Today's post is from an old friend, frequent blogger (see previous posts), and trading expert Bill Poulos from Profits Run. With Bill focusing a ton of his time on Forex, and with the Forex market getting so much attention, I wanted to ask Bill to come and give us some of his latest insights into what he's found. 

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You've likely heard the term Forex lately — it continues to be the hottest trading trend today. That's a trend I believe will continue but today, I wanted to take a few moments to point out why as well as how you can best take advantage of trading foreign currencies without being taken advantage of.

Just a couple of years ago, the foreign exchange markets were dominated by the big brokers and major banks around the world. Today, the ‘little guys' have gotten in on the action — and the growth in currency trading has increased from $1.9 trillion to nearly $3 trillion in that short space of time (that's the average daily turnover in the markets - a 50% growth in turnover).

But why should you trade Forex?

First, the Forex markets are highly liquid (in the major pairs) and have a strong tendency to ‘trend' regardless of what is happening in other markets (stocks, commodities, bonds).

That liquidity also creates constant volatility — and the volatility is where the ability to profit from those trends happens. The greater the volatility, the greater the profit potential.

Second, the stock markets remain beaten down. Yes they've rallied, fallen, and rallied again — but there are strong indications that another ‘fall' is coming. The uncertainty in these markets is keeping them from a specific direction, or trend. In the Forex markets, however, traders don't have to worry about "bull" or "bear" markets — the currencies are always in a trend (whether up, down or sideways).

Furthermore, the financial upheaval driven by the credit crisis and the massive government responses means investing or trading in the stock markets will never be the same - but these same events helped to create even greater opportunities in the Forex markets.

Forex trading is not without risk - and frankly, most people approach the Forex markets completely wrong. The current economic and financial conditions make this one of the best times to take on Forex trading, but only if done correctly.

And the correct way to trade Forex is to manage Risk first and Profit second.

It's an entirely new approach to trading - and quietly becoming the best secret weapon for Forex traders because it gets them out of trades that go wrong and helps them limit the downside risk on every trade.