incurred losses in forex initially because of theoretical knowledge

about forex. But what kinds of theory they should learn? Four most important parts people

should gain knowledge about are Fundamental analysis, Technical analysis, Sentimental

analysis, Money management. When they were asked about these, 92% of them said all of these

are very important.

Overall Findings:

People mentioned that forex is a very profitable business, and very easy to operate. But in

initial stage almost 95% people incur losses in forex. This is because of lack of knowledge about

forex. People do not learn technical analysis, fundamental analysis and sentimental analysis.

They also do not follow money management, which is a very important reason for having losses

in forex. Becoming greedy also one of the major reason for having losses.

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Secondary Data presentation and Analysis:

Beside the survey and interviewing people I also looked for some of the other sources

about why do people incur lose in forex. Many experienced traders shared their knowledge about

this.

A trader nicknamed samnur said that, people incur losses because of: “taking risk more

and more, having greed mentality, having emotional tendency, trade without market trend”( “The

most important causes of loss in forex”, 2013)

Another person parthobipasha said “I think lack of knowledge is one of the most

important causes of loss in forex trading. We should learn a lot to be a successful forex trader.

Greed is the reason of loss too. We should control our greed while trading in forex to be a

successful trader we should control our emotion too.”( “The most important causes of loss in

forex”, 2013)

People fail to make a good strategy and apply knowledge into the market. That is why

they are found to incur losses. An expert said that “While understanding the macroeconomic,

technical and fundamental analysis necessary for trading forex is as important as the requisite

trading psychology, one of the largest factors that separate success from failure is a trader's

ability to manage a trading account.”(R.,Stammers, n.d.)

People need to continue learning process and developing their knowledge. After lots of

learnings and practice they will be successful. In a forex trading forum it is said that “Only after

investing in foreign currencies for a certain period of time and going through different analysis

on a regular basis, people can know the points to be avoided.”( “Forex trading”,2011)

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Monali Jaiswal stated that “Knowledge is must: good knowledge is very essential before

trading. Understanding of subject, terminology, financial market behavior, current trends, foreign

news are must for the trader.”(“ Lessons for Forex Newbies”, 2009)

There are lots of other reasons that people have loss on forex. But for the beginners some

few reasons are found and they are mentioned above.

SUMMARY OF RESEARCH FINDINGS

After the overall research it is found that people have losses in forex in initial stage

because of lack of knowledge, being greedy and having poor strategy. There is no limit of

learning things about forex, but people have to know at least some of the simple things so that

they can make profit. Among them, learning technical analysis, fundamental analysis, money

management, controlling emotions about earning money, not becoming greedy, these are the

most important factors.

RECOMMENDATIONS

Do not start business with very low capital.

Learn some basics about forex.

Learn theory about different kinds of analysis, including money management.

Controlling emotions is very much necessary.

People should not become greedy, they should control their emotions, must have a

relaxed calm mind while trading in forex.

CONCLUSION

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Forex is a good form of investment; people can money easily from this business. This

business can be executed through internet. One just needs a computer and an internet connection.

So anyone can do this business if internet is available over there. Forex trading seems to be very

easy, but in reality it is not so easy. People want to earn lots of money, they become greedy, and

this tendency leads to having loss in forex. People do not have patience while trading. They must

have patience and gain knowledge as much as possible. Learning the basics is not enough for

forex, technical analysis, fundamental analysis, sentimental analysis and money management is

must. If someone has lack in these sectors there is a very high possibility of having losses.

References/Bibliography

1. http://www.babypips.com/

2. http://bdpips.com/

3. https://www.mayzus.com/forum/archive/index.php/t-16062.html

4. http://online-affiliate-programs.com/forex-trading-psychology/

5. http://fxtrade.oanda.com/learn/top-10-ways-new-forex-traders-lose-money

6. http://www.investopedia.com/articles/forex/10/top-reasons-forex-traders-fail.asp

APPENDIX

Name: Md. Mahiyan Chowdhury.

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Batch: spring 2011(11th semester) ID: 111 0441 030

Major: Finance and Accounting, International business.

Mobile no: 01722966509

Address: 27, Bijoy Nagar. Dhaka-1000

Tentative title of the research: Why most of the people incur losses in FOREX?

Area: Currency exchange. Foreign Exchange Market.

Research problems and statement:

Unemployment is one of the major problems in Bangladesh. Now days there are lots of people

who are doing business or jobs in internet. It is found that people are taking interest in FOREX

market to make an investment, but unfortunately maximum numbers of people are having losses

though it is a profitable business.

My research problems are:

Why forex is a safer place to invest in?

Why forex is easier comparing to the other businesses?

Factors that influence forex market.

Why most of the people are having losses?

Is risk management very important?

Objective: My main objective is to find out the maximum reasons for incurring losses in Forex

market.

Rationale: Though Forex market is pretty much good to make profit, but most of the people are

incurring losses. There are some specific reasons for that. If they became aware of these reasons

they will not incur losses. So it is very important to analyze the reasons for having losses in

Forex.

Methodology:

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I am going to search for all the available sources for Forex. Internet, books, newspapers,

journals, articles are good sources for the research. I will also talk to investors of forex, ask them

necessary questions through questioner about incurring losses or gaining profits. I will also

interview some experts.

References:

1. “Currency Trading and Inter-market Analysis: How to Profit from the Shifting Currents

in Global Markets” - By Ashraf Laïdi

2. “ForeX Trading for Maximum Profit: The Best Kept Secret Off Wall Street” - By Raghee

Horner

3. “Beat the Forex Dealer: An insider’s look into trading today’s foreign exchange market”

- By Agustin Silvani.

4. “Mastering the Trade: Proven Techniques for Profiting from Intraday and Swing Trading

Setups”- By John F. Carter

5. "Thirty Days of FOREX Trading: Trades, Tactics, and Techniques" - By Raghee Horner

6. "Day Trading & Swing Trading the Currency Market" - Written by Kathy Lien

7. "The 10 Essentials of Forex Trading" - Jared F. Martinez

8. "7 Winning Strategies for Trading Forex" - Grace Cheng

QUESTIONNAIRE

Unemployment is increasing day by day in Bangladesh. For the lack of job opportunity people

are involving in online business. FOREX (Foreign Exchange market) is one of those businesses.

But most of the people incur loss in initial stage in this business. The purpose of this research is

to find out the reasons for incurring loss in FOREX.

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Answer the following question:

1. What is you gender: _________

2. What is your age: _______

3. What is your occupation: ______________________________________

4. Why you choose FOREX as a business?

e. It’s easier

f. More profitable

g. I prefer online business more.

h. I will not prefer forex

5. How do you think of investing in Forex Trading Market in general?

e. Very profitable

f. Good form of investment

g. Less profitable

h. Too much risky

6. For how long you are doing business in Forex?

a. 5 months – 1 year

b. 1 year – 2 years

c. More than 2 years

d. I do not do business in forex

7. What about you income or loss in first 5 months?

d. Overall had aprofit

e. Overall had a loss

f. I don’t business in forex

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8. How you made a profit in forex?

a. Proper strategy

b. Enough knowledge

c. Patience

d. Luck by chance

e. All of the above

9. Why you incurred losses in forex?

f. For being greedy- To make money in short time.

g. Lack of theoretical knowledge

h. Lack of strategy

i. All of the above

j. Others

10. What is the most important thing one should follow while doing business in forex?

f. Fundamental analysis

g. Technical analysis

h. Sentimental analysis

i. Money management

j. All of the above

11. According the previous answer, why do you think it is (or all are) important?

Answer.____________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________

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12. What a new forex trader should follow in starting of business?

Answer:

______________________________________________________________________________

______________________________________________________________________________

______________________________________________________________________________

_____________________

13. What is the most specific reason for having a huge loss in forex?

Answer:

______________________________________________________________________________

______________________________________________________________________________

______________________________________________________________________________

_____________________

14. Patience and Relaxed mind is necessary than money for the business.

a) Strongly Agree

b) Agree

c) Neutral

d) Disagree

e) Strongly disagree

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15. How does the forex market differ from other markets?

Answer:

______________________________________________________________________________

______________________________________________________________________________

______________________________________________________________________________

_____________________