The easiest way I have found to explain Forex to people is the following: When you go to another country, you have to exchange your home currency for the foreign currency in order to buy goods and services in that foreign country. Depending on the strength of your home currency you can buy more or less in the foreign country. For example if I go to Europe, assuming I live in the USA, I have to exchange my US Dollars for Euros. A Forex Trader bets on that exchange rate. For example, today if I went to Europe, it would cost me $1.2500 to buy one Euro. If I would have traveled there in December of 2009, it would have cost me $1.5000 for one Euro. So a Forex Trader that would have bet the US Dollar would strengthen against the Euro back in December 2009, would have made a profit.
Many of you probably immediately associate “Forex Trading” with gambling. This is not completely true, however they do have a few similarities. For instance, the more money you bet, the more you can make and the more you can loose. You can also go to a Casino to gamble, or just play cards online at your house. Some Forex Traders work in an office with a group of traders, and some sit in the comfort of there home. Either way, both types are using the internet to trade. Forex Trading is done online, allowing you to have the ability to trade at an office, at home or even during a vacation in the Bahamas as long as you have internet access.
This is where gambling and Forex Trading differs in my eyes. Gambling – The risk is artificially created, or in other words, the risk is already defined before you play the game. For example if you want to play Black Jack (21), you have the same chance of winning every time you play. In Trading it is actually possible to significantly limit your risk with the right knowledge and tools. So your job as a Forex Trader is to decide when you have the highest probability of winning and then ACT on it immediately! This business is normally presented as a get rich scheme with little effort involved. Sure, some traders double their accounts in a week, but I can assure you that is not possible to sustain those results in the long run. Just like in any profession, you must PRACTICE in order to become successful in that specific task or subject! In lessons to follow you will learn why 97% of Traders approach this business with the wrong perspective, immediately setting them self up for failure.
You can also trade 24-Hrs/Day – Sunday (5:00PM EST) – Friday (5:00PM EST). Whether you have another job, going to school, or even have a family, if you can set aside a 3-5 hours a few days a week, Forex could be for you. The flexibility of working when and where you want, along with the potential to turn Forex Trading in to your very own lucrative Business, makes Forex very attractive. I do however understand Forex Trading is not for everyone. However, for the people that are self motivated and truly desire to learn Forex, your in luck! I am here to personally guide you along your Forex journey.
The best part about the business is you don’t need any credentials to get started! It doesn’t matter if you dropped out of high school, graduated from Harvard or even have a financial background … the funny part is, that’s the truth. Many ask, well why have I never heard of Forex before if it’s seems so perfect? Well possibly because it is relatively new for individuals like you and I to participate in. When people hear about investing or trading, the stock market is usually the first thing they associate it with. Unfortunately the stock market is also what most initially learn about and sometimes it takes years until they are exposed to the Forex market, if ever…
In the past few years, as more and more investors and individuals are learning about Forex, they are continuing to flee to the Forex market over any other market in the world. Yes, Forex is even gaining preference over the stock markets worldwide more and more every year. Why you ask. Well for a few reasons:
So what does it take to Trade for a Living you ask? Why do 97% of Traders loose money? Ill tell you this, successful Traders all have one thing in common. The top Traders in the World all have Theories, Methods and Tools (TMT) giving them an edge in the market. Theses successful Traders are making more than a living! Some are making a $100,000 a year, others over $10,000,000 a year and some you will never truly know because they have enough money to keep it that way. This is not just coincidence these traders are consistently beating the market, they just have the right TMT’s. Theories being a perception on how the market works and evolves everyday. They use various Methods of evaluating the market conditions, building confidence, staying disciplined, and putting their emotions aside. Last, but not least, Tools. This includes: Computers, Platforms/Software, Strategies, Brokers, News Feeds, etc. If you have the desire to learn about the most rewarding business in the World, I am here to provide you everything you will need to find success in Forex.
On a serious note … you are honestly one step closer to becoming a successful Forex Trader. Lets immediately start learning about the terminology in Forex Trading.
Basically you can profit from the market as long as it moves, it does not matter whether it moves up or down. While trading FOREX you will always trade a currency pair, not a single currency. You can trade for instance the Euro against the Dollar. This Pair is called Euro/Dollar or EUR/USD.If you think the Euro will rise against the Dollar in the near future or whatever time horizon you have, you want to go long EUR/USD. LONG means you are buying the first (base) currency and selling (shorting) an equivalent amount of the second (counter) currency to pay for the base currency. SHORT means that you are selling, (shorting) the first (base) currency and buying (longing) an equivalent amount of the second (counter) currency to buy the base currency. Your trade size is defined in “lot”. One standard forex lot are 100,000 units of whatever currency you are looking at. Although the position is traded in 100,000 currency units, only a fraction of the total position comes from the investor. Your Broker provides the remainder of the position and you only have to bring a margin as minimum security for you broker. The margin depends at the leverage your broker provides or you chose if you broker lets you choose between different leverages. Prices are usually quoted to the fourth decimal point in the forex market - for example EUR/USD might be bid at 1.6025 and offered at 1.6027. In this example we can see that the spread is 2 pips wide. A “Pip (percentage in Point)” is the smallest price increment in forex trading. The Japanese Yen is only quoted to the second decimal point.
Lets say the current price of EUR/USD is 1,6000 and you go short with one standard lot. Sell EUR/USD means you sell the first currency (EUR) against the second currency (USD).
Your base currency position is 100.000 EUR Your counter currency position is 100.000*1.6000=160.000 USD
Your leverage is 1:200. Since one standard lot are 100.000 US Dollar the margin you need are 500 US Dollar to make this trade.
Let’s assume EUR/USD will fall to 1.5950 and you close your position. Your profit would be 50 pips. Trading one standard lot you would make 50 *10$=500$ on this trade. On the other hand if EUR/USD rises to 1.6050 you would loose 50 pips or 500$ if you decide to close this trade.
If you don’t want to risk too much money in the beginning you can also trade much smaller sizes. Most brokers let you trade Mini and Micro Lots. Mini Lot represents 10,000 and a Micro Lot represents 1,000 units of a currency. This means you can even trade for a few pennies/pip and increase you trading size later if you feel comfortable.
This will strongly depend on your experience level and your Risk and Money Management, and a little bit on your talent to read the markets right. If you are watching my trades and learn the strategy behind you can make a lot of pips in a rather short period of time. You should target to make about 10-20 Pips on average per day, or 200-400 on average per month. While there might be a bad month with less profit or even a small loss there will be certainly month with much more than 400 Pips profit. The important thing is that you become a long term profitable trader .If you can build your account step by step, you can soon afford to trade bigger lot sizes while the risk percentage in your account does not rise. Imagine trading two standard lots and average 20 pips a day will give you an income of 8.000 US Dollar for the month.
Not at all. You can start small and build from there. You can even start with 100$ or less, depending on the allowed minimal deposit of your chosen broker. With a very small account you can only trade very small sizes of course. But even if you are trading for pennies, you learn more every day. When you are able to make pips consistently, you should trade for higher stakes. I still strongly advise not to risk more than 2.5% of your total account per trade.
I recommend even less risk. Remember we want to be winner in the long run. Therefore we must stay in the game. I rather like to have a smooth equity curve with maybe a slower progress in my total return, as to have wild swings in my account.
I concentrate on the majors US Dollar and Yen Pairs. From time to time I also trade some more “exotic” pairs like CAD/JPY, but you will never see me trade the Swedish Crone or other pairs with low volume and high spreads. I think the major pairs give us enough opportunities to make money.The main trading pairs are:
EUR/USD USD/JPY EUR/GBP GBP/USD EUR/JPY AUD/USD GBP/JPY CAD/USD NZD/USD USD/CHF
I also have an eye on Wall Street and give you my view on that because Forex and Wall Street tend to correlate most of the time, but I won't trade Indices in the Trading Room.
Novice traders should start with understanding the basics and terminology used. Members will get an introduction of the strategy I use and an essay about proper Risk and Money management. If you start to get some grip with these things you can start to make your first steps in the forex world with opening a demo account. I recommend to trade a demo account for at least two month before risking real money if you are a complete newbie to trading. Then I would change to a micro account. There you have a very small risk but you are trading the real market. If you manage to make constants profits over a longer period of time you can slowly increase your trading size. In the beginning it is more important to learn how make pips and to use a proper risk management to avoid big down draws in your account, as trying to get rich quickly while overextend yourself.
Members will get access to the Live room. Here you can watch my trades real time. I post my Entry and Target and Exit Levels and give comments on the current market development. The room is open 7:50 -11:00 and 15:00 -17:00 CET. Those times can slightly differ depending on market action. I will also post trading ideas before the Live room opens at 7:45 CET and at mid morning. This means you don’t have to be in front of your computer all day.