Excerpt from: Forex Training
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| December 22, 2008 | | Currency trading offers opportunities (and risks) | One of the most popular forms of trading this year has been currency trading -- and for good reason. Even though investments like stocks may lose across the board, with forex trading, there is always money to be made.
Indeed, GFT has seen explosive growth the last few months as people turn to currency trading. Kathy Lien, director of currency research at GFT Forex points out that GFT has seen a 37% surge in volume this year.
Forex trading provides a way for investors to:
- Hedge against other investments.
- Make money quickly. (Don't forget you can lose it quickly as well, however.)
- Use leverage to their advantage. (Remember that leverage has a dark side: Without proper management, high leverage can lead to large losses as well as gains.)
Additionally, because of the nature of currency trading, there is always money to be made it is possible to make money in the following way: If you think the euro is going down against the dollar, but up against the pound, you can enter two different positions -- one favoring the euro and one shorting the euro -- and possibly make money on both. Of course, there is an equal possibility that you will be wrong and lose money on both positions.
However, it is important to realize that forex trading is very risky. And, while it can provide some benefits to the investor, it can also add up to large losses. Forex trading is a form of speculation. Additionally, volatile market conditions can lead to abrupt changes in direction, resulting in rapid losses.
It is important to balance your investment portfolio with a range of investments, some less risky than others, and to realize that no matter how "safe" an investment is, there is still a risk of loss.
| Topic Tags: currency trading, euro, euro forex trading, forex trading, GFT, investments, Kathy Lien | |
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