Investment Information

Article Navigation

Click Here for more articles

Forex Trading: Great Opportunity or Scam?

by: Steve Pickering

A lot of interest has been generated recently in FOREX trading, hailed by some as the great new investment opportunity. There are even companies running TV infomercials, offering sure fire systems that will bring massive profits in an easy fashion.

So what is forex? Is it something new? The exchange of currencies is said by some to be the world's second oldest profession and as long as there have been two sovereign states that have issued their own currencies, there has been foreign exchange as a facilitator for trade.

Forex, as foreign exchange has been abbreviated to, has been conducted for centuries and has become a global market with a daily turnover according to a recent Bank for International Settlements survey of $1.9 trillion (billion, billion) per day. Essentially it is a global market place with no physical exchange building where all claims on foreign currencies are settled - between governments, corporations, investors and speculators among others. Banks have traditionally been the middlemen who provide the liquidity to this gigantic market, which incidentally is traded on an almost continuous 24-hour basis.

Then came the Internet and suddenly it became possible for everyone to get a piece of the speculative action. Brokers sprouted up with their electronic trading platforms and high 'leverage'. Essentially the brokers lend clients funds to speculate with, 100:1 or in some cases up to 400:1 ratio, or leverage. This means that $10,000 can 'control' up to $4,000,000 in the market. This is far higher than is possible in the stock market.

Many people have been attracted to the possibilities of earning fast profits from forex. There are often sharp movements that can turn your $10,000 to $20,000 in a matter of minutes. You can also get wiped out, but the lure of a fast buck has turned would-be speculators into out-and-out gamblers.
The Internet has also made it possible for the individual to obtain so-called 'charts', that allow them to do 'technical analysis' on their own PCs. The theory is that price movement patterns repeat themselves, so if you have a system of analysis, you can predict a future move in the market.

This may well be the case, but it does not address the problems of the psychology of trading - the fear and greed that drives many to irrational behaviour. People are often taken in by the seller of a system, often paying $5,000 for a piece of software that shows a green light to buy and a red light to sell. However, they don't tell you how to manage your money.

So speculators lose. It has been estimated that 90% of new investors in forex lose their capital in the first year - an appalling figure. What can one do to avoid being a victim? Well, forex is a business like any other business and planning is required. It is also a profession and as such, adequate training is necessary so that you understand fully what forex trading is all about.

Many are prepared to invest thousands in forex trading without really knowing what it is all about. Just think if franchises were offered in a major hamburger chain without the franchisees having a clue how to run a restaurant or even make the burgers. The failure rate would also probably be 90%!
As with all investing, it is all a matter of risk and reward. Investing in Government securities is considered low risk, therefore they carry the lowest return. Increase the risk (the probability of loss on the investment), the higher an investor is rewarded in terms of return. An individual trading forex decides his own level of risk, which should dictate the level of reward. However, in the hands of an inexperienced trader, the two factors are impossible to reconcile, meaning in stark terms that traders cannot control the risk or the reward levels.

People attracted to forex trading often have an unrealistic expectation of what can be earned. To start with an investment of $5,000 and expect to be making $100,000 a year after the first year is unrealistic. It is not impossible; then again, neither is winning the lottery.
If the parameters for trading are laid down and adhered to combined with knowledge of forex trading, success is possible. It does not take much in the way of 'enhanced' returns to be able to double an investment. 26% per annum is required to double your investment within 3 years.

Who is going to teach you? There are some very good courses available, but these will only give you the theory, in itself very important. The ideal way is to have a mentor, or guide to show you the way.
Getting mentored is a wise move because it makes it possible to draw on the experience of a veteran expert and avoid making the common mistakes that cause the unwary to suffer catastrophic losses. After a while under guidance, a forex trader will gain the experience

The bottom line is that forex is not in itself a scam. There are for sure scam artists who prey on individuals' greed as there are in any other business. If it is approached in a sensible and realistic manner and the trader is prepared to work hard, forex can provide a good living both financially and materially.

About the author:
Steve Pickering is founder and owner of Forex Trader Mentor and has been engaged in the forex markets since 1971.

Circulated by Article Emporium

Read Articles:

The Term Sheet�s Role in Raising Venture Capital

E-currency Exchange Trading

HomebuilderStocks.com � Exclusive Industry Inte...

RenewableEnergyStocks.com, Reports on Increasin...

RenewableEnergyStocks.com Reports: �New Astris ...

Venture Capital Negotiating Issues

SAFELY PROTECT YOUR HOME BASED DREAM OF RETIRIN...

IS THE BEST RETIREMENT BUSINESS RIGHT FOR YOU?

Residual Income -- Making Money while You Sleep

Why Your Internet Business Is Like The Stock Ma...

Buying Overseas Property

Sales Process - The Secret to Closing More Sales

Forex Trading: Great Opportunity or Scam?

Buying Beach Houses in New Zealand: Real Estate...

Buying a Franchise

Learning from Voom

Forex Trading Online - 7 Reasons You Should!

An Untapped Resource For Finding Your Ideal Ho...

Going Broke Committing To Your Job? A Home-Base...

Sales Process - How to Avoid Wasting Time on Pr...

Poverty in America: Over 35 million living belo...

HomebuilderStocks.com Reports: Commerce Departm...

10 Resourceful Things You Can Do With A Product...

Alternative Retirement Income Options in 2005

Buying a Timeshare Resale: Seven Tips For Success

HomebuilderStocks.com Reports � Homebuilder Sec...

Why Should You Have a Business Plan?

Foreclosure Home Deals

The importance of planning

Is It Necessary To Have a Business Plan?

Sales Tax vs. Income Tax

Residential Income Property Financing: Part 2 of 3

You Are What You Wear

Is It Worth Becoming a Partner?

HomebuilderStocks.com - Reports This Week: Reco...

IndiaStockMarket.com Presents �Twenty six blue-...

HomebuilderStocks.com Reports �Homebuilder Stoc...

ISO 9001 Registration � 8 Steps for Success

Online business is a real business like all oth...

Make an Informed Decision Buying a Forklift

More Article Pages 1 - 2 - 3

How Investment Plans Work
by: John Mussi

More people are choosing investment plans than ever before. With the rising cost of living and the growing insecurity about the availability of many retirement funds, many individuals are looking to investment plans to begin a nest egg or to make some additional money via investment without having to spend a lot of time purchasing stocks and bonds.

Investment plans allow individuals to simply purchase a specific amount of stocks, bonds, or indices on a regular repeating basis, cutting out a large part of the hassle while allowing for some of the main advantages of investment.

If you've been considering an investment plan but aren't completely sure what they might entail, the following information might help you to decide whether or not an investment plan is the right investment option for you.

The Mechanics of an Investment Plan

Basically, an investment plan is a method of making multiple investments over time at regular set intervals. The funds for the investment are taken from a cheque, savings, or money market account automatically, and are used to purchase stocks or bonds that you have decided upon beforehand. In most cases you can change the amount, frequency, or purchased stocks or bonds of the automatic investments at any time, though depending upon the broker through whom you're doing the investments you may be subject to fees or penalties especially if changing details relatively close to the next investment date. Most online investment firms offer investment plans that you can change at any time free of charge.

Deciding How Much to Invest

When deciding how much to invest each cycle with an investment plan, you should take care not to overextend your funds and bring yourself up short. Make sure that the amount that you choose is available and that you'll have it to spare each time your investment comes up� it can be difficult to plan for events in the future, and just because you have a surplus now doesn't mean that you won't find money running tight a few investment cycles from now.

If you feel that you're reaching a point where you won't be able to afford your regular investment, go ahead and reduce the investment amount or put a hold on the next scheduled investment� better to put less in than short yourself afterwards.

Choosing What to Invest In

Making the decision of which stocks and bonds to invest in can take some time, but it's worth it� this is your money that you're dealing with, and you shouldn't invest it without putting some thought and research into your decisions. Find stocks or bonds that have performed well over time, and that are likely to continue doing so� they may be expensive at times, but you aren't making your total investment all at once so it doesn't matter as much.

Don't be afraid to add new stocks or bonds to your plan later, either� this can help to diversify your portfolio.

Deciding On an Investment Interval

You also need to decide how often you wish to make your investments� this will largely depend upon the cycle of your paycheques and your monthly bills and expenses. You may decide to invest once per month, after everything has been paid, or you might want to invest a little from every paycheque.

The more often you invest, the lower the amount of each investment can be� after all, two or four small investments per month might end up purchasing more than one larger one.

Decide on what works best for your lifestyle, and modify it as needed later if it doesn't seem to work out for you.

You may freely reprint this article provided the following author's biography (including the live URL link) remains intact:

This Static Spot is open for sponsor

This Static Spot is open for sponsor