Understanding What is Forex Trading About
After doing some online research, I started to see that Forex trading is slowly picking up and not just in the U.K but North America as well. What I also noticed is that many of you ask the same common question, “What is Forex trading about” ? You see people on Facebook and Instagram promising you the billionaire lifestyle with easy to almost no work involved. Let’s pause for a moment and breakdown the myths and some truths about Forex.
Forex trading is very much like stock trading. In stock trading you use instruments or hold positions on companies such as Nike(NYSE:NKE) or Coca-Cola(NYSE:KO). In Forex, or foreign exchange, you trade currencies against several others from many countries such as EURUSD, USDCAD, USDJPY, AUDUSD, NZDUSD, GBPUSD, USDCHF and many more. Not only can you trade almost any currencies, you can also enjoy the benefit of being able to trade the market 24/5, from Sunday 5PM EST to Friday 5 PM EST.
Trading forex is also accessible to a bigger mass due to its lowest investment or deposit available to start with. You can literally open and fund a trading account with less than 5-10$, all thanks to margin trading. The idea of margin trading is borrowing money to control a bigger amount of capital. Brokers from Canada or USA are restricted to 1:50 while brokers in Europe, Asia or Australia can go up to 1:1000.
Because of these aspects, it also attracts different types of purposes. The internet is filled with Get Rich Quick scams and the Forex trading community is not immune to it. You will see many websites selling you trading courses promising tons of riches if you follow their so-called bulletproof Forex trading strategies. Only to find out the same author is releasing a new trading course every 6 months. Which makes you wonder, why so many releases if they are all insanely profitable strategies?
I myself have made some of my forex trading strategies available to the public where you can be the judge of its performance.
Next on the list is also a must when it comes to knowing what is trading about really mean. If you’ve been around, you have heard or will most likely encounter occasions which you hear people say that the market is rigged and a fraud! Because you almost always will lose money to the market you will jump to the conclusion that there is definitely something fishy behind all this. After all, you can either Buy or Sell a currency, 50/50, heads or tails, how can you always be wrong? Must be rigged. I have been working on a few projects and will show you what is forex trading using algorithms and backtests showing you that it can become a profitable venture.
Another recent trends are Forex MLM’s or Forex Multi-Level Marketing groups. What they offer are so-called Forex Masterclass trainings and some trading chat rooms. Have one guy buy the program, have him recruit friends of his and get a payout for each referral, make them subscribe to their Masterclass training and recruit again. Eventually, the guy at the top makes tons of money because of all the recruited members done for him while providing the same so-called Masterclass training material you can freely find at sites such as Baby Pips.
A topic which also never gets old is the 2 different mentality in trading. What about Forex trading schools of thought? On one side you have the technical traders who have developed systematic ways of trading the market using patterns they have observed. On the other side you have the fundamental traders who have also developed trading systems based on economic and socio-political events. In my honest opinion, I believe they are as equally good if there are no restrictions on timeframe of tradings and available capital. To be fair, I believe they complement each other and if you can understand how to use both approaches then you are on a great path to success.
There exist a sub-topic on this discussion which covers the efficiency and potential of algorithmic trading. For the vast majority, this topic will target all traders using automated systems derived from their technical chart trading strategies.
Regardless if you are trading stocks or Forex, an aspect which is generally overlooked and easily skipped is money management. By default, the Forex market is very volatile and at times can seem to be random. Before entering any trades I suggest you already have a clear defined entry and exit strategy. The idea behind is to later be able to track and analyze all the data from these trades and slowly start optimizing your trading process.
Until you make your first deposit, you will never find out what is Forex trading about. Trading Forex can be very rewarding if you decide to stick to it. While I encourage you to start trading using your own methods, I also offer what is called a Copy Trade signal service. For the past 8-9 years, I have been testing and building Forex systems and it quickly became an addictive hobby. I strongly believe in technology and the opportunity to have programs which can outperform certain redundant tasks that we humans could be of no match.
After countless hours and years spent on testing and optimization, I finally made my signals available under the very popular MQL5 trading service umbrella. By subscribing to my signal, you will copy all the trades made by my algorithms and you will also be able to see the trades made on my own account in real-time.