FOREX TRADING- What are you Risks:
Every single investment comes with some level of risk. We have all seen the odd bank go under which has quiet often being seen as a ‘safe’ investment. While forex trading there is the risk of loss in trading off-exchange forex contracts can be substantial. It can sometimes be greater than the initial investment when guaranteed stop losses are not in place. Pleas make sure you are using a broker that offers guaranteed stops, click on this link for a recommendation Best Forex Broker. So if you are considering participating in this market, you should understand some of the risks associated with this product so you can make an informed decision before you start trading. So Trader Beware. What does come with higher risk, that’s right higher returns.
As shown above if you are considering trading foreign Currency Trading there is that element of high level of risk and may not be suitable for all customers. If you cannot take a loss, do yourself a favor and don’t TRADE, as no matter how brilliant of a trader you are you cannot pick the market 100% of the time.
Money Management:
If you have a solid money management plan in place this can help to reduce the risk of forex trading. So when you start trading you should only use funds to speculate in forex trading that you are prepared to loss, or any type of highly speculative investment for that matter, are funds that represent risk capital fore example funds you can afford to lose without affecting your financial situation. So the day to day money that you require to live on, don’t trade with that. There are other reasons why forex trading may or may not be an appropriate investment for you, and they are highlighted below.
This can be a volatile market and it can move against you very quickly. Also remember you are trading with leverage, in some cases up to 400:1 so make sure you use leverage that you are comfortable with.
You have just blown the stack, lost it all that how fast this market can move.
When you start trading, you are required to open the account with a deposit of money (often referred to as a security deposit or margin, which is what you leverage agains) with your forex dealer. This will then allow you to order or simple terms buy or sell an off-exchange forex contract. Above we showed with the leverage (up to 400:1), a relatively small amount of money can enable you to hold a forex position worth many times the account value. So $1000 can be leverage up to $400,000 so it doesn’t take much of movement to lose the initial $1000. The smaller the deposits in relation to the underlying value of the contract, the greater the leverage. If the price moves in an unfavorable direction, high leverage can produce large losses in relation to your initial deposit. In fact, even a small move against your position may result in a large loss, including the loss of your entire deposit. This is why using a broker that offers guaranteed stops is paramount. THIS MUST BE ONE OF YOUR TRADING RULES: NO EXCEPTION.
Now there is also the flip side to Forex Trading, if you get the trade direction correct it can result in major gains. Maybe this is why we all love Forex Trading.
Now if you have a great trade and make great profits from forex trading, do not get overconfident. If you become over confident it can be dangerous. Also make sure that you do not overtrade remember the currency market is open 156 hours per week, so don’t panic if you miss one trade. If you exit a trade you should not automatically re enter a trade.
Make sure that when you are trading that you have your rules, stick them, follow them. The forex market is doesn’t work on a popularity basis, so need to ask family and friends their opinion on the trade it will only confuse things.
Forex trading can be very rewarding but make sure you go in with your eyes open, as 90% of traders will go broke, mainly through the above reasons. It is always advisable to get some level of knowledge before you start out in the market. There are a host of forex education courses available. The CFD FX Report has recently reviewed a lot of them, and on our homepage is a company that we believe to be outstanding. A lot of students have come out making over 300 pips per week.
Please though do not spend thousands of dollars on these courses as quiet often they don’t guarantee success and a course of a few hundred dollars such as the course above is normally better.
singapore trader
http://www.articlesbase.com/day-trading-articles/forex-trading-we-show-you-the-risks-699662.html
Is this a good forex trading strategy that could work to make you a millionaire? Please read/advise. Thanks?
Okay, so, currently I’m 18 and I’ve looked into different possibilities of how I could become a millionaire using the forex market as my vehicle. I have discovered that using 1:100 leverage or even 1:50 – 1:25 is a bad idea if you want to be safe about it, and using a more modest 1:10 leverage instead is best for my chances of success.
What I’ve also discovered is that the forex markets trends last months or even years. So, my plan is as follows:
1) Start with $1,000 in my new forex trading account.
2) Use 1:10 leverage always to reduce a lot of risk.
3) Use a stop-loss of all my trading capital in every trade.
4) Keep the minimum take-profits as long as its more than what my commissions would be.
5) Just follow monthly chart trends, i.e. if the trends gone up for the past year on a yearly chart, and it shows it in a monthly chart that its going up as well, just follow the trend up along with it and keep on going up until I think its going to stop going up by taking advatage of lots of small take profits along the way.
6) Be aware of economic news and reports.
Example:
Say the GBP/USD is trading at £1.0000-$1.5000, and I place a bet to buy GBP/USD at this price at a 1:10 leverage, or $15,000 worth of pounds, (£’s) and I set a take-profit of, say, $15 or 10 pips and a stop-loss of my whole $1,000 and and keep on doing this, taking profits by trend trading and make this same $15/day for the 6 days the FX market is open a week, or $90/week x 52 weeks = $4,680 in 1 year + my original $1,000 = a 568% return for one year.
After I have achieved my 568% for 1 year, reinvest all capital and get another 568% compounded on top of that. So, it works as follows:
year 1) $1,000 up 568% = $5,680
year 2) $5,680 up 568% = $32,262.40
year 3) $32,262.40 up 568% = $183,250.43
year 4) $183,250.43 up 568% = $1,040,862.40 = USD millionaire
year 5) $1,040,862.40 up 568% = $5,912,098.74 = USD multimillionaire and GBP multimillionaire, or £3,829,025.15.
What do you say here like? Could this plan work do you think?
You’re catching a falling knife. Just buy some gold and let it set for 5 years. That or short some bonds because interest rates are going up.
Don’t screw around in currencies… you’ll lose your ass.
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It doesn’t work like that, I’ll bet you that $1,000 that you won’t make it through year one, much less year two.
Forex is for the pros and you would be eaten like an oyster, swallowed whole without a second thought.
References :
It won’t work because:
1. Trading currency futures is normally a $2,500 minimum balance at all times, meaning to set up a single position you are planning would need another $5K or so.
2. You will have to prove that you have trading history, provable income and liquid assets of at least $25K to open the account, because if you get margin called out on a bad position, that 10:1 leverage is working against you. FOREX is very volatile, I know guys that lost $5k a position in one day!
3. I know some traders that trade by a safer route, simply short or long currency ETF’s like FXB, FXY, UDN, UUP etc.
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Simple answer-NO
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