Should You Trade Forex?

Forex is a difficult market for the retail investor.

While online trading has made this an increasingly easy market to get into, the small margins of currency fluctuation can make it a very difficult one in which to make any meaningful gains. Typical Forex traders will manage single trades worth millions of dollars, as this is the scope required for realistic profit margins in a market where prices move by pennies (or fractions thereof).

As a result this can also be a highly dangerous market. The scope of Forex trading lends itself to aggressive leveraging. It is common for traders to make their deals while putting up only a fraction of the actual cash in their transaction. They pay for their initial investment with the money they make after closing out their position. Closing out a position which has lost money requires them to cover the difference from their portfolio (or even personal) assets.

Under virtually no circumstances should you adopt a leveraged position. 

However, if you are comfortable with small gains and potentially high paced trading, there is little harm in the Forex market as long as you stake your own capital. It is a market with little relationship to stock movement and can provide some slow and steady diversity to your portfolio