Be Careful If You Are A First Time Investor in Forex

Currency trading is done on a much greater proportion than any other kind of trading in the world. Some 1.9 trillion dollars are exchanged every single day. About 73 percent of all forex trading is done by 10 international banks with names you're familiar with: Merrill Lynch, Citigroup, and so forth. Domestic banks and other financial institutions account for another chunk of forex trading, and transactions by "day traders" -- regular individuals, people like you and me -- account for only 2 percent of all trading.
Nevertheless, many average traders do try their hand at forex trading, and there are many financials institutions who handle such transactions. It's identified as "retail forex," and it's handled much the same way that day trading of stocks is managed.
The downside is that unlike the stock market, the forex market is not particularly well regulated, and people inexpert with it can be easily defrauded. The U.S. Commodity Futures Trading Commission (CFTC) gives a number of bits of guidance for amateur forex traders. Among the CFTC's tips:
- Avoid companies that predict or guarantee large profits, or that assure little or no financial risk. There is ALWAYS a financial risk in currency trading, and no one can assure profits when it comes to speculative activities.
- If someone won't give you his background, don't deal with him. Likewise, always check out a business's track record before doing any trading with them.
- The Internet is a haven for shady types. Be suspicious of anyone wanting you to send money.
- Above all, remember that if an opportunity sounds too good to be true, it probably is!
There are plenty of trustworthy and reliable forex trading firms out there, including ones that operate online. But even if the trading company is genuine, there are still risks inherent in trading. As currency rates can change for such a variety of reasons, it's difficult to forecast what investments to make. Even experienced professionals get blindsided from time to time.
In short, forex trading can be lucrative, but only if you know what you're doing. Before embarking on any investing, study the details of how the market works, what creates fluctuations, how to interpret economic indicators, and all the other ins and outs of the market. Forex trading isn't something to be entered into without due consideration. There is much potential for profit, but there is even greater potential for loss, both at the hands of crooked trading firms, and of your own inexperience.