What I've learned about Forex

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