What does it take to invest in Forex?

They warn that it is not suitable for all investors and it involves huge risks. Heck if I love the stock market, why wouldn't I go for forex? Why is it said to be so risky?

Trading (or investing) in the Forex market does involve risk.

As a matter of fact, the higher a markets potential for return the greater the amount of risk involved. I am sure that you know that from your stock trading experience. Taking a flier on a penny stock involves much greater risk than investing in GE.

That being said, an intelligent investor like yourself would undoubtedly study the market before jumping in with both feet. I am sure that you would identify the various elements of risk and analyze methods and strategies to mitigate as much risk as you possibly could.

The greatest element of risk in the Forex market is ignorance. People that do not have good money management skills, sound levels of self discipline and solid appreciation for the idiosyncracies of the marketplace have no business putting their money at risk...unless they have accepted the high likelihood of losing it all.

There are a variety of conservative strategies that can be deployed in the Forex market that do not involve gambling and blindly opening positions. One of the strategies that I would suggest that you look at involves investing with hedged positions so that if one side of your position were to decrease in value you could be hedged with a corresponding position that would be increasing in value.

It is unfortunate that so many people do not take the time to learn or get assistance before participating in the Forex market. Personally, I enjoy investing in the market quite a bit and the return is certainly greater than I have gotten anywhere else.

Good luck.

Paul

Trading leveraged futures and forex is NOT investing. Try holding a position at 100:1 leverage, and you will immediately see the consequences. Trading stock at 2:1 leverage is considered risky. Until you investigate thoroughly, don't even think about 200:1 leverage in the forex. Geez, how much trouble can we get into now?

These markets are driven around economic releases. The banks run this business, and have disallowed trading the news releases by running the stops in both directions. So you have to wait five minutes for the dust to settle, then decide what to do. In between these times, price will often do nothing, or trend one way, and squirt the other by 30-40 pips.

In the stock market, they know exactly how much to retrace a move to get the little guy out; usually 20-30 pts on the Dow will do it, and 40-50 will sweep the floor. But in the Forex, there is no limit to a false move.

What does it take? Deep pockets, lots of knowledge and balls of steel.

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