Sep 19, 2009

Forex: Risky OR not?

I'm very very very very sure that most if not ALL of you want to know - "Is Forex Trading RISKY?". Why am I so sure? It's because I have been asked this question so many times that it's easier for me to count the number of steps it takes for me to walk from my home to Singapore than it is to remember the number of times I have been asked this question. Slight exaggeration but you get my point ;)

Now, I totally understand why people would think like that. There are probably about 8,811,967 horror stories out there of how people have lost money through scams or trading forex themselves. But I can't help feeling agitated when people tell me that "Forex Trading is VERY RISKY" when they themselves do not even know what it is all about! Think about it. It's like someone who has never played a game of soccer/football and commenting on a professional player's performance on TV. "Oh he SHOULD HAVE kicked the ball slicing it with his outer foot, bending his body at 49.67 degrees angle to get a better balance and shifting his left hand so that was aligned with the energy of the sun."

SO...Is FOREX TRADING RISKY? Well my answer is ALWAYS this. It depends. That's it?!? No direct Yes or No? I'm sure you would love a Yes or No answer but here's why I say it depends.

Is driving a car risky? Yes or No? Well, it depends! Is the driver a 5 year old? Has the driver been trained to drive a car? Does the driver have vision acceptable for driving? AND EVEN IF the driver has been trained and is reasonably suitable to drive a car, does it mean that driving is 100% risk free? I'm sure you all know the answer is a BIG NO! (I would have typed the NO in much bigger font but it will screw up the text formatting). However, through training AND experience, you would have reduced the risks of driving a car  drastically!

Translating the above to Forex Trading, here's what you need to do to reduce the risks of Forex Trading drastically!

1. Education
- This is the first and the most important task if you want to Succeed in Trading Forex. You'll be surprised if I tell you how many people want overnight success in forex trading but refuse to invest in education nor do they diligently learn the in and outs of being a successful forex trader. Spend time and effort on your education and be one step closer to successful forex trading.

2. Experience
- Education alone will not take you there. You will need forex trading experience. Experiencing the vast range of emotions that tag along with forex trading, the different behaviors of price movement etc. is similar to driving in the real world. Getting a driver's license will not make you a good driver. You need to have on the road experience.

There you are, my answer to whether forex trading is risky or not. So what will your answer be the next time someone asks you about the risks of forex trading?

Comments and questions welcome as usual.

Til then,


rain said...

You need proper training and be well informed on the highs and lows of trading. Forex trading is a successful venture if you know how to use the right tools.

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DT4X Trader said...

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Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to trade foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts. Any opinions, news, research, analyses, prices, or other information contained on this website is provided as general market commentary and does not constitute investment advice. will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information.