Fear the Forex Market

If you have to catch something that's going around, do whatever you can to make sure it's not the forex trading bug.

Although the offers of easy riches from swapping currencies might be tempting, the vast majority of investors would do well to resist the lure. Not only is this market supremely risky, but there are other, better ways to achieve the same investment goals.

That's not readily apparent to everyone, especially given the feeble performance of the U.S. dollar, which is down around 30% against the euro over the past five years. That has made betting against the greenback look like an appetizing one-way bet.

As the easy money of the housing market becomes a distant memory, a small industry of shops offering fast access to the forex market has sprung up like mushrooms in a dark, damp room, all hinting at the profits to be made by trading currencies.

To be sure, that possibility does exist. But the truth is, an individual is much more likely to lose, according to industry experts.

"I can categorically say that Joe Average has no place in the currency markets," says Morris Armstrong, who spent 23 years as a currency dealer and who is now a financial adviser at Armstrong Financial Strategies in Danbury, Conn.

More than $2 trillion of currency is bought and sold each business day across the globe, largely by very sophisticated operators with major technological advantages relative to the small investor -- think huge multinational banks like Citigroup (C Quote) and HSBC (HBC Quote) or national monetary authorities, such as the Bank of England or the European Central Bank.