Quite a statement I think you will agree, but can it be
done?
The ruling bodies for the foreign currency off-exchange
markets are collectively the National Futures Association
(NFA) and the Commodity Futures Trading Commission (CFTC)
in the USA and in the UK the Financial Services Authority
(FSA). They do not like to see statements like the one on
this headline title.
I think that it would be fair to say that the NFA, CFTC,
and FSA are trying to make sure that people are not
encouraged to grab every penny that they can get their
hands on and dive headlong into the forex market, possibly
putting themselves and their family into financial crisis.
What they want is for the foreign exchange market to be
perceived in a balanced way, and for people to understand
the risks that are involved in trading within it.
OK, that said let us take a balanced look at the forex
market.
Most retail traders enter trades using very high leverage -
often 100:1 and sometimes more. This means that quite small
movements in the price differentials of currency pairings
will create large gains or losses in direct proportion to
the amount of leverage employed, and because of this, every
trader should be aware that it is highly possible to
sustain big losses as well as make big gains.
Of all of the participants entering the forex market, it is
widely predicted that 95% will sustain at least a partial
loss of their investment and only 5% will make a profit.
But is it possible to make $27,000 in 4 minutes flat?
Actually the answer is YES! But by the same token it is
also possible to lose $27,000 in 4 minutes flat too.
Are the governing bodies right to be so touchy about
attention grabbing headlines that seem to infer the
possibility of great gains? In my opinion they are.
The problem is an old one. The few ruthless operators that
lure in the unwary for the sole purpose of separating them
from their cash casts a shadow over both the good and bad.
The rooting out of these unscrupulous entities is to be
commended, but on the other hand, is it fair and balanced
to be forced to play down the good side of this great
industry?
I do not think that it is.
If you have funds that you wish to invest, and they are
funds that if lost would not cause you financial hardship,
then you may well wish to consider trading on the foreign
exchange because it is one of the few places that it
possible to turn a relatively modest investment into a
considerable sum of money- but not without risk.
Trading on the foreign exchange is a risk business and as
with any risk business one needs to have in place, a solid
risk management system and a very reliable trading system.
Even then a total loss of funds is still possible - as is
the possibility of making a better than average return on
your investment.
Summing up, I would not advise forex trading to the unwary
investor, nor to anyone that is already having a hard time
trying to make ends meet. But for anyone that has funds
that they would like to invest in a high risk high reward
environment then forex may just be the right place for you.
Finally, just to be clear, please read the following:-
IMPORTANT RISK DISCLOSURE
Off-exchange foreign currency trading 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 invest in 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 off-exchange
foreign currency trading and seek advice from an
independent financial advisor if you have any doubts.
----------------------------------------------------
Martin Bottomley is a full time professional forex trader,
acknowledged author, forex tutor and co-developer of forex
trading software including The Amazing Stealth Forex
Trading system.
You will find more information at:
http://www.stealthforex.com
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