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What I've learned about Forex
by D.S. Mueller
http://www.extrinsictrading.com
Why settle for low yields in savings accounts and money
market accounts when you could join the world of Forex to
boost your return?
What's that you say~ "Me trade Forex?"
Relax, let's discuss some of the basics first.
What does the acronym stand for?
Forex stands for (Foreign Currency Exchange Market)
The foreign exchange market is the largest financial market
in the world. With a volume of over $1.6 trillion daily in
the USA alone. This is more than three times the total
amount of the US Equity and Treasury markets put
together.
What is traded in the Forex market?
The instruments traded by Forex traders and investors are
called currency pairs. A currency pair is the exchange rate
of one currency over another. The most traded currency
pairs are:
EUR/USD: Euro
GBP/USD: Pound
USD/CAD: Canadian dollar
USD/JPY: Yen
USD/CHF: Swiss franc
AUD/USD: Aussie
These currency pairs generate up to 85% of the overall
volume generated in the Forex market.
What hours and days can I trade?
The Forex market is open 24 hours a day (except weekends)
which means that in the USA it opens at 3:00 pm Sunday
(EST) and closes Friday at 5:00 (EST). This allows active
traders to choose the times they want to trade. You only
need to spend about 15-20 minutes a day looking for trading
opportunities. You can spend as little (or as much) time
trading as you like. If you want to day trade, you will
need to spend more time observing and monitoring the
market.
What will it cost to get started?
You can generally open an account with a $250 or $300
minimum. This will allow you to test the waters before you
dive in. But first, you should try your skills on a demo
account. Most Forex brokers offer a demo account, an
account with virtual money. This is an excellent choice to
test your trading skills, as there is no money at risk. In
this step you will figure out if a strategy works for you.
If you feel comfortable trading it, then it is most likely
to produce good results. How much time should you stay in
this step? It varies, but you shouldn't go one step further
until your system gets consistent profitable results over a
period of time. It can take many months, but remember, you
need to be patient.
The way I see it, here are the advantages of Forex over
other types of money generating investments.
Pricing
Foreign Exchange quotes are based on interbank prices,
regardless of the transaction size. Prices are quoted on a
net basis.
Liquidity
Being the largest market in the world with over $1.6
Trillion bought and sold daily, huge volume of transactions
are readily executed and cleared. Unlike futures or the
stock market, there is never a lack of buyers or sellers.
Therefore, it gives the investor the prerogative to open or
close a position at will.
Execution
Orders are executed and confirmed online or manually via a
recorded phone call. Customers know immediately the rate at
which the order is executed. Confirmed orders will always
receive a single price execution.
Settlement
Foreign Exchange contracts opened can be rolled over daily
for an indefinite period.
Leverage
You can enjoy the benefits of leverage on contracts up to
one hundred times your margin deposit. That is, with 2% of
the absolute value of interbank contracts, you can enter
the largest marketplace in the world. As long as you are
able to maintain your margin requirements on the full
contract value, you can remain indefinitely in the market.
Should new Forex traders purchase Forex trading courses or
join a Forex training program? Definitely Yes! By now you
have probably heard that only 5% of traders achieve
consistent profitable results when trading the Forex
market. The main reason for this is the lack of education.
Don't get me wrong. Taking a Forex training program or a
Forex trading course won't guarantee profitable results,
nothing can, but choosing the right Forex training program
or Forex trading course will definitely put the odds in
your favor.
Unfortunately most traders are attracted to the Forex
market because they think it's easy money. Mainly because
of the publicity showing how easy it is to trade and make
money in the Forex market.
Fact: Yes! It is very easy to trade. Anyone can do it.
It's no more difficult than clicking a mouse. But, the
second part of it isn't easy. Making money or achieving
consistent profitable results is hard. It requires lots of
education, patience, discipline, etc.
D.S. Mueller
http://www.extrinsictrading.com
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