CURRENCY TRADING FOR DUMMIES

FOREX TRADING

My ex-girlfriend Saa-rah got divorced  in 2011, that's just five short years ago.  She had worked for a large banking group as an IT manager in their credit card division for almost 25 years. She earned good money and managed to buy a very beautiful and expensive home in a fairly upmarket golf estate. Unfortunately her marriage was doomed to fail since she married him on the rebound after we parted company, yet through all that time we remained dear friends. Her husband was a lazy opportunist, essentially a bum who never did a stitch of work in his life except swindle people out of their hard earned cash. Her husband essentially screwed her over and she got a really raw deal. The decree of her divorce stipulated equal division of assets and her share of the proceeds after lawyers expenses was a mere R187 844.00, though still a substantial amount of money yet certainly not enough to buy a decent car let alone a small house.    

However, she was money savvy. She sold  her Volkswagen Polo, bought a bike and moved in with her sister who lived in a flat. They shared all their household expenses so that she Saa-rah could start over.  After doing much research on Forex and doing an online course with one of the Forex traders, she invested a total of R200 000.00 in USD. In 2012  the USD/ZAR = 7.2510 and ever since behaved very poorly. The rand slipped several times over the past few years and was especially susceptible to  President Jacob Zuma's political  antics. The most recent one was when Jacob Zuma abruptly fired his finance minister Nhlanhla Nene and replaced him with David Van Rooyen, who was a relatively unknown lawmaker with little experience in government causing the rand to crashed through the R15/$ level. By replacing him with Pravin Gordhan the rand recovered slightly. 

However  two of the three major credit ratings agencies downgraded South Africa to just one notch above “junk” status, citing over-spending, declining business confidence, and weak economic growth as justification. In 2013 the South African rand was ranked as the 18th most-traded currency in the world. Surprisingly, today  South Africa accounts for only 0.3% of the world’s daily foreign exchange market turnover, and accounts for 1.1% of worlds daily currency trading. Be that as it may, just yesterday morning Saa-rah cashed in her chips at USD/ZAR = 14.23.  Believe it or not she sold her USD making R6.979 x 200 000 which amounts to a cool R1,395 800.00. Yes you read right, One cool million three hundred and ninety five thousand, eight hundred rands. Ostensibly she earned herself 6.9 years worth of income based on her current salary and she is contemplating to reinvest.  This is one of the good stories.

Steven Lang ex-principal of Lexington Collage also traded Forex but he wasn't that lucky or intuitive.  He traded EUR/USD over a short term and lost half of his retirement pension in the process. This is one of the sad stories. Forex is not a get rich quick scheme but a strategic money making endeavour. It is reliant on political scandals, turmoil in foreign markets, nuclear project, arms deals, etc. Staying abreast of the issues that affect the currency you trading can spell the difference between making a profit or loss.

A CRASH COURSE IN FOREX TRADING STRATEGIES

 In the forex market, you buy or sell currencies. Placing a trade in the foreign exchange market is simple. An exchange rate is simply the ratio of one currency compared against another currency. The object of forex trading is to exchange one currency for another with the expectation that the price will change, so that the currency you bought will increase in value compared to the one you sold. You would buy the pair if you believe the base currency will appreciate (gain value) relative to the quote currency. You would sell the pair if you think the base currency will depreciate (lose value) relative to the quote currency.

Example:

EUR USD - You purchase 5,000 euros at the EUR/USD exchange rate of 1.1800
Two weeks later, you exchange your 5,000 euros back into U.S. dollar at the exchange rate of 1.2500

EUR 5,000 x 1.18 = US $5,900  
EUR 5,000 x 1.25 = US $6,250
You earn a profit of $350

How to Read a Forex Quote

Currencies are always quoted in pairs, like GBP/USD or USD/JPY. The reason they are quoted in pairs is because in any foreign exchange transaction, you simultaneously buy  one currency and sell  another.  

GBP/USD = 1.4995  
The first listed currency to the left of the slash (“/”) is known as the base currency (in this example, the British pound), while the second one on the right is called the counter or quote currency (in this example, the U.S. dollar). When buying, the exchange rate tells you how much you have to pay for one unit of the quote currency in order to purchase one unit of the base currency. In the example above, you have to pay 1.4995 U.S. dollars to buy 1 British pound. When selling, the exchange rate tells you how many units of the quote currency you get for selling one unit of the base currency. In the example above, you will receive 1.4995 U.S. dollars when you sell 1 British pound.

The base currency is the “basis” for the buy or the sell. If you buy EUR/USD this simply means that you are buying the base currency and simultaneously selling the quote currency.  


Long/Short

First, you should determine whether you want to buy or sell.
If you want to buy (which actually means buy the base currency and sell the quote currency), you want the base currency to rise in value and then you would sell it back at a higher price. In trader’s talk, this is called “going long” or taking a “long position.” 
Just remember :- long = buy.

If you want to sell (which actually means sell the base currency and buy the quote currency), you want the base currency to fall in value and then you would buy it back at a lower price. This is called “going short” or taking a “short position”. 
Just remember :- short = sell.


What is a currency pair?
How to Make Money Trading Forex
Know When to Buy or Sell a Currency Pair
What is a Pip in Forex?
Forex Trading Tips
Impress Your Date with Forex Lingo
Types of Forex Orders
Forex Trade Your Way to Success
Forex Trading is NOT a Get-Rich-Quick Scheme
How to Make Money with Forex
What is a Lot in Forex?

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FOREX TRADING FOR BEGINNERS

HELLO & WELCOME PROSPECTIVE  FOREX TRADER

FOREX TRADING FOR BEGINNERS 

This is my very first blog in a series of Forex blogs explaining what Foreign exchange trading is, how Fx works, how lucrative Forex is, how to monitor Foreign exchange rates and how fast you can make money with Foreign exchange, if  you have the temperament for foreign exchange trading and some spare money to venture.

The stock exchange has always held a fascination for me especially when the bell rang. Only to see hundreds of men in suits who were standing-by idle, suddenly  leap into action. And whenever  the digital dashboard streams the cost of stocks and bonds, everyone just seem to be shouting buy, buy, buy. However.., the markets has changed and many ex stock market traders have migrated to the Foreign Exchange Market to become forex traders with its more than 2,7 Trillion USD daily turnover. Many people think or even say that to become a  Forex trader is  risky business but it is no different than selling shoes at a profit, or clothing at a profit or even selling a car at a profit. The beauty of online forex trading  is that you don't even have to leave the comfort of your home to trade anymore. It can be done directly from your study or your bedroom or even the kitchen table. All that is required is a laptop or a personal computer, a relatively fast internet connection and an account with a Forex principle and some spare cash  then you can start forex trading. I just heard you say, Ya right spare cash.

Trading Forex for beginners provides ideas to make money online. Many people just wonder, how to make quick money, but here is your practical opportunity to make money online  and earn money online without making an investment. If you are interested and willing  to try your hand at Forex trading don't hesitate, start right away, because there is not time like the present. You don't even need cash, just  sign-up with a Forex broker who can offer you a dry run. Meaning, they will teach you how to earn money online and spot you the money; as much as  $50 K virtual cash with which to trade, just to see how good you are at it. With this money you make actual purchases, you see the "Ask" and the "Bid" as well as the most important,  "Spread". You could make a bundle on cash very quickly but if you sucked, remember you didn't lose of your own money. If you did great, so sorry, unfortunately  you won't be sharing in the profits since it was virtual.

However, if you made a killing and had fun and you are convinced that you can do Forex Trading part time, then you should venture your spare money. Just six months to a year of forex trading would give you such great confidence and profits, that you may think of giving up your day job since you will be on your way to becoming a forex billionaire. You may even want to join the Forex Billionaires Club.

I highly recommend that you click on one or more of these links and select  a demo forex trading account since it won't cost you anything, and follow this blog for an online education in trading Forex.  

Click on this link or one of the other links above, for  FREE online courses and forex practice accounts. Perhaps this is just  the encouragement you needed to  become a forex account manager.


Disclaimer!
NB! My blog is purely of an educational nature. It provides knowledge about Forex Trading and fills the educational gap that exists in currency trading. Any and all ideas shared on this blog are merely suggestions and are not to be acted upon without sound Foreign Exchange knowledge.   Please make sure that you understand the risks involved before committing to Forex Trading. Never venture cash that you cannot afford to lose. I cannot and will not take responsibility for your inability to trade foreign exchange nor for Profits & Loss.  I do not recommend forex funds, nor advise, neither provide tip for Forex trading. Enroll in a Forex course and become proficient before venturing your money. I highly recommend that you click on several of this links and create a practice account with one of them since it won't cost you anything