Novice investors are often drawn to the forex (foreign exchange) markets because they hear stories of how you can make tons of money in a short space of time. It is the same story with other highly-leveraged markets such as futures, options, CFDs and various other tradable instruments that allow you to deposit a small amount with the potential of making high returns.
But let’s take a reality check for a moment, shall we? If it really was so easy to make money in these markets, then every Tom, Dick and Harry would be doing it. The fact of the matter is that, as a novice investor, you are much more likely to lose money than you are to make a profit when trading forex and derivatives.
The big profits in these markets are made by those who know what they are doing (usually the big investment banks and Wall Street firms), not the average retail investor. Of course, it is possible to do well, but only if you have a good knowledge of the instruments you are trading and some significant trading experience. As a novice trader, you will have neither.
That is not what you would be led to believe if you do a search on the Internet for forex trading systems however. There are all sorts of scams and “get rich quick” schemes out there run by charlatans and self-styled “trading exerts” who will be only too happy to take your money off you. There is a reason why automated forex system trading has become associated with scammers and fraudsters, and that’s because there are so many of them out there.
The best thing to do if you want to make a start in forex trading is first of all to have realistic expectations. Don’t assume you are going to make money straight away. Find a system and a style of trading to suit your outlook and personality, then paper-trade for a while to see how you get on before investing any real money. And once you do start trading for real, start out with a sum that you know you can afford to lose. Don’t borrow money to trade or put your house up as security for your margin account, for heaven’s sake!
Get some experience, have some trading discipline, learn the markets and you should be in good shape. But don’t expect to get rich quick with forex, it will never happen!