What are the important facts about trading forex, that everyone must know ?

<p id="isPasted">Forex trading involves significant risks and complexities that everyone must understand before participating. Key facts center around high risk, the mechanics of a decentralized, 24/5 market, the powerful but dangerous tool of leverage, and the absolute necessity of robust risk management.&nbsp;</p><p><strong>Understanding the Market</strong></p><ul><li>World's Largest Market: Forex is the most liquid financial market globally, with trillions of dollars traded daily. This immense size ensures high liquidity, making it easy to enter and exit positions in major currency pairs quickly.</li><li>Decentralized and 24/5: Unlike stock markets, there is no central exchange. Trading happens "over-the-counter" (OTC) through a global network of banks and brokers, running 24 hours a day from Sunday evening to Friday night across major financial centers (Sydney, Tokyo, London, New York).</li><li>Currency Pairs: You never buy or sell a single currency. Instead, you trade currency pairs (e.g., EUR/USD), speculating on the change in value of one currency relative to the other.</li><li>Influencing Factors: Exchange rates are influenced by a complex interplay of global economic indicators (GDP, inflation, interest rates), political stability, central bank policies, and market sentiment, making accurate predictions challenging. </li></ul><p><strong>Essential Risk Factors &amp; Tools</strong></p><ul><li>Leverage Amplifies Everything: Leverage allows traders to control large positions with a small amount of capital (margin). While it can magnify profits, it just as effectively magnifies losses, potentially beyond your initial investment. High leverage is a primary reason many new traders lose money rapidly.</li><li>Risk Management is Crucial: Discipline and a sound risk management plan are vital for longevity. Most professional traders recommend risking no more than 1-2% of your total account on a single trade.</li><li>Stop-Loss Orders are Non-Negotiable: Always use stop-loss orders to automatically close a trade at a predetermined price, limiting potential losses if the market moves against your position.</li><li>You Trade Against the Dealer (OTC): In the OTC market, you are often trading against your broker (the dealer). The dealer controls the prices you see, and while regulated brokers are supervised by bodies like the CFTC or FCA, unregulated brokers pose a significant fraud risk.</li><li>Demo Accounts are Essential: Before risking real money, practice extensively with a demo account to test strategies, understand the platform, and build disciplined habits in a simulated environment. </li></ul><p><strong>Common Pitfalls</strong></p><ul><li>Trading without a Plan: Many new traders lack a well-defined strategy with clear entry/exit points and risk limits, often leading to impulsive, emotional decisions based on fear or greed.</li><li>Chasing Quick Riches: Forex trading is not a get-rich-quick scheme. Unrealistic profit expectations often lead to poor choices, like overleveraging or overtrading.</li><li>Ignoring Education: A thorough understanding of market fundamentals, technical analysis, and global events is necessary. A lack of education is a common reason for failure. </li></ul>