Forex trading, once the domain of governments, banks and professional fund traders has become a popular part-time and in some cases, full-time pursuit for ordinary people at home with an internet connection and a little money to invest or speculate with. It’s made out to be easy to profit from trading Forex, mainly by salesmen and marketers eager to relieve you of your hard-earned cash in various ways, without warning you sufficiently of the relatively high risks involved in any market trading activity.

The Forex is an electronic, automated over-the-counter trading market for major currency pairs, and while it is very easy to learn to use, there is risk – as with any form of speculation, betting, gambling, trading investing, call it what you will. The fact is that for every winner, there must be a loser. It’s what is known as a ‘zero-sum game’.

While the forex trading system is easy to use by the average trader, there are aspects of currency trading that increase the risk of loss due to ‘margins’ and ‘leverage’ offered by all banks and brokers. Low margin and high leverage also mean high risk and this is the primary cause of losses by inexperienced Forex traders who have not been taught the implications.

Misunderstanding, misuse or abuse of leverage offered by a dealer or broker should be considered as ‘mortal sins’ for forex traders. Although new leverage rules are now in place for US-based forex traders, there are ways to take advantage of them.

What is meant by ‘low margin’ and what exactly is ‘leverage’? Basically that you are able to control a large amount of a currency in the Forex market with a very small cash outlay. In the normal stock and index options markets it may be possible to control say 100 shares of IBM for $500, whereas to actually buy them could cost you $15,000. That’s an example of 30:1 leverage. However, in the Forex market, leverage can (or for US traders used to) be much higher – several hundred to one. The risk of large loss is that much greater if the trade goes the wrong way.

The recent housing market crash was a perfect example of where leverage and low margin caused massive losses among individual investors, mostly in the form of home owners. People across the world were given almost unlimited credit by banks and lenders to buy properties well beyond their ability to pay for them, even over 30 years. To tempt buyers even further, they were asked to put very little cash down as a deposit. A lot of these transactions were little more than speculative, greedy bets on the ever-continuing rise in housing prices.

However, some knowledgeable, experienced traders (notably investment banks) realized this could not continue indefinitely and they made money from others’ huge losses. Many of those losers weren’t necessarily ‘bad’ homeowners, but without knowing what it was, they had misused leverage.

The huge amount of leverage and low margin requirements available to forex traders is similar to that scenario. Previously, US traders could be offered anything up to 500:1. The new Forex leverage rules allow only 50:1 on major currencies and 20:1 on minor currencies. Some dealers and brokers may still be able to offer 100:1 leverage. But lower levels still contain risk.

When new or insufficiently experienced traders allow their emotions – primarily greed and fear – to rule their trading, they are likely to end up on the losing side of large leveraged trades which are no more than high risk bets.

You can learn more by getting a useful and free Forex Toolkit with a separate video section dedicated to using the new lower-risk leverage rules to enable you to still trade profitably and more consistently.

However, I’ve just read a report that surprisingly disputes this – at least in the way that Wall Street usually recommends, and shows proof. This is not about exotic derivatives that caused the recent economy meltdown, but the major markets and  mainstream shares – the kind you hear about every day on CNBC, Bloomberg and the like.

Download this 10-page pdf and after reading it, see if you still believe that ‘normal’ diversification still works in today’s financial markets.

There is a solution too. Clue: Think Global.

SQIP is going to be big for sure. If you don’t know about it, Sqip is a new social media network including a communications program that is claimed to be better than Skype, Yahoo, Google and any others.  The owners’ investment claims are not small, either. They compare SQIP’s investment potential to stock bought in Microsoft, Google and Yahoo before they became ‘big’ during the years following.

SQIP’s about-to-be-launched Messenger is claimed to be ‘state-of-the-art’ and superior to Skype and all the chat and social networks put together. Messenger incorporates online communication, collaboration, networking and entertainment and paid advertising; it’s expected to draw in a hundred million free users within 2 years, plus five million or more ‘PRO’ paid subscriptions.

This is of most significance to SQIP’s ‘stakeholders’ including ordinary free members who have already bought equity in the corporate in the form of PEPs (Private Equity Points), and who are expected to achieve a high rate of return on their investment. Whereas there are not any guarantees (as with any investment in stock), even a modest minimum holding of 100 PEPs at one euro each, around a hundred and forty dollars total, could be worth four hundred times that by 2011. Or not!

SQIP will change from private ownership to become a UK-registered PLC during 2010. Because the claimed payout on sale of equity shares is so high, it’s better to not even mention it here. Get all the main points direct from the SQIP website and make your own assumptions. Personally, I think it’s worth the risk, but it might not be right for you.

I began a small investment in SQIP from its inception in 2009. Since then, I’ve kept abreast of events and received regular bulletins from its CEO, Christian Fortune (good name!). I’m quite certain this is not a scam but of course there aren’t any guarantees that the suggested income will ever materialise.

In order to benefit more than just by being an affiliate, I supplemented my free PEPs to reach the minimum needed by January 31, 2010, when the offer was to end, to reach a hundred euros worth. Now I am a stakeholder and in line for a share of future profits from various totally different streams inside the SQIP program.

There is a further potential benefit. If the owners of SQIP receive an ‘offer they can’t refuse’ to sell the company before it goes public, stakeholders may indeed see a windfall they weren’t expecting. As this has been on the cards from the start, that is another reason I decided to get my stake in SQIP.

Anyone could have joined until that date by paying cash or paying for their €100 ($140) equity in five monthly installments. This offer has now expired, but a few 500 PEP blocks have become available for 500 euros each due to refunds to investors who decided for whatever reason not to increase their holding to a minimum 100 shares.

Find out more about the whole SQIP program and what it could mean to users, affiliates and stakeholders by visiting the Sqip web site through my member’s link, but I get nothing unless it all happens as the owners have planned it.

If you decide to be part of SQIP, you automatically get your own link and can recruit a ‘down line’ and optionally earn from Messenger advertising; there is no obligation to buy or sell anything. Stakeholders also get free PRO membership to Messenger with all its many innovative features.

If you are primarily an investor rather than an active participant, you can just sit back and wait, but there are Sqip features and Messenger facilities that practically anyone will enjoy using  for free. Visit the SQIP website where you can join for free and see just what Messenger has to offer. If you’re interested in the 500 PEP offer, then you probably need to act quickly. There are a lot of current members who have enough faith in SQIP’s future value to want to increase their equity.