There are lots of rags to riches stories about Forex Trading making the rounds? Have you heard the one about the Manager of a McDonalds restaurant in the City of London who got a tip from a Forex broker, and two weeks later he drove into work in a brand new gleaming silver Lamborghini?
My friend Jake heard a very similar story and was on the verge of remortgaging his $400,000 flat and investing it all in Forex trading. Luckily for him, I found out about his plans and I went over to visit him. I don't want to go into too much detail, but let's just say that Jake and I won't be talking to each other for a little while.
I get really frustrated when people believe all the hype they hear. Sometimes, I feel like bringing out the sledgehammer I keep under my bed, and going out there to do some damage. Do you think I am a raving lunatic? I'd like to have a quiet word with you then. Are you ready?
Seriously, I don't mean you any harm, but I think we need to talk.
Forex trading is certainly one of the most lucrative money making opportunities around. After all, seventeen years ago, George Soros made $1.6 billion in just one Forex deal. This is a very true story, by the way, but what is also true is that a lot of money was also lost in that deal. And guess who lost a major chunk of the money?
No not Warren Buffet. I am talking about somebody much bigger than Warren. Try the Bank of England.
While George Soros was celebrating his historic currency trading success, the Bank of England was on its knees, literally. Its losses were estimated to be in the region of $1.3 billion. As a result of this, the British Government was forced to leave the Exchange Rate Mechanism (ERM). If you've heard of 'Black Wednesday', then that is what it was about.
95% of people that take up Forex trading lose all the money they invested. You have a chance of joining the 5% group of Forex traders who are actually successful at trading. I can tell you that the majority of the people that fail at currency trading are those that bought into the hype. On the other hand, those that succeed are the few that learn all they can about Forex.
I am not trying to put you off Forex currency trading, or scare you to death. I just want to show you a different side of the coin. I want you to have a balanced view of what is involved in trading currency. That is why I have a series of articles depicting the reality of Forex trading.
Ironically, I wouldn't have to be doing this if the Forex industry would show a little more restraint in luring newcomers into the Forex markets. What they don't realise is that the whole industry will be much better off, if retail investors like you and me were more educated about Forex trading.
