IS Forex trading a scam ~ The Digital Cashier

Venturing into the world of Forex is a temptation that many can't resist.

Forex trading isn't for everyone, but anyone can try it. Because the desire to make money-preferably big money, is a temptation that many can't resist. And in the forex market, the money is there, and lots of it!

The drive to make more than enough money to live a debt-free, financially abundant and worry-free life, is the simple reason why lot of people sometimes stake their bets in the foreign exchange market, using their whole life savings.

Their hope of getting a high return on investment or ROI is what drives them to take such decisions. But in the game of Forex, whether the losses are more than the profits or profits are more than the losses, one thing is clear-that,

a) You need money to make money.

Forex is all about investing money to make more money. And it goes without saying that the more capital you invest the more profits you will make. Many have been led to believe that forex is a fast approach to making quick financial gains.

Although it requires you to have a substantial capital set aside for investment purposes, you are not required you to put in all of your hard-earned money into it.

b) Accept the fact that losses are inevitable.

Engaging in forex trading is all about investing your hard earned cash. investments are risky ventures where the risk of losing all or part of the initial capital invested is a possibility.

This is why when you open a forex website, the first thing you might see at the top of the site is a warning note that goes somewhat like this,

72% investor accounts lose money when trading with this provider. You should consider whether you understand how forex works and whether you can afford to take the high risk of losing your money.

Making a profit is what everyone aims for. And while it is good, sometimes you may simply have to walk away from a trade gone too bad because losses may sometime be too much and too painful to bear.

This is the nature of forex or foreign exchange or FX for short or FX market. And then it is also called the Currency market or Foreign exchange currency market.

It is the financial market where currency pairs are traded. This means that you can buy and sell money denominated in one currency with money denominated in another currency. But it is also where you can trade in commodities on the international market like stocks, gold, diamond, crude oil and bitcoins, etc.

The hype around Forex

There is a hype around forex where some people sell you a rags-to-riches story. This is because they make trading in currency pairs look like an easy gateway to a world of riches because of the enormous amount of profit that can be made from it. And so all you need is a very small investment to make profits in the hundreds and thousands.

For example, you may have been told that with a small startup investment of about say $200, you could earn profits as high as say, $4000. Promoters of this get-rich forex scheme might tell you that you can make that profit in the space of say one week, one month or within six month.

And while the forex market is globally is a market worth more than a trillion dollars, which means there is a lot of money to be made from it, the legitimacy of the claims being made must be verified. And you can only do that when you go into Forex trading yourself. What does this mean?

Dispel the myths first hand

if you have to prove to yourself or to any other person, how easy it is to make money from forex trading, then you simply have to see first hand, how it works. Having a first hand experience means engaging in forex trading yourself. By doing this, you will know whether Forex is,

-a scam or, is a legitimate way of making money.

Not only, but engaging first hand will also help you dispel claims such as,

-making huge profits on relatively small investments.

The above example of investing the minimum sum of $200 to make a profit of $4000 within a month, two or six month sounds too good to be true. If you engage in forex trading, you can prove or dispel this claim and also answer the question,

Can you make money with forex?

The simple answer is yes, you can make money trading in currency pairs. How much money you will make depends on how much you are willing to invest. But it also depends on what strategies you employ, your trading abilities and perhaps the market conditions.

One characteristics of forex is its volatile nature. This means that the value of currencies go up and down fast and making a profit means understand this volatility. As a newbie in forex you still are testing the waters if you have no prior experience at all. However before you start, there are a three essential things you need to know.

What to know before you get started

When you want to go into forex trading for the first time, think of it as if you are about to open your very first business, like a sales outlet. You may have started without any prior experience at all.

But you went ahead and set up shop because at the time, you had the money and thought that the best thing to do was to invest that money right away. The thinking here is that once you open shop and fill it with products, people will start rushing to the store and buy them.

However, fast forward and six months down the line, your dreams of smiling to the bank is put on hold. Forex trading goes somewhat like this, so it is necessary to have a good first hand knowledge of it before you start trading.

The start of anything is always a hassle, but with the right guidance, you will sail through the initial difficulties. And so when starting out here are a few things to bear in mind.

a) You will not get rich overnight

Forex is not a game where you can make 6-7 figures overnight. If it were so, a lot of people would leave their 9-5 jobs and instead, focus on getting rich overnight through forex trading. And so do not believe that by investing a small amount you will reap enormous profits. Once you get hooked on these claims, this may drive you to want to spend huge amounts of your hard-earned money trading.

b) You have to learn forex trading

Yes, it is necessary to first acquaint yourself with how the forex system works by gaining enough knowledge before you jump into it. Educating yourself then, will save you a lot of time and money. And so it is important to get first hand knowledge by studying and reading books on the subject. Also you need to seek advise from experienced traders to get more knowledge.

c) You can start with a little sum or no investment

With forex trading, you can start trading with real funds for as little as $5.00. However most online forex brokers require an initial investment amount of $250, while some may require you to start as low as $500. And then there are those who peg minimum investment at $1000.

As mentioned earlier, you can start trading with as low as $5.00 and there are online brokers that can start you off that way. You may want to try them just so you get first hand experience of trading with real funds.

You can also trade with zero investment. However trading with zero investment is really trading with virtual money that the forex broker offers you.

How to start

For newbies who want to start forex trading, you might be thinking about how to start and what steps to take. If that's the case then for starters you need to distinguish between "real-time trading" and "practice trading." and choose between the two.

Being new to the game requires you to approach it with caution, so as not to rush things and commit serious mistakes. And so to help you decide which might just be right for you, let's see some definitions.

Real-time trading: This type of trading is done with real funds. What does this mean? It means you will invest a determined amount of money on a currency pair, and see how that investment is doing in real time.

To do real time trading, you must open a live trading account with a forex broker by going to their website and filling out an application form with your personal details. Once your registration has been approved you can start trading using real funds that you must put into your account.

Practice trading: With practice trading, you are simply learning to trade using a virtual or as is popularly called, a "demo" account. This virtual account comes with a fixed amount of virtual money that starts anywhere from $10,000 to $ 500,000.

You can use the virtual money to practice trading so as to get the first real feel of forex trading. The good thing about a demo account is that virtual money is available to you to practice with any time. You don't have to worry about losing your funds. With a real account you must exercise caution so as not to incur heavy losses.

What steps to take

Now that you know the difference between a live account and a demo account, the next step is choosing which one you want to go with. The choice is yours really but any forex broker site will ask you to start with a demo account.

Some broker sites will upon approval of your account registration, test your knowledge of forex. This is done by telling you to take a simple question and answer test which they have set up on their site. If you pass the test then you will be allowed to open a real account.

If you don't pass the test, then they will block you from opening a real account and suggest you continue with a demo account until you have enough knowledge.

Conclusion

Anytime you engage in forex trading, or in buying shares and stocks, you will be prompted to invest your hard-earned money. This is money that you will eventually lose if a trade goes bad. But there are also profits to be made if things go in the right direction for you. However no matter which way the wind blows for you, it is important that you do not fall into the hands of scammers and lose money.