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Can I trade currency myself?

You don't have to be a financial expert to trade currency. In fact, all you need is a bit of patience and about $300. If you get it right, you can make a lot of money from foreign currency exchange, or forex, but it's important not to underestimate the risks.

Brokers have to have a deep understanding of the market so they can try to anticipate what's going to happen next and act on it. Nothing is certain and all brokers expect to make some losses, but for smaller traders these missteps can be devastating. For example, when the Swiss National Bank removed a cap on the Swiss franc in January 2015, the euro plummeted by 30% against it, leaving many Australian independent traders facing major financial difficulties.

As a result, we wouldn't recommend trading currency yourself. However, if you're still keen to get more involved with foreign exchange it's important to be aware of a few key points.

Firstly, the biggest pitfall traders face is leverage. A bit like a mortgage, this system allows you to pay as little as 2% of your investment up front and borrow the rest. This means huge returns if the market goes your way, but devastating losses if it doesn't. Without proper protection, small-time investors can find they're accountable for millions. 

New regulations have been introduced to increase protection, but it's important that you protect yourself as well. You can use a 'stop loss', which lets you set a figure to sell at so you don't lose more than you can afford, or initiate 'forward contracts', which guarantee you always make your budget rate, whatever happens to the market.

Before putting up any real cash, it's worth doing plenty of research. eToro.com lets you watch and follow other traders to pick up tips, and forex.com has a demo site where subscribers can practise with 'play' money. Keeping an eye on financial news sites like FT.com and DailyFX.com will help you to stay up to date with the market's movements.

Even the most experienced traders can't be 100% sure whether they're onto a big win or a bigger loss. It's exciting, but to send money abroad safely, contact a certified broker. They know how to get the best exchange rates on the market, making it the cheapest way to send money, and a far less risky prospect.

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Alex Larsen

I've been struggling to find a way to make regular transfers to my Norwegian account from the UK (where I work). Finally I've at least got some pointers for where to start, so I won't have to pay a fortune every time I transfer!

Martin Ham

Very useful information and fairly up to date! I would definitely recommend the site for anyone interested in exchanging currencies!
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