In order to be an effective Forex
Trader, you need to understand the risks associated with it.
The Forex Market is highly volatile market that never sleeps. In
any 24 hour period over one trillion dollars flows through this
market. So not only is there volatility, but there is also
PRO: Currencies trade 90%
true to the charts. So if your charts are saying the EUR/USD is
going up, then you have a 90% chance of making money on a long
position and the vice versa on a short position
CON: There is no telling
when the other 10% of the time is going to rear its head.
PRO: This market reacts
sharply and immediately to news. Do your due diligence on
upcoming economic news
events and you stand a better chance of being on the right side
of the market when the news breaks.
CON: On days with economic
news the market swings can only be described as violent. A
position can gain or loose 30 to 150 pips in a matter of two to
three seconds. Either do your homework or stay offline
PRO: We do
provide a calendar for economic news
events that enable you to get a head start on what's upcoming.
CON: As we have all seen in
the past, there is no way to tell when exactly the winds of
change will blow. A change in political climate and or terrorist
activity can dramatically change the price of any given currency
at any time.
PRO: A number of different
stop loss tools enable you to determine what your willing to
loose and how much you want to make, prior to taking a position
CON: All to often, traders
say "I want to make as much as possible and I won't loose a
penny", and they trade without using stops. Just remember "Pigs
get fat and Hogs get slaughtered". Your Forex trading platform
is not a slot machine. Luck is not a factor in being a
PRO: Some offer commission
free trading, which means there is no cost associated with
taking a position
CON: There is no such thing
as commission free trading. You can rest assured that those that
do offer it are manipulating the spreads. That being the case,
you are loosing way more than ten dollars for every lot of
currency you trade
can trade currencies online from the comfort of your home or
office virtually anytime of day.
CON: As a forex trader you
are, soley, assuring that your hardware and internet connection is
sound. Hardware failures and internet outages are your
responsibility. In other words, trading with a dial up
connection and a pc made in 1995 is not only foolish, but your
When I first entered the Forex
Market my mentor told me a few things that has stayed with me
and enabled me to be effective.
- Don't get greedy
- Always use stops
- Always use your charts
- Stay up to date with
Taking the good with
the bad is very important. Realizing and
risks associated with trading currencies is essential.
Greed will only serve to handicap you.