Forex Trading: Can You Really Make Money Trading Forex?

The notion of trading foreign exchange (Forex) currencies may sound like a fairy tale. You're doubtless asking yourself if there is any possibility that you can earn cash trading Forex?

If Forex prices stayed fixed then you'd expect there to be a clear win/lose for every currency deal made. But that view is way, way too simple. OK, if the deal was for me to sell you real dollars for real dollar notes, there's unlikely to be a winner or a loser. Of course, if you offered to sell me $500 for $400 then you'd lose $100 on the trade and I'd win the same amount.

Of course, since it's real life, Forex trading isn't quite as easy as in that example.

The exchange rate between any two currencies is a moving target. Just look at the graphs and you'll see how much movement there is in an hour, let alone a day. Then remember that whilst dealing Forex can be simply selling Australian Dollars to buy Roubles. I could change my dollars into euros first, if the mood took me. Or if I thought making two exchanges would be better than making one. Even after the trading fees.

If you're just starting Forex trading, it will pay you to go through at least one of the online Forex courses available.

Next put your toe in the water. Make a real deposit in a Forex trading account.

Don't waste your time or effort with the demo accounts you can get. It just isn't the same thing. If it's not your own money it's unlikely you'll make the same decisions (think how your tax dollars get spent, for example). If you don't believe this, go ahead and open a demo account. But pay attention to your stomach when you make a trade. If your stomach doesn't churn when you stand to lose your make-believe dollars (and chances are that it won't) then you need to decide whether or not you'd react the same with actual hard cash. My bet is that you won't trade real cash anywhere near the same way.

Which means your first foray into Forex trading should be with real cash. Cash you can afford to lose. But it is still cash.

Next up, unless you want to be glued to your computer screen 24 hours a day, get some Forex software to help you. At the very least, you want a program that will quit out of a winning or losing trade at a given level. It's called a stop loss if the trade is losing. And it's good practice to quit a trade when you're ahead.

Find out more about automatically trading Forex here.