Having dabble in shares ( I guess many people do so) for decades, I believe it is the ultimately "money generator". You know, the goose that lays the golden egg! This is especially so if one went through the period of Super Bull run of the stock market in Malaysia in the 90s.
Well, I guess that thought has long leaved my mind. Now, forex (yup, I am serious) looks way more enticing than shares.
I know. I know. Some of you would say, "What? Are you out of your mind? Trading forex is so dangerous! More than 95% of forex traders lost money in a very short time!" While others would add, "You are going to get burnt. Far worse than shares!" Scroll to the end of the post for some GOOD NEWS!!!
![]()
To be honest, I also have the same thought before I step into the world of forex. I, an ex-forex dumbo, also thought forex is the fastest way to the poor man house. Ever so as I heard Bank Negara also lost a lot of money in forex. "With those professionals in the bank, they can't make money. My chance of making money in forex will be close to nil, if not negative", this thought lingered in my mind for quite so time. And to make matter worse, Malaysia Government has declared that forex trading is illegal and recently it is "haram" for Muslim. Thank God I'm not a Muslim but I still see lots of my Muslim friends continue indulging in forex trading.
Despite all that negative and unfavorable surroundings news revolving around the world of forex, I did take my dive into forex. Why? Sound rational and much better than stock trading after I got some introductions from my highly charged forex spirit brother plus a little help from Mr Google.
How is trading forex better than shares? Well, for one, one can make profit (of course loss also) when the currency pair goes UP or DOWN while in Malaysia, one can make profit in shares only if it goes UP. ANd that's why I can hold shares for ages (well, actually until the company went bust!) hoping that they will one day, at least, go back to the value I bought them.
Unlike shares, trading forex requires only a small amount of capital. Of course, you can start with as litttle as $100 but most of the time, the capital will vanish into thin air. The relatively small capital is just too prone to margin calls and when that happens, most of the time, it will be gone forever. After trading for years, I find a $2,000 capital is ideal for me to work on. So forex is a business with low barrier entry!
And in forex, one can use the ever powerful tool known as leverage. Trade more than what you have. Yes, that's margin. It is like when one buy a house, you put down a certain amount of money and the rest is financed through mortgage. If the house price increases, you make a bundle! Of course, this leverage stuff is very dangerous if you don't know what you are doing. It is like driving a race car without any training. Surely the outcome would be disastrous.
Being used to trading shares, the stock exchange is open like a normal shop or bank. Office hours, five days a week. But in forex, it is 24x5. Almost. Well, it means it open throughout the day from Monday to Friday. How is that possible? Well, it is because forex trading involves banks. When one bank closes in one country, another one opens in another country. That is how the world of forex is kept awaken through out the normal business days. So this means more trading time, forex is like an online store compared to a brick and mortar shop. One can do trading after work or even during the middle of the night. Man, isn't this flexible?
Ooh ...ooh.... before I forget, did I mention the low charges in forex? Don't believe those forex brokers sites that mention there is no commission in forex trading. There is, they come in the form of SPREAD, the price difference between SELL and BUY (usually a few pips). For those that have no spreads, one would have to pay a few dollars for a certain volume of trading the currency pairs. Anyhow, this commission is REALLY REALLY LOW if compared to buying shares. Man, do I LOVE forex?
Yup, for some of you who are reading this who are risk averse, you might say that it is very risky. Risky? Yes, if you don't know how to control the risk. Risky if you go into it thinking that it is easy to make money without any hard work. Risky if you cannot stomach losses! Speculative? Definitely. Gambling? Yes if you carry the same mindset as in buying a lottery ticket or go into a casino.
But for those of you who are willing to invest time, energy and effort with undying persistencies, it will worth its weight in gold. No free lunch in this world. This applies to every thing in life. If you prepare to adopt a different mindset (very different in other field such as employment), you will be rewarded handsomely. The only problem is most people will give up after a streak of loss (might be deep pocket money loss). So in short,
The profit potential in forex trading is the sky.... heh heh heh... actually the sky is also not the limit!!!
Update 13th May 2012
Wow! I got good news. According to a recent report covering profitability and performance of US based forex brokers by forexmagnates, 39% of forex traders are profitable. According to the report, the number of US based forex retail accounts held with brokers showed a significant drop (11,000 accounts reduction) in 2011. Hmmm, maybe this is due to the small leverage imposed by the US Government (1:50 only) and also the non hedging policy.
![]()
Well, I guess that thought has long leaved my mind. Now, forex (yup, I am serious) looks way more enticing than shares.
I know. I know. Some of you would say, "What? Are you out of your mind? Trading forex is so dangerous! More than 95% of forex traders lost money in a very short time!" While others would add, "You are going to get burnt. Far worse than shares!" Scroll to the end of the post for some GOOD NEWS!!!
To be honest, I also have the same thought before I step into the world of forex. I, an ex-forex dumbo, also thought forex is the fastest way to the poor man house. Ever so as I heard Bank Negara also lost a lot of money in forex. "With those professionals in the bank, they can't make money. My chance of making money in forex will be close to nil, if not negative", this thought lingered in my mind for quite so time. And to make matter worse, Malaysia Government has declared that forex trading is illegal and recently it is "haram" for Muslim. Thank God I'm not a Muslim but I still see lots of my Muslim friends continue indulging in forex trading.
Despite all that negative and unfavorable surroundings news revolving around the world of forex, I did take my dive into forex. Why? Sound rational and much better than stock trading after I got some introductions from my highly charged forex spirit brother plus a little help from Mr Google.
How is trading forex better than shares? Well, for one, one can make profit (of course loss also) when the currency pair goes UP or DOWN while in Malaysia, one can make profit in shares only if it goes UP. ANd that's why I can hold shares for ages (well, actually until the company went bust!) hoping that they will one day, at least, go back to the value I bought them.
Unlike shares, trading forex requires only a small amount of capital. Of course, you can start with as litttle as $100 but most of the time, the capital will vanish into thin air. The relatively small capital is just too prone to margin calls and when that happens, most of the time, it will be gone forever. After trading for years, I find a $2,000 capital is ideal for me to work on. So forex is a business with low barrier entry!
And in forex, one can use the ever powerful tool known as leverage. Trade more than what you have. Yes, that's margin. It is like when one buy a house, you put down a certain amount of money and the rest is financed through mortgage. If the house price increases, you make a bundle! Of course, this leverage stuff is very dangerous if you don't know what you are doing. It is like driving a race car without any training. Surely the outcome would be disastrous.
Being used to trading shares, the stock exchange is open like a normal shop or bank. Office hours, five days a week. But in forex, it is 24x5. Almost. Well, it means it open throughout the day from Monday to Friday. How is that possible? Well, it is because forex trading involves banks. When one bank closes in one country, another one opens in another country. That is how the world of forex is kept awaken through out the normal business days. So this means more trading time, forex is like an online store compared to a brick and mortar shop. One can do trading after work or even during the middle of the night. Man, isn't this flexible?
Ooh ...ooh.... before I forget, did I mention the low charges in forex? Don't believe those forex brokers sites that mention there is no commission in forex trading. There is, they come in the form of SPREAD, the price difference between SELL and BUY (usually a few pips). For those that have no spreads, one would have to pay a few dollars for a certain volume of trading the currency pairs. Anyhow, this commission is REALLY REALLY LOW if compared to buying shares. Man, do I LOVE forex?
Yup, for some of you who are reading this who are risk averse, you might say that it is very risky. Risky? Yes, if you don't know how to control the risk. Risky if you go into it thinking that it is easy to make money without any hard work. Risky if you cannot stomach losses! Speculative? Definitely. Gambling? Yes if you carry the same mindset as in buying a lottery ticket or go into a casino.
But for those of you who are willing to invest time, energy and effort with undying persistencies, it will worth its weight in gold. No free lunch in this world. This applies to every thing in life. If you prepare to adopt a different mindset (very different in other field such as employment), you will be rewarded handsomely. The only problem is most people will give up after a streak of loss (might be deep pocket money loss). So in short,
The profit potential in forex trading is the sky.... heh heh heh... actually the sky is also not the limit!!!
Update 13th May 2012
Wow! I got good news. According to a recent report covering profitability and performance of US based forex brokers by forexmagnates, 39% of forex traders are profitable. According to the report, the number of US based forex retail accounts held with brokers showed a significant drop (11,000 accounts reduction) in 2011. Hmmm, maybe this is due to the small leverage imposed by the US Government (1:50 only) and also the non hedging policy.
