| There Is Money To Be Had In Forex Trading, But It's Risky For A First-Time Investor |
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| Written by James Bolton |
| Thursday, 18 February 2010 19:37 |
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Currency trading is done on a much greater proportion than any other type of market in the world. Some 1.9 trillion dollars are exchanged every single day. About 73 percent of all currency trading is done by 10 worldwide banks with names you're familiar with: Merrill Lynch, Citigroup, and so forth. National banks and other financial institutions account for another chunk of forex trading, and trades by "day traders" -- regular individuals, people like you and me -- account for only 2 percent of all trading.
Forex trading is done on a much greater scale than any other type of market in the world. Some 1.9 trillion dollars are exchanged every single day. About 73 percent of all forex trading is done by 10 international banks with names you're familiar with: Merrill Lynch, Citigroup, and so on. Domestic banks and other financial institutions account for another chunk of forex trading, and contracts by "day traders" -- regular individuals, people like you and me -- account for only 2 percent of the total. Nevertheless, many regular traders do try their hand at forex trading, and there are many financials institutions who handle such transactions. It's identified as "retail forex," and it's handled much the same way that day trading of stocks is managed. The downside is that unlike the stock market, the forex market is not particularly well regulated, and people inexpert with it can be easily defrauded. The U.S. Commodity Futures Trading Commission (CFTC) gives a number of bits of guidance for amateur forex traders. Among the CFTC's tips: - Avoid businesses that predict or guarantee large profits, or that assure little or no financial risk. There is ALWAYS a financial risk in currency trading, and no one can assure profits when it comes to speculative transactions. - If someone is not providing background information on themselves or their company, just avoid them. As well, always check out a business's track record before doing any trading with them. - The Internet is a haven for shady types. Be suspicious of anyone wanting you to send cash. - Above all, remember that if an occasion sounds too good to be true, it probably is! There are plenty of trustworthy and dependable forex trading firms out there, including ones that operate online. But even if the trading company is genuine, there are still risks intrinsic in trading. Because currency rates can fluctuate for such a variety of reasons, it's difficult to forecast what investments to make. Even veteran professionals get blindsided occasionally. In short, forex trading can be profitable, but only if you know what you're doing. Before embarking on any investing, study the details of how the market works, what causes fluctuations, how to interpret economic signals, and all the other ins and outs of the market. Currency trading isn't something to be entered into without due consideration. There is much potential for profit, but there is even greater potential for loss, both at the hands of unscrupulous trading firms, and of your own inexperience. DISCLAIMER: This article is provided as information only and is not to be taken as financial advice. You would be crazy to spend any money to learn forex trading before you take some time to learn about the many forex robot out there. |