On Investment - Forex

I was just surfing at random, suddenly thought about forex, after watching Wall Streets: Money Never Sleeps. And the thought of forex reminded me of 2 events: A recent conversation between my vocal teacher and a clubmate about learning Forex. And also, a financial course I've attended before on stock trading.

I was told before that there's no one in this world that made his/her fortune out of Forex alone, unlike entrepreneurs, stocks investors, etc. Just checked my facts on the net and it seemed true. Even the only one person who succeeded it (George Soros), only becomes bloody rich cos of just one extremely successful speculation, rather than it being a continuous process.

I actually felt that I should advise my clubmate about the risks involved (even though my understanding of Forex is only very mediocre), especially for someone who probably is new to the investment world. I actually noticed a further pattern in people who are obsessed with speculative investing: They tend to apply leverage more careless than they ought to. It's a gamble, even with sophisticated trading options like trailing stops, price targeting, etc.

The currency differences are usually either positive or negative. The fundamentals involved that influences the currencies are complex and not always a determinant. For example, how will you speculate the rise or fall of a currency when there are numerous financial news that points to both the rise and fall of the currency concurrently? For all we know, Euro dollar likely to take a hike, due to the EU decided to bail Ireland out of it's financial ravage. And it wasn't too long ago within this year that Greece needed a bailout from the EU as well. The situation could have been interpreted as:

1. This signifies potential financial problems with member countries of the EU. Euro dollar could continue to depreciate for the time being. Best to dispose existing investments against Euro dollars.

2. The EU and IMF will always bail out its members, therefore investors are always safe. Should acquire more Euro dollar while it's cheap.

At the least, it seemed to me that the EU is unlikely to allow the Euro currency be destroyed anytime soon. Curiously, Germany seemed to be against the bailout in both incident. What could this spell?

I guess stocks are somewhat safer. The fundamentals are on the company's balance sheet. Yes, the stock price does not always go along with the intrinsic value of the company, but at least a fundamentally strong firm, or one with strong competitive advantage doesn't die that easily. Besides, technical analysis could also be applied to speculate the market, when there's no particularly news on the market. The two could be combined together, so that even if risks need to be taken, it's taken reasonably. And of course, personal finance management is also a key part to risk management. Only invest what you can afford to lose. And of course, with the aid of trading tools as like I've mentioned for Forex earlier on, it further helps to monitor and enter/leave the market as quickly (unless there's a sudden price gap that exceed the target price boundary).