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"As fast as you can make money in this market, you can lose it all"
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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 liquidity.

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 successful trader.

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

PRO: You 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 problem alone.

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.

  1. Don't get greedy
  2. Always use stops
  3. Always use your charts
  4. Stay up to date with economic news

Taking the good with the bad is very important. Realizing and
understanding the risks associated with trading currencies is essential.
Greed will only serve to handicap you.
 

 

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