'The Forex Market Is Active 24 Hours Per Day'

• While it is true that the Forex market operates 24 hours per day, this is not reason enough to participate in this market. If you work a day job and want to develop your trading skills, you might be considering Forex as a major market that trades during your evening hours. However, the major moves that take place in most currencies occur at similar times every day. If you trade the U.S. dollar against the euro, for example, you will find less activity in the evenings than during the morning hours, due to the time zones of the major participants.
  
  

'Leverage Lets Me Make a Lot of Money'

• Leverage is the ability to purchase more financial products, such as Forex currency, than your actual cash balance should normally allow. The Forex market is highly leveraged, and this attracts novice traders with little capital. In the U.S., you can purchase $50,000 of currency with only a $1,000 cash deposit. This does indeed increase your profit potential, but most novices fail to equally consider the risks. Consider an exchange rate of 1.21 that moves to 1.20. This is a fluctuation of only one penny. If you maxed out a $1,000 account with full leverage, you would lose approximately $416 on this tiny difference. That is more than 40 percent of your account lost due to a single penny difference in the exchange rate. Leverage works equally for and against your bottom line, and is the downfall of most novice traders who cannot trade consistently well.
  
  

'My Broker's Special Software Is the Key to Success'

• Forex brokers face stiff competition in this market. More than 10 times the trading capital of the world's combined stock markets flows through the Forex market every day. Brokerage firms are innumerable and they all compete for customers. Thus each broker offers proprietary trading software complete with advanced charting features and impressive interfaces to entice traders to their system. However, despite these tools, the vast majority of Forex traders fail. New laws in the U.S. require Forex brokers to publicize the profitability of their customer base. Typically well over half of all Forex traders lose money.
  
  

Warning

• Forex trading is unlike many of the myths that surround this market. If you wish to learn Forex trading, open a risk-free demo account with a broker. You can trade in real time and develop your skills while using fake investment capital rather than real money. This is an important step to gauging the Forex trading process and learning strategies.