We hear of traders spending years and decades trading Forex but barely making a living. What is going wrong? Take too much risk and you burn out. Take too little and you fumble along never making any serious money. You must have some savings in a savings account, an IRA, or company k plan, even if you do not have a taxable brokerage account.

If your only savings consists of equity in your house, you have capital but it is not liquid. You would not be able to sell your house in days in order to pay a debt to a broker. Do not even consider speculating in Forex if you have no liquid capital at all. A focus on high-leverage Forex can also put your overall portfolio management out of whack.

This is disproportionate. By adding Forex to your portfolio, you have ruined the entire portfolio.

A little voice will nag at you every time you make a gain. You will be tempted to listen to the little voice. What Is Forex? Up to USD. Please disable AdBlock or whitelist EarnForex. Thank you! EarnForex Education Forex Course. What I mean by this is you will undoubtedly come across the idea of some type of magical formula or system, or even indicator that can make you rich. Can you imagine the generosity of someone who makes that kind of money to give you these powerful tools for just a few dollars?

Or, is it more likely that they are trying to sell you something to make money rather than use it for their own account?

The reality is that the most profitable advice that people can give you is to simply dial back the leverage and use psychological discipline, something that most people fail miserably at. In fact, a serious argument can be made for the system being somewhat irrelevant, as even some of the most basic trading systems have been proven to make money over the long run.

The question then becomes whether or not you as a person can psychologically take trading.

However, beyond making a few thousand dollars here and there, I have gained much more than monetary value trading Forex. One of the biggest surprises for traders to stick with it is just how much it opens up your eyes to the rest of the world. You begin to look at the psychological aspects of everything, and some of the lessons that you will learn far outweigh anything that you can gain in a bank account.

I think at this point the most important thing to take away from this article is that Forex should be thought of more or less as a puzzle. However, having the ability to use so much leverage can teach you lessons about becoming a better trader in other markets as well.

Risk Warning

As soon as you realize just how deadly leverage can be, as well as helpful, you then begin to learn how to become a true trader. In fact, some of the best traders I know started out in Forex and then got involved in other markets such as bonds or oil.

At the end of the day, you learn market dynamics with a very small deposit, and several life lessons. Beyond that, if you do learn these lessons, you can make a strong return on whatever money you do have. Christopher Lewis has been trading Forex for several years. He writes about Forex for many online publications, including his own site, aptly named The Trader Guy.

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Some hard truths.