Recently, a friend asked me whether foreign exchange investment can make money. I want to share some of my experiences over the years, especially for beginners interested in getting started with forex trading.

To be honest, the forex market is indeed a good opportunity. The global daily trading volume exceeds 6 trillion USD, with liquidity being extremely high, far surpassing stocks and futures markets. In the past, forex investment was mainly a game for financial institutions and large capital players, but now with technological advancements, retail traders can participate easily. Over 30% of daily transactions come from retail traders like us.

However, I must be honest—this market is not a paradise. Statistics show that 70% to 90% of individual investors have lost money, so it’s crucial to do your homework before entering forex trading.

First, you need to understand the different ways to invest in forex. The most basic are currency exchange and foreign currency savings, which carry lower risks and are suitable for beginners. But if you want higher returns, you should learn about forex margin trading, also known as “forex trading.” This method has a low entry barrier, allows 24-hour trading, supports two-way operations, and offers high flexibility.

The core of forex margin trading is leverage. Simply put, it’s using a small amount of money to control a large position. For example, if you deposit $1,000 and use 100:1 leverage, you can trade $100k. I’ve seen people use 200:1 leverage, where a 5% price movement can result in a profit or loss of $10k. That’s why some people get rich overnight, while others go bankrupt overnight.

My own experience is that leverage is like a double-edged sword. It not only amplifies profits but also magnifies risks, as well as human fears and greed. Therefore, beginners should use low leverage—many experienced traders stick to 10:1 or less.

When choosing which currency to start with, I recommend high-liquidity, low-volatility currencies, such as EUR/USD. These currencies have low spreads, low trading costs, and easy access to information. If you’re a beginner, avoid highly volatile currencies—they carry extremely high risks.

When selecting a platform, make sure to check for regulatory compliance. Reputable regulators include the UK’s FCA, Australia’s ASIC, and the US’s NFA. Platforms without proper licenses pose significant risks, such as scams or withdrawal issues.

Over the years, I’ve summarized a few key insights: First, learn fundamental analysis—pay attention to political, interest rate, and economic data that influence exchange rates; second, develop a solid trading plan and avoid frequently changing strategies; third, always set stop-loss and take-profit levels—exit the market once your target is reached; fourth, start small with demo accounts to practice; fifth, have a clear understanding of risk—don’t trade with money you can’t afford to lose.

Forex trading can indeed be profitable, but high risk is something you must understand. If you can handle the risks brought by leverage and prepare psychologically, it’s a good idea to start with demo trading and gradually gain experience. Remember, successful traders are made through long-term learning and training—there are no shortcuts.