Is Online Forex Trading for You?

By: Gerald Greene
Forex trading is the Big Daddy of the investment world. Daily volume far surpasses that of all of the world's stock markets combined. Major participants include governments, corporations involved in international trade, banks and financial institutions, hedge funds, and large professional traders.

Until recently, trading forex was beyond the reach of the small to average private trader. However, the growth of the Internet and the rapid growth of online forex brokerage firms that target the smaller investor have changed that. Internet technology now allows online firms to provide the necessary forex data feeds and information flows directly to your computer, often free of charge.

Just a few years go the data feeds were too expensive except for those with deep pockets who were trading large sums of money.

The average trader/investor can now easily open an online forex account and trade alongside the big boys. But should he/she?

Despite the claims you may see on some FOREX web sites, FOREX is not risk-free. You are trading with substantial sums of money and there is always a possibility that trades will go against you.

There are software trading tools, however, that can minimize your risk, and with caution, and above all education, the FOREX trader can learn how to trade profitably while minimizing losses that are part of the business on the losing trades.

No one should trade forex without first doing a good bit of research and study. One of the best ways to become comfortable with the pricing, trading procedures, and software is to open an online trading practice account. Most online forex brokers offer free trading accounts where you can make trades with "paper money" and in addition access online lessons about how best to trade successfully.

Forex trading when properly done can be quite profitable. But it is a specialized business and is not for the lazy or fainthearted. You must devote some time to educate yourself about trading forex before placing real money at risk. Then you should start out by trading small. See how you do trading real money before ramping up to trading substantial positions.

While trading your practice account will quickly bring up your comfort level as to procedues and managing the software, you will soon find that trading real money and putting that money at risk is an entirely different psychological matter. Some traders will enjoy the challenge and some will not.

If you feel extremely uncomforable while trading then perhaps forex trading is not for you. Like any specialized business some folks will be suited for trading forex and some will not be. It's better to pass if you feel too confused or just don't want to work at it. It's far better to pass and save your money than feed the big alligator until the dent in your bank account forces you to stop.

You may also find that forex trading is not for you if you are too relaxed and trade like a madman. Profitable forex trading requires care in choosing low risk entry points and a lack of self discipline in following a well thought out trading strategy will lead only to losses.

In summary, forex is an exciting and potentially profitable business. However, before you can expect to trade well you must become well educated and follow a trading plan that will limit your trading to trades that have a high percentage of being winners.