As you may be aware currencies shift and change in value very often, almost from minute to minute. These fluctuations are caused by the shifts in the demand and supply of any one currency in the international markets (forex markets) for the large part by governments, large corporations, banks and many small entities. Given the fluctuation in the currencies, there is great opportunity to make a profit by the shrewd and responsible investors using a Forex trading online platform.
Risk vs Reward
No investment is without risk. If you buy a property to rent it out the tenant may stop paying rent or it might burn down in a fire, if you invest in shares the value of the stock may evaporate overnight and even having cash in a bank account is subject to risk as the bank may default. It generally considered that the higher the risk the higher the return on investment although that’s not always the case. Although you can minimise your losses in forex with stop losses it’s still incredibly tempting to engage in trades that see you loosing good sums of cash.
Educated Investor or Speculative Gambler?
In terms of forex trading if you are not an informed and educated investor whose executing a well thought out trading strategy then technically you are doing whats called speculation. Putting it bluntly if you don’t know what you are doing with forex trading then you might as well be gambling on the races. Speculation or Gambling is not necessarily a bad thing, I regularly bet on the sports or races, however, I don’t do it with the expectation to win but just for the enjoyment. Also, I don’t recommend doing it with large sums and it should only ever be a small part of your total portfolio of investments i.e less than 5%.
How much can I make trading forex?
This really depends on a large number of factors such as:
• How much you have to trade with – profit will be much greater from $40,000 vs $4,000
• How much knowledge and experience you have
• Your appetite for risk
After doing a lot of research on the topic myself I get the impression that you really need to have a lot of money upwards of a couple hundred thousand to make a living out of forex trading. Typically forex currencies don’t fluctuate in huge amount day to day so to make a profit you really do need to have a good amount invested. Even when you do make a good amount one week you really can expect that one week you might make a huge profit followed by a loss the next week, really depends on your skills in determining how much you can make.