Just gathered some insights about foreign exchange investing, and sharing them with friends who want to get started.

Many people ask me whether forex trading can make money. To be honest, opportunities do exist; the global daily forex trading volume exceeds $6 trillion, which is several times larger than the stock and futures markets. But in recent years, retail investors participating in forex have also experienced high losses; statistics show that 70-90% of individual investors have had losing experiences.

Why is that? I think the key reason is that many beginners don't understand how to use leverage and margin.

Let's first talk about the various ways to invest in forex. The most basic methods are currency exchange and foreign currency fixed deposits, which carry relatively low risk and are suitable for beginners. But if you want to profit from exchange rate differences, you need to use margin trading. The advantage of this method is low entry barriers, 24-hour trading, and the ability to go long or short. The downside is that the risks are also high; a single fluctuation can wipe out your principal.

Regarding leverage, this is the area where forex trading most easily causes problems. Leverage can amplify your gains, but it also proportionally increases your losses. For example, if you deposit $1,000 and trade with 100x leverage, a 5% change in the exchange rate could result in a profit or loss of $5,000. That’s why many emphasize that beginners should use low leverage, ideally within 10x.

When choosing currency pairs, I recommend beginners start with high-liquidity mainstream currencies, like EUR/USD. The reasons are low spreads, low costs, quick access to information, and relatively stable price fluctuations. If you lack sufficient trading experience, it’s too risky to trade volatile commodity currencies (like AUD, which is affected by commodities).

When selecting a platform, be sure to check for regulation. Globally recognized regulators include FCA, ASIC, and NFA. If a platform doesn’t have licenses from these authorities, I suggest avoiding it. Legitimate platforms won’t have issues like managed account trading, signal calls, or withdrawal difficulties.

My own experience in forex trading over the past few years is: First, study the fundamentals and pay attention to political and economic events that influence exchange rates. Second, always have a trading plan and avoid frequently changing strategies. Third, always set stop-loss and take-profit levels; exit decisively when targets are reached, and don’t be greedy. Fourth, beginners should start with small positions to accumulate experience under low risk. Fifth, practice with demo accounts first, and only trade with real money once you’re confident.

Forex trading indeed offers opportunities, but the high risks of leverage trading must be understood in advance. If you can handle the risks and are mentally prepared, start with demo trading. This market tests not only your skills but also your mindset and discipline.