Starting Out in Forex Trading

The foreign-exchange (“ forex ” or “FX”)  market  is the place where currencies are traded. The  forex   market  is the largest, most liquid market in the world with an average traded value that exceeds $1.8 trillion per day.

The  forex   market  is open 24  hours  a day, five days a week, with currencies being traded worldwide among the major financial centers of London, New York, Tokyo, Zurich, Frankfurt, Hong Kong, Singapore, Paris and Sydney – spanning most time zones. There is no central marketplace for currency exchange. Trade is conducted over-the-counter.

The  forex  has been the domain of government central banks, as well as commercial and investment banks. It has also been used for hedge funds by large international corporations. The rules were revised during the 1980s to allow smaller investors to participate using margin accounts. It is because of these margin accounts that  forex  trading has become so popular. When you consider that a 100:1 margin account allows you to control $100,000 of currency for just $1000, this has created an excellent opportunity for making a great deal of money. Of course, such leverage is also a recipe for losing a great deal if you are not properly prepared. Naturally this course is designed to help you become prepared.

 FOREX  traders usually require a broker to handle transactions. Most brokers are reputable and are associated with large financial institutions such as banks.

Like anything else, you should shop around for the best bang for the buck when looking for a broker. Here are some things you should look for when considering a broker:

A Respectable Quality Institution –  Forex  brokers are usually associated with lending institutions or large banks. The reason for this is that such institutions have the large amount of capital needed in order to provide the leverage needed. Look for brokers that are registered with the Futures Commission Merchant (FCM) and regulated by the Commodity Futures Trading Commission (CFTC). This information should be provided on the broker’s webpage or its parent company page.

Lowest Spreads –  Forex  brokers do not charge a commission such as Futures brokers do. They make their money from the spread, which is calculated in “pips”. The difference between what you can buy the currency for and what you can sell it for is the spread. PIP stands for Price Interest Point. It is the increment in which the currency pair will trade. For example, if you buy the EUR/USD for 1.2015 and it goes up to 1.2016, it has gone up 1 pip. When looking for a  forex  broker, find one that offers you the lowest spread for the currency pairs you plan on trading.

Types of Accounts – No two traders are alike. Some have a vast amount of money while others have smaller accounts in which to trade. Look for a  forex  broker that provides you with some account choices. For example, traders with small accounts or just learning how to trade in the  forex  should look for what many brokers call the “Mini Account”. This type of account requires a small minimum to open, say, $250. This account allows for a high amount of leverage that you will need in order to trade with so little amount of money. In such an account, you can trade with a $1 pip, as opposed to $10 or higher pip value. Standard accounts have higher minimum balance requirements and allow for trading at different leverages. Read carefully the different types of accounts being offered.

Available Leverages – Leverage is important in  forex  because the price deviations (how you make your money) are merely fractions of a cent. Leverage is the ratio between the capital that is available and actual capital. The leverage depends on what the broker is willing to lend you. For instance, 100:1 ratio means that for every 1 dollar of your money (actual capital) the broker will lend you $100 (available capital). Some brokers offer 250:1 and even 300:1 ratios. The higher the ratio, the more leverage (bang for the buck) you will have. Keep in mind that a high ratio not only gives you more bang for your dollar but it also increases your risk of a margin call. Lower ratio will lower your risk of a margin call, but it will also lower the power of your dollar.

Extra Goodies (Tools, Research) – To get your business brokers provide various free tools and information resources to their customers. You will want to find a broker that will provide you with free real-time price charts as well as an excellent online trading platform. One very popular platform and the one I currently use is FX Trading Station. But shop around and see what is being offered.

The best thing you can do is to ask around on various trading forums where  forex  traders haunt. This is because there does not exist any blacklist for those brokers that may commit acts of sniping or hunting, which is prematurely buying or selling near preset price points in order to increase profits. Also, make sure that they are happy with the broker’s margin rules. Some may be too strict and get you out when the market moves against you although you still have enough capital to hold the position. The position may turn out in your favor had you not been exited by the broker. This can be costly. So ask around!

Trading Forex Automatically – Can it Be Done?

The main reason most people fail in  forex  trading is because they are human and suffer from such human emotions as anger, frustration and greed. Plus, as humans we suffer from tiredness, as the  forex   market  runs 24  hours  a day, this is quite reasonable, so the idea of an automated computer trading system is quite a realistic notion.

One of the most popular automated systems is the  Forex  Funnel, with this you do get a 60 day money back guarantee, so if it doesn’t work, send it back. This software will keep a close eye on the 24 hour market for you, if it sees a profitable trend going bad, it will sell for you. If it sees a trend start to become profitable it will buy into it for you, depending on how much money you have given it to work with. This system won’t make you rich overnight, neither will you lose everything overnight, it trades in the low risk/low rewards markets. Making a small but steady profit every day.

Another automated  forex  trading system is called  Forex  Tracer. Yes, like them all, it can make small losses on your part, they all do. It will however, make you a steady but small income every month. None of these computer systems will turn you into a millionaire overnight, if they say they can, you can be sure, they are a scam. The only way they could do that is if they could tell the future, which they can not. After all,  forex  trading is simply gambling on the foreign exchange  market .

All that these  forex  trading systems do is help you to cut your losses quicker, and stop you from making the mistakes that you as a human are so very likely to make. Because you are human.

Forex Vs Share Trading

Ask anyone and they will tell you they are familiar with the buying and selling of stocks. Buying and selling of stocks is also called share trading because stocks are issued as shares. People buy and sell multiples of these shares. Stock trading is as old as the United States. Companies have used the issuance of stocks in order to raise money to pay for expansion or to expand into new markets. If you have ever worked a day in your life, chances are you have worked for a company that has stock available for trade.

On the other hand most people are not familiar with the  Forex   market . They may be familiar with the name  Forex  because of all the recent attention on how much money anyone can make trading on this  market .  Forex  has only been open to the general public for the past 50 years which is why it has less brand recognition with the general public.  Forex  does not trade stocks but instead trades currencies.

Both share trading and  Forex  trading have things in common. There are also some differences between the two. Let me discuss the major differences between the two investment strategies.

Access to Market

Share trading occurs through listed stock markets such as the New York Stock Exchange. On the other hand  Forex  does not have a listing  market  so it is considered over the counter trading. Because share trading occurs through the listing market there are limits on when you have access to the market. The New York Stock Exchange is only open from 9:30 AM EST to 4:00 PM EST. The  Forex   market  is open 24  hours  a day. You can place trades with  Forex  at any time of the day or night that you want. With share trading you are restricted to when you have access to the market to buy or sell shares.

Short Term vs Long Term

Share trading is usually considered a long term investment. The stock market is not very volatile so it is very challenging to make a quick profit in an hour or a day. In order to make a profit on the store market you usually have to hold on to an investment for a year or more. The  Forex   market  is very volatile. Most trades are bought and sold in less than 24 hours.  Forex  trading is considered a short term investment.

Location

The New York Stock Exchange and the London Stock Market are physical locations. All trades are completed through this location.  Forex  does not have a central location. Trades are place all over the world.

Liquidity

The share market is considered not to be very liquid. You are limited to the time you can access the market which adds to it not being a very liquid market. Purchasing stock shares require you to have the full amount of money available. In order to sell you need to find a willing buyer.  Forex  trades do not have the requirement to have the entire funds available. Since  Forex  trades are made 24  hours  a day they have a high level of liquidity.

There are many differences between  Forex  and share trading.

10 Reasons to Get Started In Forex Trading Today

In the world of  Forex , swapping currencies is the name of the game. Foreign Exchange trading, also known as  Forex  or currency trading, refers to the world’s largest financial  market  upon which one currency is traded with another for profits. The top ten most traded currencies in the  Forex   market  include USD, Euro, Japanese Yen, British Pound, Canadian Dollar, Swiss Franc, Australian Dollar, Swedish Krona, Hong Kong, Dollar and Norwegian Krona. The prices of these currencies fluctuate on the basis of its supply and demand. Other factors such as interest rates and the country’s financial and political state can also affect the worth of the currency. The participants of the  Forex   market  are very diverse ranging from multinational corporations and banks to small businesses and even individual traders.

In addition to that, there are 10 unique benefits of  Forex  trading that attracts thousands of traders from all over the world on a daily basis. Let’s look at all of them individually.

1. Trades can be made every  hour – Unlike stock  market , the world of  Forex  never sleeps. Being open 24 hours gives the traders a chance to trade any time of day or night. That said, activity level of the  market  does fluctuate throughout the day, and any veteran  Forex  investor will tell you that the best time to trade is when activity level of the  market  is at its highest (we will get to the why a little later). There are four major sessions the  Forex   market  is divided into. These include New York, Sydney, Tokyo and London. When one session closes, there is always another one that is opened; thus, keeping the market open 24 hours. The busiest time of the market is when two trading sessions overlap.

2. Highest Liquidity– Liquidity is determined by the market size (amount of active participants) and the number of trades (buying and selling of currencies) happening at any given time. The  Forex   market  has the highest liquidity among any financial market. Because of the high amount of participants trading currencies at any given time, it is estimated that about US $4 trillion worth of exchange happens on a daily basis.

Now remember how in point 1 it was mentioned that the best time to trade is when the market is at its busiest? Here is why- This peak time is when the liquidation is at its highest. This is when the most exchanges happen, which means more opportunities and good deals. This is also when the market’s volatility (currency’s price fluctuations) is at its lowest. So it is easier to make a profit in short amount of time by making a spot trade when the currency’s price is good. On the other hand, when the liquidity is at its lowest, the trades become very slow and the fluctuations of prices happen slowly. It is also important to mention that the price changes are drastic. Hence, it is very easy to lose money during this time.

3. Leverage– In layman’s terms, this feature allows the trader to trade more money than the amount present in trader’s account. This gives the trader a chance at getting hands on huge profits by investing a small amount. In most cases, the trader gets to choose their own leverage. Leverage is a ratio. Let’s say that you have $500 to invest in your account and that you are entering into a trade with a leverage ratio of 50:1. This means that for every $1 you can trade for up to $50. Now for as little as $500, leverage gives you the power to trade up to $25000.

4. Low Capital– This feature is what makes  Forex  attractive to so many working class individuals. It allows you to start trading with as little as $100 in the account.

5. High Return on Investment– In  Forex , leverage allows potential for a high ROI than any other financial investments such as stocks, bonds etc. Currencies with low volatility can produce high ROI’s.

6. No commission on trading– Mostly all dealers/brokers do not ask for a commission on making a trade. Instead they are compensated with a bid/ask spread. A bid refers to the price at which the buyer is willing to purchase the currency. Ask, on the other hand, refers to the price that the seller wants to sell the currency for. The difference between the two is a spread. Since currency is the most liquid asset in the world, it has the lowest spread; stocks, on the other hand, has a high spread. In  Forex   market , spread can be kept low by always trading in currency pairs that are has the highest liquidity. Some of these include Euro and USD, Euro and GBP, and GBP and USD.

7.  Forex  is omnipresent– Because of its global nature, the  Forex   Market  can be accessed from anywhere. It does not have a physical location, and all the exchanges occur automatically. This allows for the trades to occur in matter of minutes. Also, because of its high liquid state, it is easy to make a huge profit in a less amount of time.

8.  Forex  is a Bull  Market – Bull market refers to a financial condition when the market is on an upward swing. Its opposite is the “Bear market”. The  Forex  world, on the most part, is always a Bull  Market . Why? Because at any given time, you will always find a currency whose price are going up. That said, it is also true that every bull market will always have a parallel bear market. This is because currencies are always traded in pairs and, for example, if Euro depreciates in value against USD, Euro investors will lose money (Bear Market) and USD investors will gain profits (Bull Market).

9. Can be easily learned– One of the biggest benefits of  Forex  is that everyone can participate. Yes, it’s true that not everyone is born a financial whiz but it’s also true that, with the easy access to knowledge that Internet provides, everyone can learn the basics for free. In addition to that, with  Forex  trade simulators, inexperienced traders can now get a feel of the real world of  Forex  without losing their hard earned cash. It allows amateur traders to learn the process and hone their skills by placing mock trades.

10. Quit and sell whenever you want Forex  allows you to enter and quit at any time you want. Along with that, through spot trades,  Forex  also allows you to buy or sell a currency right then and there to take advantage of its current price. It also allows you to make profits by going short (also known as short sale). This is when you purchase a currency and sell it, and purchase it back at a lower cost than what you sold it initially for. This difference would be the profit you made. Along with that,  Forex  also allows you to make a profit by taking advantage of the currency’s increasing value by going long (or making a long sale). This is when the currency is sold at a later period of time for a higher price than what you paid.

5 Things College Students Can Do to Be Successful in Life

As financial literacy is lacking in the world today, I am motivated to promote financial literacy. My experiences regarding high school, college and transitioning into adulthood after college, has inspired me to promote financial guidance to young adults by providing powerful and inspirational ways in which a student can take advantage of in order to achieve success after college life. Preparation for success begins years before a student attends college. Below are five things college students can do to be successful in life.

1. Prepare for the ACT/SAT in middle school or earlier so that there is a greater chance of scoring high on both tests, as higher test scores will provide the student a better chance of earning a scholarship. It is also important for students to get involved in extracurricular activities. Remember, college is still possible and can be affordable even when a student doesn’t have a scholarship.

2. Students must be mindful regarding the selection of his or her career choice. It is imperative for the student to identify and select the right career that will suit him or her long-term. Being indecisive in career choice and changing majors half way through college or later, wastes a tremendous amount of time and money.

3. Students must be aware of how important it is to obtain and maintain good credit. Without having any credit or good credit, a student can have a difficult time receiving lower interest rates on their car, house, etc. Higher interest rates will cause higher car, house and etc. monthly payments. The three credit bureaus report and provide credit history on each individual and demonstrate how well a person has been paying his or her bills. The credit rating score will determine what interest rate the individual will receive.

4. Students must prepare for the workforce while attending college. Without preparation prior to graduating from college, a student may struggle or find difficulty in landing a job in his or her field soon after graduation. Many employers seek individuals who have had experience in the field for at least one year and will not consider interviewing a student without experience.

5. Lastly, saving early for retirement is a must. Many young adults feel that they have plenty of time to save for retirement, but in reality they do not. I have heard so many adults say that they wish they started saving as soon as they started working as a young adult and regret not doing so because they have to work longer than desired.

In Conclusion, these are the five things that college students can do to be successful in life. College students deserve a shot a success. Take charge of your life and be the next success story!