Investors looking to enter the world of foreign exchange can find themselves frustrated and quickly spiraling downward, losing capital fast and optimism even faster. Investing in forex—whether in futures, options, or spot contracts—offers great opportunity, but it is a vastly different atmosphere than the equities market.
Even the most successful stock traders can fail miserably in forex by treating the markets similarly. Equity markets involve the transfer of ownership, while the currency market is run by pure speculation. But there are solutions to help investors get over the learning curve: trading courses.
- As an individual trader, it's never been easier to get access to forex markets from several online and mobile providers.
- With easy access, beginners may find it in their best interest to read up on how the forex market works and to hone their skills and knowledge with a forex-specific trading course.
- Courses are offered both online and in-person.
- Keep a look out for the course provider's reputation, feedback from past students, and if the course has professional accreditation or certification.
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Types of Forex Trading Courses
When it comes to forex trading courses, there are two main categories:
- Online courses
- Individual training
Online courses can be compared to distance learning in a college-level class. An instructor provides PowerPoint presentations, eBooks, trading simulations and so on. A student will move through the beginner, intermediate and advanced levels that most online courses offer. For a trader with limited foreign exchange knowledge, a course like this can be invaluable. These courses can range from $50 to well into the hundreds of dollars.
[Note: Investopedia's Forex Trading for Beginners Course offers an in-depth introduction to forex trading developed by John Jagerson, a CFA and CMT charter holder and founder of Learning Markets. With over five hours of on-demand video, exercises, and interactive content, you'll learn how the forex market works, how to analyze currency pairs, how to build strategies, and much more. The self-paced online course includes lifetime access and a money-back guarantee.]
Individual training is much more specific, and it is advised that a trader have basic forex training before taking up this option. An assigned mentor, typically a successful trader, will go through strategies and risk management with the student but will spend the bulk of the time teaching through placing actual trades. Individual training runs between $1,000 and $10,000.
Qualities of Good Forex Trading Classes
No matter which type of training a trader selects, there are several criteria to consider before signing up.
The Reputation of the Course
A simple Google search shows roughly two million results for "forex trading courses." To narrow the search, focus on the courses that have solid reputations. There are many scams promising giant returns and instant profits (more on this later). Don't believe the hype. A solid training program won't promise anything but useful information and proven strategies.
The reputation of a course is best gauged by talking with other traders and participating in online forums. The more information you can gather from people who have taken these courses, the more confident you can be that you will make the right choice.
Certification for the Course
Good trading courses are certified through a regulatory body or financial institution. In the United States, the most popular regulatory boards that watch over forex brokers and certify courses are:
- The Securities and Exchange Commission
- The Chicago Board of Trade
- The Chicago Mercantile Exchange
- The Financial Industry Regulatory Authority
- The National Futures Association
- The Futures Industry Association
- The Commodity Futures Trading Commission (CFTC)
Not all trading course or system promoters are required to be members of the National Futures Association or registered with the CFTC, but most of the reputable ones are, and they adhere to these bodies' code of ethics.
For those thinking globally, be aware that each country has its own regulatory boards, and international courses may be certified by different organizations.
Time and Cost
Trading courses can require a solid commitment (if individual mentoring is involved) or can be as flexible as online podcast classes (for internet-based learning). Before choosing a course, carefully examine the time and cost commitments as they vary widely.
If you don't have several thousand dollars budgeted for one-on-one training, you are probably better off taking an online course. However, if you plan on quitting your job to trade full-time, it would be beneficial to seek professional advice—even at the higher cost.
Staying Away from Scams
"Make 400% returns in a day!" . . . "Guaranteed profits!" . . . "No way to lose!"
These and other catchphrases litter the internet, promising the perfect trading course leading to success. While these sites may be tempting, beginning day traders should steer clear, because absolute financial guarantees in the world of foreign exchange just don't exist.
Unfortunately, the rise of online trading, electronic platforms, and open-access marketplaces have fueled a parallel rise in scams. The Commodity Futures Trading Commission (CFTC) has long been concerned about dubious courses designed to prey on the unsuspecting. "The CFTC has witnessed increasing numbers, and growing complexity, of financial investment opportunities in recent years, including a sharp rise in foreign currency (forex) trading scams," it warned in a release, as far back as May 2008.
To ensure a trading course is honest, read its terms and conditions carefully, determine whether it promises anything unreasonable, and double-check its credentials and certification for authenticity. In particular, beware of sites that prominently display hypothetical returns, or that show actual returns without the stipulation to the effect that "past performance is no guarantee of future results."
If you think you've been defrauded, contact the CFTC. The Commodity Futures Modernization Act of 2000 (CFMA) made clear that the CFTC has jurisdiction and authority to investigate and take legal action to close down a wide assortment of unregulated firms offering or selling foreign currency futures and options contracts to the general public."
Other Types of Forex Trading Education
While trading courses offer a structured way of learning foreign exchange, they aren't the only option for a beginning trader.
Those who are talented self-learners can take advantage of free options online, such as trading books, free articles, professional strategies, and fundamental and technical analysis. Again, even though the information is free, make sure it is from a credible source that has no bias in how or where you trade.
This can be a difficult way to learn, as good information is scattered, but for a trader starting out on a tight budget, it can be well worth the time invested.
The Bottom Line
Before jumping in with the sharks, getting trading advice in the highly volatile forex marketplace should be a top priority. Success in dealing with stocks and bonds does not necessarily breed success in currency. Forex classes and trading courses—either through individual mentoring or online learning—can provide a trader with all the tools for a profitable experience.