Forex Trading

[res0nat0r]

With all this talk of XM and Sirius and my roommate trying to make some money off of this and the stock market I was thinking about also opening a scotttrade account and dabbling in a bit of conservative daytrading. I really dont like finances as I think all of it is confusing as hell.

But I know there are some finance heads on here, does anyone know what Forex trading is? How hard is it? I guess you just trade on the price differences of currency exchange rates, and this can be done 24/7. Has anyone here done this before?

[day_for_night]

Re: Forex Trading

umm, this is one of those cases...if you have to ask, its probably better if you don't. the foreign exchange market is one of the biggest in the world (its mainly out of london, but can be done anywhere there is internet access). 1 trillion dollars per day gets traded. thats not a typo...

but ya, currency trading is risky, especially due to the leverage you can get with the futures markets. you only have to put 5% down as margin, and a movement in a single day can wipe that out. predicting the direction of currency movements is one of the hardest things to do in the financial world. so many factors come in to play i don't even know where to start. and then there are market shocks that no one can predict.

making money consistently from forex trading is best left to the pros.

buy a nice index fund, a world bond fund, put them in a tax free retirement plan (401k, IRA, whatever) and leave it the hell alone for 30 years.

note: this is just my advice. this is not a professional consult and any use of the advice is entirely your responsibility.

[res0nat0r]

Re: Forex Trading

^^ah i wasnt going to do this at all, way over my head, i was just curious how this type of thing worked. no way am i going to try it. i will stick with my 401k and nothing risky like that.

that is pretty crazy how much money gets traded during the day. i dont know how anyone could consistently make money on that...something over my head.

[Miroslav]

Re: Forex Trading

umm, this is one of those cases...if you have to ask, its probably better if you don't. the foreign exchange market is one of the biggest in the world (its mainly out of london, but can be done anywhere there is internet access). 1 trillion dollars per day gets traded. thats not a typo...

but ya, currency trading is risky, especially due to the leverage you can get with the futures markets. you only have to put 5% down as margin, and a movement in a single day can wipe that out. predicting the direction of currency movements is one of the hardest things to do in the financial world. so many factors come in to play i don't even know where to start. and then there are market shocks that no one can predict.

making money consistently from forex trading is best left to the pros.

buy a nice index fund, a world bond fund, put them in a tax free retirement plan (401k, IRA, whatever) and leave it the hell alone for 30 years.

note: this is just my advice. this is not a professional consult and any use of the advice is entirely your responsibility.

what he said I don't know much, but I do know that this is basically what really brainy people at wall street investment banks and hedge funds with access to the best information technology in the world get paid big bucks to do...it can't be a cakewalk.

[FM]

Re: Forex Trading

well, 1 trillion is probably on the lower end...1.5-2 trillion is a bit closer.

There's 357 different ways to trade in the markets these days (on top of what you can trade), and any one of them can be profitable if you sit down, study, learn, practice, learn some more, practice some more, test, refine, and find something that works for you...and stay out of the "turn $1000 into 10,000 in 90 days" pitches...you don't need a finance degree or advanced education for it (though it can help), but just a willingness to learn and see how it all falls together...but it's definitely something for the longer haul of things in terms of years.

Most anything these days will allow a demo account setup so you can practice a bit trading too to see if it's for you, whether it's Forex or not...probably the best thing on Forex is that you can usually start as low as $500 on an account, so while you may not make huge profitable gains, if you blow up the account, you're not losing $10K either...and it is 24/7 6 days a week which is also nice. Leverage is phenomenal sometimes, but can just wipe you out in the blink of an eye if abused. Heck, some people just trade the news reports there and can make a nice amount.

If you think you want to pursue this in any fashion, spend a little spare time and read up over at the EliteTrader Forums. At the bare least you can get some good reviews of brokerages and platforms to utilize...heck I've been finally getting in live in the futures side, but only after practicing and learning for the past 4+ months...and even now it's trading on bare minimums to continue to learn and refine some things...I've got lofty goals yes, but also know it'll take a while to reach them, so I'm not going for the home runs right off the bat (otherwise I might as well hit the casinos instead)

[KinKyJ]

Re: Forex Trading

you might wanna pm thesightless for this.

[AndyH]

Re: Forex Trading

All good advice above. Forex markets are being touted as the next best thing for private traders due to the recently granted access to smaller traders, the size of the market and also the ease in which u can bet/trade in either direction. If u choose to try this route of making omney then u have a long task ahead with many many set backs and a v small chance of actually becoming consistently profitable. Even the institutions/hedge funds etc firms are far from ALL profitable and in fact most of them arent even with their superior research facilities and PHD bods.
If u are going to try then stay away from day trading (which is where u enter and exit a trade within a day, hour, minutes or even seconds) which is all the rage at the minute. Any shorter time scale puts more pressure on you to make a decision and transaction costs are likely to wipe out any profits that u do manage to make. If you trade over a longer tine scale then u have much more time and lower costs.

Have a look at trade2win.com which is a v good sight and dont get sucked into any promotions promising 1 million pounds in 1 week or whatever, they are ALL cons..

Have fun...

[supaz]

Re: Forex Trading

If you want to daytrade, you have to have at least 25k equity in the account. Unless you've got your teeth cut in the past by trading, etc...it's best just to invest for the long-term. There's a big price to pay if you want to learn how to trade.

Morningstar.com is a good resource and is widely recognized within the industry...check out their tools, etc.

Everyone has their own asset allocation strategy...it's best just to do your own research and set forth your own investment goals.

[FM]

Re: Forex Trading

$25K is applicable if you do things like stocks and the like that require larger account balances to be able to open an account in many cases...as you would want to buy a fair amount of shares to get going, and then typically hold for a while or in a very long-term.

$500-$1000 can get a Forex account going, and around $3000 works for futures. Now by starting minimum you're not going to make a huge amount of money right off the bat. But you're also not going to lose a lot either provided you trade within your means through demoing and some real time (as the 2 are very different when it comes down to things)...

The old adage says around 90% of day traders fail within a year's time mainly by blowing up their account. Some get out, others try again. To dig into that statistic a bit, a lot do so by jumping in w/little knowledge, using a system that doesn't work or isn't suited to their style, as well as trading out of their means through the market(s) chosen, or by risking way too much at a time, losing, then trying to play catchup...psychologically getting played big-time. Others yes it simply isn't for them and just won't work out. Scary yes, but a nice challenge if you're up for it and have the time to devote.

Personally, I love the idea of creating money out of thin air

[FM]

Re: Forex Trading

and while I mentioned elitetrader, a smaller more manageable board for newbies with explanations and people helping each other out, is http://www.askatrader.com

[Lorn]

Re: Forex Trading

Personally, I love the idea of creating money out of thin air

The fed already does that....its called the printing press.

[shosh]

Re: Forex Trading

cash-value life insurance imo

[FM]

Re: Forex Trading

The fed already does that....its called the printing press.

ehhh that's just green paper with a bunch of fancy symbols on it

[thesightless]

Re: Forex Trading

please dont PM thesightless for this.

i know enough, but you damn daytraders do more harm to the market than any war does. jim kramer should be shot in the face.

in terms of finance and investment, i am not a trader, im a CPA who works for brokers and planners. i usually deal with capital equity investment (buying business interests based on the financials). the foreign eschange rates vary daily, and sometimes get affected by factors that shouldnt affect a dollar value. (hurricanes, disasters, government pissing contests, restrictions--pay attention to the iranian dolalr value once the UN issues its sanctions in the upocming days).

stop day trading. go open an account with a decent fund. im guressing here, but i see you are 28 and live in indy, so you should fall within the 50-75k a year range, dump some money into a vanguard fund, the 500 is safe, slow grower, but they have high risk funds that jump around, and if you have good timing, you can take advantage.

again, i am not a broker, analyst, or trader so take my words at what they are. i prefer putting my money into business, with hard assests that can be sold, with growth potential. oil funds, companies like united tech, and northrop grumman, and small ventures.

[Lorn]

Re: Forex Trading

i know enough, but you damn daytraders do more harm to the market than any war does.