Forex traders will more likely lose than gain. Forex deals with large volumes over small margins, and high frequency trades. “You’ll always be up against sharks who use algorithms, candlesticks, RSI, Bollinger bands and similar indicators, which you don’t have. Forex is the shark’s territory, the small fish always gets eaten,” says Robert Ochieng’ an investment analyst.

Apparently, when beginning to trade forex, the broker will request you to install an application which will allow you to trade for yourself.

“What he will ask you to do is fund your account up to a certain amount then lend you more money as a trusted client. What he will not tell you, though, is that there are pension funds and investment banks trading Forex using algorithms and a ton of data, with access to the latest news and the capacity to take huge losses,” says Mr. Ochieng’.

Strikingly, though, many of the existing forex trading online platforms will have a warning to potential traders that they should only trade what they can afford to lose.

Edna Gakii: What I learned about investing after losing big money in forex trading

In addition, the broker might have other traders shooting your trades. “This means that there are traders betting against you, such that when you lose money, they gain money.” The big concern, nonetheless, lies in internet speed. “By the time your trade goes through, it is highly likely that the prices will have changed. Chances of you effecting trades using data that has already changed is very high.”

Isaac Thendeu attests to this: “I lost Sh. 50,000 for the first six months when I started. This was because I was using the materials my broker provided, which is self-defeatist in itself. I realized that these companies couldn’t just give you easy money just like that,” he says.

Isaac, though, says that 95 per cent of forex traders make losses! “Retailers go into losses because when the market indicators tell them to sell, the bulk buyers who trade in billions go against them, meaning their sell orders return losses.” Apparently, the only way for new forex traders to learn about forex is through online MTF education materials provided by brokers.

According to Isaac, these give the brokers prior knowledge of every move you’re likely to make at the market, allowing them room to go against your bets in order to gain! It was only after realizing how the market tide worked, Isaac began to swim along the bulk traders’ current.

“I check how the indicators are asking retailers to do then I confirm with the available volumes and how shark traders are likely to go then I make my move,” he says. “Though high risk, it is profitable. If I could have Sh. 8 million and above ($100,000), making Sh. 1 million per day would not such a big deal!” says Isaac.

Nonetheless, as Isaac confirms, not every trader has lasting bad Forex experiences. Take Peterson Otieno for instance. He began to trade Forex in early 2008 and after a series of losses, he is now trading profitably on full time. “It took me years of patience. Severally, my investment of Sh. 90,000 ($1,000) was wiped out, but I didn’t give up,” he says. “I examined what I was doing wrong and how I could turn my loss-making streak into profit.”

Apparently, Peterson says that he noticed that he was over-trading out of greed and using too much leverage. “If my first position made a return, I would open five other positions in a bid to make more. In the process, both my gain and investment would be smoked into thin air.”

He adds that after he began to include extreme analysis using the market technical and fundamentals, he made his first profit of Sh. 9,000 ($100). “I am glad that since then, I have recovered my previous losses,” says Peterson, adding that forex is a high risk business that shakes the insides of any trader.

According to Eric Nyamu, a forex trading analyst, forex trading is similar to investing in stocks. “It is more profitable, though due to price swings!” He notes that traders can start trading in forex with zero capital by opening a forex account called ‘No Deposit Forex Account’.

To begin with, you must do demo trading before you start trading forex live. This includes a practice on how to trade forex profitably for three consecutive trades. “Thereafter, you can open a forex account with any of the existing forex brokers,” he says.

According to David Rodriguez, a forex market analyst at DailyFx, traders are more likely to lose more money on their losing trades than they make on their winning trades. “In forex trading, it is always wise to cut your losses early. When your trade goes against you, take a small loss and close it out.

Conversely, when a trade is going well, do not be afraid to let it continue working. You may be able to gain more profits,” he says, adding that your trading should have a stop and limit set to a risk or reward an equal ratio.

“Whenever you place a trade, ensure that you use a stop-loss order. Always make sure that your profit target is at least as far away from your entry price as your stop-loss is.” Noteworthy, your stop-loss order should reflect the current situation in the market, including volatility, resistance levels and support, at the time of trading.

According to Peterson, leverage at the forex is the double edged sword that executes investments of new traders, and which anyone looking to start forex trading should be wary of. “It is commonly used by new traders and works against them. This is unlike banks which doesn’t use leverage,” he says.