Although Forex provides an investor with lots of opportunities, the trader must also understand the risks before they begin trading in forex market. It is important for the trader to know that one wrong trade could cause serious losses to the trader both financially and emotionally. It is to be noted here that forex should not be taken lightly, all trading decisions should be based on some rational. Forex trader earns money because of the fluctuations in the market value of the currencies. The trader here must and should know about the global political and economical scenario before initiating a trade. A country with good sets of GDP number would have a positive impact on the currency and the value of that currency would appreciate in comparisons to their peers. If the trader is totally relying on broker tips or forex simulators then there are high chances of losing a considerable amount of their capital. Many traders in forex indulge in big tickets trades using leverages. Leverage trading is basically a forex trade which is executed using borrowed money. It is important for the trader to know that leverage is like loaded gun which has its own advantages and disadvantages. The profit made by trader using leverage is far more than what they could have earned by investing their meager margin money, but at the same time the loss could also be catastrophic. Loss caused using leverages could wipe out your entire capital and could make you a debtor. Therefore it is very important even for experienced traders to put orders with stop losses which act as an electronic circuit for saving the trader from any steep losses. Another important factor to be considered here is the risk factor of the trader. Traders with high risk appetite generally carry out traders that carry high risk to reward ratio, while some order trades which are not risky but at the same time the rewards in such trades is also quiet meager as compared to risky trades. Most of the trades which are executed in the forex market is based on market speculation where trader from all around the world invest in anticipation that the price of the currency would rise without any fundamental to justify the price rise. It is important to know that sooner or later the price of the currency would correct itself to its true value. Last but not the least, forex market is not a get rich quick like scheme. It is a market which is based on demand and supply principle. If a currency is in high demand the prices of that currency would appreciate because of its high demand and low supply constraints. Hence all trading strategies should be made keeping this basic principle in mind.