Forex trading is done on a much greater proportion than any other type of market in the world. Some 1.9 trillion dollars are handled every single day. About 73 percent of all forex trading is done by 10 global banks with names you’re familiar with: Merrill Lynch, Citigroup, and so forth. Domestic 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.
Nonetheless, many regular traders do try their hand at forex trading, and there are many financials institutions who handle such contracts. It’s identified as “retail forex,” and it’s managed much the same way that day trading of stocks is handled.
The risky part 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 novice forex traders. Among the CFTC’s tips:
– Avoid companies that predict or guarantee large profits, or that promise 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 endeavors.
– If someone is not providing background information on themselves or their company, just avoid them. Likewise, always check out a business’s track record before doing any trading with them.
– The Internet is a haven for dubious types. Be suspicious of anyone wanting you to send cash.
– Above all, keep in mind that if an opportunity sounds too good to be true, it probably is!
There are plenty of decent and dependable forex trading firms out there, including ones that operate online. But even if the trading company is legitimate, there are still risks inherent in trading. Because currency rates can fluctuate for such a number of reasons, it’s difficult to predict what investments to make. Even experienced professionals get blindsided at times.
In short, forex trading can be rewarding, 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 indicators, and all the other ins and outs of the market. Forex trading isn’t something to be entered into lightly. There is much potential for profit, but there is even bigger potential for loss, both at the hands of crooked trading firms, and of your own lack of experience.
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.