I hear great things about people who trade currencies and the profits they make. I only have $1200 to invest but wouldn't it be worth risking putting the money into currencies if the returns are better?

Everyone likes to tell the story about how they made a million in a day but they don't like talking about the 5 million they lost just before that, if you get my meaning.

Forex has risks, as with all trading. Question is whether you can afford the risk. Looking at what you say you got I'd say you can't afford that.

Just my opinion.

Forex seems to especially have high risks associated with it. The big difference between forex and stocks is that stocks will generally accrue value, so everybody has a chance to make gains.

The problem with forex is that you only make gains by someone else making losses - and as there are a lot of experienced players out there on the foreign exchange markets, you need to be able to play better at them to make your profits.

Hell, if you've only got $1200 to invest then you sure would be taking a big risk to put it all in Forex.

Forex is a high-risk/high-gain market, and to me it's not something you invest in unless you have a very good idea of how markets work, and are prepared to accept you could lose all your investment.

If you only have a limited amount to invest, then any kind of general equities investment fund is going to work better for you in the long term - stable returns and less risk.

That's just my opinion, though.

I think this would be a scary thing to try and invest in.. Yikes! I know that we always played with foreign exchange rates, living in the United States but with all our relatives in Canada. Currency rates flip flop like mad. I know my mother was really good at getting the most out of her Loonies but I'd be scared to do it.

I agree with Finance Administrator. If you're a gambler and can tolerate the loss of the whole $1200, then go nuts. Or better yet, make a few bets on the Kentucky Derby . But if you care about the $1200 principle put it in the stock market or a stock mutual fund if you don't know much about individual stocks. As usual, This is all my humble opinion only.

I agree that FX is a kind of gambling, otherwise, nobody would risk their money with less chances of winning. It is still a matter of luck. Another thing that relates FX with gambling is the fact that both are dependent on patterns, previous patterns of wins and losses. IMO, a good gambler can be a good FX trader.

If you are interested in forex trading then, READ UP. It takes a while to be come knowledgeable enough to become comfortable with the forex. I think it took me a week to finally know what a pip was. There are sites that offer some good information on forex and a virtual account. Go there first and study.

Yah, study and more PRACTICE. There are lots o free demo accounts before you really invest. Make the most of them.

Good advice everyone. Just wondering if everyone can list URLs that have free tutorials and information of how the most successful investors do it?

$1200 is certainly NOT enough to start trading in the FX-markets. However, there is a new proprietary approach to this that will allow a start up with limited risk at @3000 to 5000 in start capital.
Mark Vincellette in the US has recently created a revolutionary new investment system that allows the complete amateur to invest in the Foreign Exchange market in a hands-off fashion. The risk management built into the system is really crucial, because most new users of traditional trading software, easily spending 5000 dollars just to get started with the software and necessary training, typically lose all the invested capital in 60 days. On top of that, they tend to get glued to the computer screen for hours a day (and partly during the night).
The new system uses a proprietary software where hedging of positions combined with limit orders allow the user to set it and forget it (until an alert is received). Typically, the management of any size portfolio takes less than 30 minutes per week. As with all such programs, previous profits are no guarantee for future results, but the potential of double digit returns per month (rather than per year) makes this highly attractive for many investors. When the principal may double in 6 months rather than 6 years, quite some attention is invoked.
At the moment, the knowledge of this system among the general public is close to non-existent, with about 3000 users in about 60 countries world wide. After a deliberately careful and slow start about a year ago, the number of users is now picking up momentum. One reason for that is the incredibly low cost of a user license at 100 dollar per month. The fact is of course that nobody would continue paying the license without making more profit than that using the system. The proof is in the pudding in the sense that the retention rate is very high.
Fortunately, there are many ways to place money to make them work for the investor. The presented software is one of them and a highly interesting one at that. One important aspect of the program is the very low time-demand to manage it properly. This makes it quite possible to use this system without getting in trouble with a busy schedule.
Questions and comments are welcome:
Knut F Garshol

That is very good information, and I would keep that in mind. I think that the more you put in the better position you have in trading.

I would like to just give my 2cents worth here. I have been a Forex trader for about 2 years and never lost more than 10% of my account at any time. So that would put me in the top 10%, since most traders burn out their trading accounts within the 6months of trading.
Forex trading is not "Gambling" as many of you would believe. Its a matter of proper trading strategy, discipline and money management. If you even lack one, failure is certain. Most beginners to forex trading, or just plain trading for that matter, believe that all they need is some magical system or strategy that will churn out money for them and spend most of the time in the pursuit of this. Infact its the last criteria on the menu of a successful trader, Money management and discipline being the first two.
Trading takes study, lots of it, adequate capital and patience.
If you want to enter the forex markets :

1) be adequately capitalized, being underfunded is sure recipe for failure.
2) read and read more, there is sufficient information on the net available for the beginner.
Forex Education, Forex Training, Beginner's Guide to Forex Trading - BabyPips.com is a good primer to those who wish to learn the basics
3) Remember, there is no magic system or strategy to trade the forex markets.
4)If you would like to profit from the forex markets but dont know how to trade forex, get your money managed by a Forex money manager. It might cost you a little out of your profits, but you sure the hell can make more money than the mutual funds and ETFS.
5) 90% of information out there on the net regarding trading systems is bogus, all you ever need to learn is mostly available free on the internet, so dont waste your money.
Let me know if I can help in any way.
Anyone telling you otherwise has no idea about what trading is all about.

Regards

Thanks for the post and welcome to the FM forums, FXInvestor.

It's really a shame those days I spent offline the past week because I was needing information on Forex trading and the information provided by FXInvestor would be very handy, but still quite userful.

Thanks for sharing it.

FX..thank you so much for that advice. But I have to ask you a question. What if you have a minimal amount of cash to deal with? What would you suggest then?

Hmmm. The small account problem, how about hedging with another pair? Has FXI tried this? If not, why not? I'm an FX newbie too my play money is GBP 1,400.

Let me try and address the problem of a small capital.

Lets try and get a better perspective on trading. Forget all those fancy stories that you have heard about people making millions in the stock market. For every millionaire that is standing, there are a multiple of millions who have lost money, as if you understand trading..... it is a ZERO sum game. The winner can make money only if there is a loser at the other end.

Starting with capital less than 25k is not going to make you a hell of a lot of money. Please remember that you NEVER make 200%.400% or more returns every year as many will have you believe. Most top performers do make consistently about 10-20% at the lower end and sometimes 60-100% on the higher end.
So for a account of 1000$, that is just 100$ to 200$ per year at the lower end and 600-1000$ at the higher end. You can be sure that most of the time the returns are at the lower end, which is better than most what is available from other investments. Forex and stocks are are high risk high reward investments. In the wrong hands you can lose it all. Even in the right hands you can lose it all. Keep your head and comman sense about you before you invest.

200$ a year is just about 18+$ a month. It does not look very attractive now, does it? Remember, the equity may dip below your original principal before it goes up. This makes it harder to recover the losses and hence for a smaller account it is just not worth it.

Hedging :
You end up making the broker happy. There are few traders who employ hedging, but its not something I would advise.
Even employing the Freedomrocks software and principle, you would see such wild fluctuations in your account before you make profit.

Regards

Andy, wait for a few months where you can build a safe capital of atleast 15-20k $ before investing in stocks or forex. Till then try CD's or bonds.

Sorry for the double post

FX...what are your thoughts on people doing their own research as opposed to giving money to an investor to deal with? I have always done better doing my own research and have actually lost money with brokers! Why is that??