When the stock market wobbles, you might want to look for a quick score by investing in foreign currency. But I have some amazing new stats on this game of chance that you’ve got to hear.
For years and years, I have warned against foreign currency trading. It is something a lot of people got into when they lost faith in investing in the stock market, especially when stocks tanked and hit a low three years ago.
It was also something people got into when they lost faith in the U.S. dollar because of all the moves the Federal Reserve did to try to prop up the economy by pumping dollars into the system.
And whenever you get on the web, it seems you can’t surf very far without hearing that siren song about getting rich and all the rest.
When it comes to foreign currency exchange, it’s been my belief that the kitchen is too hot even for those who do this full time as professionals. So the idea that you as an individual opening an account and trading after you’ve listened to a tape, watched a DVD or taken a course will be smarter than the average bear and make a boatload of money is just not the case.
But don’t just take my word for it. A recent Wall Street Journal analysis found that between 70% and 80% of people who got involved with FXCM, a foreign-exchange broker serving retail customers, lost their shirts.
If you know guys (or girls, but it’s mostly men) who are fired up about this, I want you to warn them away. The only money you should ever put into this is what I call ‘sleeping money.’ That is, never put more money in than will keep you from sleeping at night. If you want to play the tables, it better be money you’re not going to need that you won’t be sorry you lost.