A reader wrote to me inquiring about foreign exchange trading and that he was considering delving in this business. It would seem that he was attracted by certain web sites claiming it only takes one dollar to start trading and all that was required was his credit card details.

More impressive were the advantages of no stress over day-to-day work at offices, convenience of working from home, no fussing over proper office wear and the luxury of being your own boss.

It is estimated that $1.8 trillion are traded on the foreign exchange market everyday. The bulk of the trading is between banks however other financial institutions also contribute, particularly in Uganda substantial trade is conducted through foreign exchange bureaus.

Trading in currencies is a volatile business and the risks attached to this trade are uncontrollable although with advanced mathematical models certain risks can be mitigated. Individuals contribute to a tiny percentage of the foreign exchange trading and those that participate do so through brokers and banks or perhaps may be the target of forex scams designed to entice the individual by convincing them of guaranteeing high profits on low investments.

In the United States , the foreign exchange market is regulated by US Commodity Futures Trading Commission however regulations are not stringent which has resulted in forex fraud increasing at an alarming rate.

It has been reported that some $300 million has been lost by innocent victims of forex fraud. Regulatory bodies constantly issue warnings to the public about the risks involved in all types of volatile trading. Nothing much however has been done about unrecognised portals offering online share dealing and forex trading.

Foreign exchange trading is complex in nature and unless one is an expert in the field there is a high risk of incurring huge losses. Exchange rates fluctuate by the second and with time zone differences currencies are traded twenty four hours a day.

An open position at close of business will have changed at the start of the day perhaps in favour of the deal or totally against expectations. Global institutions are able to monitor their open positions at all times but for the individual this is practically impossible.

While it sounds tempting to work from home and earn high profits on low investments in reality the only people who gain are those that are promoting such schemes. Individuals must remain cautious at all times in dealing with volatile trades whether it is commodities, metal, currencies or shares.

The writer is an independent financial consultant FCCA