As we all see there are lots of articles mentioning about the advantages of investing in Forex. Well, actually yes, the writers may be right, there are more advantages than other instruments. But on the other hand, I can tell you about many dangers, risks and tricks about forex market.

As a result, if you want to be a real forex market investor, you have to, not have to, you must know some points about trading in forex.

Lets start talking about Forex market.

First things first: A little bit Forex History

Well, Forex is not an old market. Just about twenty years ago, Forex was only a market that the countries' national banks took part. And also we may mention about some international or multinational companies. Thats all, there were no individual accounts and small investors in Forex. It was a virtual platform that generally national banks exchanged currencies between each other.

After 1970 's, when the 1980 's came, some new regulations and investment terms met with forex. By these regulations, individuals, lets say small sized investors found opportunity to trade in Forex.

Trading in Forex

Because of not having a cash amount as national banks, there had to be new definitions about trading and account types. So leverage system was born in 1980 's to let individuals for trading in Forex. By the help of the leverage system, a small investor found opportunity to trade. For example, $100.000 with his $1.000 cash in his account. That means, for this account, you can open a position which has a volume of $100.000 by blocking your $1.000 from the account as a deposit to handle it in Forex.

So as you see, even a small investor can buy or sell $100.000 with $1.000 cash in his account. I am sure you all can see that leverage system lets the investor to open a position ( buy/sell )easily, but on the other hand, it also makes the investor to take more risks on the position he opened.

As I mentioned above, an investor opens a position by buying or selling some amount of currency relative to other currency. For example, if you want to buy 1 lot of USD against CHF, then it also means that you sold 1 lot of CHF against USD. Both sayings are the same and true.

In forex, investors buy or sell currencies, but it is obvious that, it has to be done with the convertible money units, which its country has a stable economy. That is because of not willing to have a liquidity problem afterwards. You have to find another investor who wants to buy what you want to sell. If not, you can't find any buyer and there will be a liquidity problem. And also, if the countires' economy or political situation is not stable and strong enough, there can be many big price moves or changes happen on the values. So thats too dangerous for the investors in Forex.

Then now, we may underline the main obligation: Reading, researching for all countries' situation of politics and economy. Thats the main point. An investor in Forex market must be well educated about politics and economy of all countries.

The second obligation : Finding a broker to open an account in order to open and close the positions ( transactions ). The investor has to find a reputable brokerage company and also a broker. It will be the best if your broker has registration to Futures Commision Merchant in Commodity Futures Trading Commision. That can lower the risks in forex trading, but never makes it zero. Forget about zero risk.

Opening an account in a brokerage company is all about filling out a complicated form and reading instructions, Terms Of Service etc. In addition to this, some initial deposit of between $1.000 - $10.000 ( depends on the brokerage company ) will be offered for a standart account.

Now in 2000 's, online Forex trading is possible. There are a lot of brokerage companies for those investors coming to Forex market for the first time. They can provide his new customers to simulate their accounts. This situation gives a great opportunity to understand and live trading as real, and lets them to have a little bit experience.

In addition to that Forex simulations, there are some very useful and popular tools that are always used in Forex trading such as, real time quotes, news headlines, price charts, technical analysis tools.