Hi, my Forex trading had been haywire recently and I suffered big losses due to spikes that suddenly appeared in the opposite direction to trend. I think it was generated by news events. How can a trader protect himself from these pitfalls. My practice to have big stop losses to give more room for price fluctuation also backfired. On the other hand, small stop loses are easily triggered, what should I do?

Answer
Well, first of all you should always consult in advance the news calendar and be aware of any incoming major news.

Second, before major economic news releases, stay out of the market. Wait for the market to digest the news and make its mind. Here, be aware of a usual phenomenon called "the knee jerk reaction", a fake move in one direction, followed by the real move. Sometimes the news is so obvious that there is no knee jerk reaction, but the straight move. In any case, you can enter the market and capitalize on the newly formed trend only after it becomes obvious.

Third, big stop losses are not a good idea unless your lots are very small, which is not a very bright idea either. Find some middle groud and use primarily technical analysis plus the risk-reward ratio to calculate your stop loss limits.

Stock vs Forex for trading? Pros/Cons?

Can you get rich with forex trading like you can with trading shares?
What is better?

I am thinking that forex is better because the market is opened pretty much anytime thus I would be able to keep a day job and trade too. Forex trading does not seem like there is much to it, as in... the news does not effect it does it? Like for companies once a company releases something publicly then the market gets effected. Is forex like that too?

I am completely new to Forex and just found out about it yesterday... Is forex trading just based off of pattern analysis?

Answer
First things first, you are new to Forex trading and at first you say it appears to you that there is not much to it. This opinion is normal for people new to Forex but when you get experience you will soon realize just how much you don't know and it is lifetime learning material. Trading Forex is also very hard and high risk so don't be under any disillusion; however the potential to make more money fast exists as does the potential to lose.

Stocks are much lower risk in contrast and of course will be less profitable but returns are safer, more secure and consistent... but this is relative.

Contrary to your initial thoughts the news does affect the Forex market a lot and that is why there is an economic calendar of scheduled news on all major Forex news sites. Forex is trading with leverage and because of that profits and losses are magnified sometimes by 400x or more, which means you can lose your initial deposit or make a lot of money within the day, if you are careless.

To trade Forex successfully you need to learn how to interpret the economic news, understand technical analysis and develop your own psychology to handle the market with real money. It is possible to become consistently profitable but you need a lot of experience and the right attitude.

Since it is a zero sum game those making money in Forex have to be much better than the average trader, and they have to have the right tools to beat the average trader (which includes having more funds). It also helps to be with a good STP/ECN broker that does not interfere with trades.

Here are some good websites that can help:
http://www.forexfactory.com/ - Biggest Forex website, forum, news, economic calendar
http://www.babypips.com/ - Forex educational website
http://www.investopedia.com/ - Finance educational website
http://www.investing.com/ - Forex, CFDs, Binary Options, Stocks news and information portal
http://www.xglobalmarkets.com/ - ECN-STP broker