Four Common Misconceptions About Trading Forex

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A lot of people who are thinking about investing in Forex are put off by some of the stuff they read on the internet about the Forex Market. A great many of these things that they read are not true, incomplete or inaccurate. Forex Investment is neither as risky, nor as rewarding as these exaggerated articles tent to portray it. Sure, you can make a great deal of money and you can lose a great deal of money, but it is possible to go into Forex Trading armed with a sensible approach and the knowledge that you have researched Forex Trading thoroughly. A good place to start is by avoiding these four misconceptions.

(1) You Will Make Your Fortune Trading in the Forex Market
One of the reasons that Forex gets a bad rap from time to time is that people believe the hype that they will be able to simply get their money, invest it in a load of currency pairs and then they will be able to kick back and watch all of their new riches start pouring in. This might happen to a few very, very lucky individuals, but it probably wont happen to you. The fact is that there is only a small percentage of investors who make their money through investment in Forex Trading. So getting rich quick is not a good aim when you start out. Rather, you should look at Forex trading as a way of building a retirement pot or nest egg.

(2) If You Have A Great Deal of Knowledge at Your Disposal You Cannot Fail.
Knowing what you are doing is essential and researching your markets is also crucial. Studying patterns of old trading and reading up on all the Forex sites and forums is also useful. But remember this. Just because you have read everything and studied everything and done all the Forex workshops does not mean you can feel confident of not making losses. Being aware of the possible pitfalls does not mean you will always avoid them.

(3) You Should Always Listen to the Experts of Forex Trading
There are a lot of people out there who claim to be experts in Forex Trading. Whilst some of them will inevitably be telling the truth, they won’t all be experts. Learn to be discerning about who you listen to and always bear in mind that no matter how knowledgeable they are, they could still be completely wrong. Learn to trust your instincts on these things.

(4) You Should See Forex Trading as a Hobby
No. Take your investments seriously and view your trading as a part time job, not a hobby. It might not be able to make you rich, but Forex trading can make you better off and alternatively, can make you poor very quickly too. Take it seriously.

Alex is a freelance journalist and financial blogger. He loves to write about football and jazz but spends most of his days writing about mortgages, stocks and shares and payday loans.

How to Avoid Forex Investment Fund Scams On the World Wide Web

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Not being one to let the world of high finance pass you by, you decided to look for opportunities in the forex market. Like many others who thought that they had what it takes to master currency exchange, you found the foreign exchange to be less than inviting. Fortunately, there is more than one way to peel a potato. Trading in currencies is one way but if you are not the kind of person who likes to get his or her hands dirty, a forex investment fund may be for you. The down side is that there are just as many scams and rip-off websites for forex investment funds as there are legitimate ones.

  • Fraudulent forex websites often look real and make sense using the perfect forex terminology
  • Scam artists in forex know exactly what to say to draw in potential victims
  • The FBI is swamped with Financial Institution Fraud cases involving bogus investment firms offering membership to bogus forex investment funds

Fraud Is Everywhere

Fraudulent forex websites come and go every day on the Internet. For every fake forex website that disappears, two take its place. The worst of these are the ones that do not go away. These are the semi-real financial institutions that take advantage of clever language and contract loopholes to dupe investors. Even when the investors catch on to their unscrupulous methods, the website carries on, raking in more victims and dealing with unhappy investors with unscrupulous lawyers. Eventually, they also disappear and make out with a lot of unearned money.

How Investment Funds Work

Forex investment funds give you more power and potential to earn by allowing you to invest with other forex traders in a mutual account. The fund will appoint one person to make higher yield, higher risk trades with a larger amount of collective funds. The returns for such trades are much higher than if you were investing alone. The appointed fund manager must operate within the group’s pre-appointed parameters. The trick to avoiding scams lies in how much research you are willing to do into any given website that offers the opportunity to join a forex investment fund.

Research Is Always The key

When researching forex investment fund websites, it is wise to keep in mind that there are never any guarantees in forex investments. Any website that makes unbelievable claims of success is suspect and bears much scrutiny. Another method of ferreting out fraudulent websites is finding forex investment fund reviews and websites put in place by victims of such websites. Very often, someone who has fallen prey to a fraudulent forex website will feel obligated to warn people who may be looking at that website. You have to dig very deeply, however, as these victim may know little about search engine optimization techniques.

Guest post by Debbie who loves to write about business and finance topics such as foreign exchange and currency markets.

Common Risks Associated With Forex Investments

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Forex investments are extremely risky when it comes to the business of trading in foreign currency. People affected by these risks are foreign investors and particular companies specializing in foreign currency trading. But whatever line of business you are in the risks and potential losses are all the same. So how then do you know of risks threatening your investments? Here are some forex and foreign stock tips to help you make wise investment decisions.

Forex Money for Exchange in Currency Bank
Forex Money for Exchange in Currency Bank (Photo credit: epSos.de)

Generally the strengthening of a currency against other currencies is a major threat to foreign currency trading. Export and tourism industries are always the hardest hit by this scary phenomenon because of their immediate contact with foreign markets. When any currency strengthens a local market can experience a tough time trying to secure export markets because of the high cost of their export goods. Tourism industries can also experience a dip in revenue because tourists find goods expensive in such a country. So at the end of the day the frequency of trading will drop, thereby triggering a drop in value.

The devaluation of a currency is a notable risk, perhaps the deadliest of them all. A currency that is devalued, like the Zimbabwean dollar, immediately plummets in value. The obvious consequence of this is that people who had Forex accounts in their reserves will see their money erode in value. As for exporters their buying power is considerably lessened when it comes to trading on overseas markets.

War, exclusive government policies and coups are political events that can easily prompt a sizable plunging of currency values. The general impact is that of making the country in question unstable for investments. Sometimes governments can order the nationalization of resources and the seizing of foreign owned investments, both of which present themselves as risky economic factors.

The best way to protect your investments from risk is by hedging your Forex trades and ensuring that all the risks you can protect yourself against are mitigated, and that you will stay abreast of all newsworthy events happening within any foreign countries whose currency you are actively trading.  You may be making forex investments to make money, but the first step to that is to not lose money on your investments.