Today Forex trading is one of the most popular online revenue sources. Previously, Forex (Forex, FX – an abbreviation of the English phrase FOReign EXchange (Wikipedia) was available only in a certain professional environment. Nowadays everything has changed due to the rapid development of the Internet and its arrival in every house, and more and more people are interested in obtaining a stable online income.
Forex is an international financial market in which the currency acts as a commodity. It was created for currency exchange, works around the clock, includes a large set of trade, investment and speculative operations carried out with the help of a complex system of institutions (banks, dealers and brokers, insurance companies and pension funds, etc.).
Forex trading has become an affordable way to generate high income. To start work in the financial markets, you need to be trained, to learn what Forex is, choose the right broker and trading platform, go through a quick registration and demo trading, and finally start earning the income that you personally need to achieve your life goals.
What is Forex trading and how do i cash in on it?
So to speak, it is a board of trade through which anyone can trade, so long as they correctly use data on the growth and decrease in the value of foreign exchange quotations.
The market provides a huge number of operations per day. It has no geographical constraints, is large-scale and capable, and is easily accessible, even for traders without special education. Today, board of trade employs a large number of online traders who trade currency without leaving home and consider Forex additional or their main source of income.
Without a certain trading platform, Forex trading gives an opportunity to earn real money by taking a certain position toward currency. Forex operates according to a simple rule: a trader trades one currency against another, buying when the value of the currency is set to grow (long position) and selling when the value is likely to fall (short position). At the same time, there are not many currencies (only Euro (EUR), Pound Sterling (GBP), Japanese Yen (JPY), US dollar (USD) and Swiss Franc (CHF), unlike a large set of tools in binary options, which allows you to concentrate on the currencies’ movement and easily track changes.
To achieve good results, speculators learn profitable strategies, reliable indicators and trading platforms, and technical and fundamental analysis. So trading in the Forex market requires the ability to properly assess information, analyze the charts, choose the correct entry position, and place orders for buying and selling, as well as the ability to correctly choose a Forex broker.
Basic concepts in Forex market
Long — opening of a long position aimed at the purchase of currency.
Short — opening of a short position aimed at the selling of currency.
Lot — is an indicator of trading volume measuring standard unit operation for selling or purchasing of currency.
Trading Volume — is an indicator of the rate, which will significantly increase the income (if the volume is large), or make it less significant (if the trading volume is minimal).
Order Execution Type — is an option to execute the order; it could be instant and market.
Instant Execution — instant execution of the order at the declared cost.
Market Execution — type of the order execution when the order is executed not at the declared cost, but at market.
Ask — is the price at which the currency could be purchased.
Bid — is the price at which the currency could be sold.
Spread — the difference between the cost of Bid and Ask, which the broker earns; it could be fixed or variable
Fixed spread — this type of spread always has one value. It is stable and does not change its value under the influence of various factors (market fluctuations, volatility, daypart).
Variable spread — unlike the fixed, this type of spread changes its value depending on different factors (sharp market fluctuations, daypart, etc.).
Stop loss — is a pending order that allows fixing income and stopping losses by automatically closing the trade if the selected currency starts moving against the trader’s position.
Take profit — is the type of order that allows generating income by automatically closing the trade as soon as the selected currency reaches the required value level.
Pending order — is a specially established order for the purchasing and selling of currency in the future at a specified price. Types of pending orders are set as:
Buy limit – is an order to purchase a currency at a lower cost than the price when placing an order, which is set by the trader and relied on to decrease price.
Sell limit – an order to sell a currency at a higher price than its indicator when opening an order; set by a trader and relied on to increase price.
Buy stop – is an order to purchase a currency at a higher price than its value when placing an order, which is set by the trader and relied on to increase price.
Sell stop – is an order to sell a currency at a lower price than its indicator when opening an order, which is set by a trader and relied on to decrease price.
Forex trading: an affordable way to earn money through the Internet
Forex trading has become one of the most popular and affordable sources of online income. Anyone can get acquainted with the possibilities of this market and get in on the bottom floor of the Forex market. To get a decent income, a trader should be guided by a simple principle – «at or better» – and be aware of the rules of money management, pending orders, stop loss, etc. However, this is not simple speculation but impressive analytical work. As such, only serious users become professional players of the market, and this kind of work becomes sustainable for them.
In the Forex market, it is sufficient for a trader to do relatively few things: just set a position (long, short), specify the volume of the trade, also using orders, types and variants of execution of orders. And yet, in order to make stable income from Forex trading, an individual should commit to constant self-improvement: reading professional literature and thematic forums, passing special courses, finding profitable strategies, and testing indicators. As an option for freelancing or a remote online job, Forex deserves to develop and achieve more with the help of competent trading.
Difference between Forex trading&binary options
Future traders should know the difference between Forex trading and binary options. To obtain income from the Forex market, the trader needs to ensure that quotations, following the forecast, are higher by a substantial number of points than the value when the transaction was opened, and then close the trade. In binary options trading, the process is different: the trader does not need to keep track of the number of points, as in Forex; here it’s enough for the price schedule to follow one point in the direction of the forecast for maximum income.
In addition, in binary options the time of the end of the trade (expiration) is known in advance; when buying an asset on the Forex market, the trader must close the deal himself at a time that is profitable to him and decreases the risk of losses. Such losses are excluded in binary trading: the trader can’t lose more than he put on the trade. And yet, serious traders may be more profitable working in Forex, which allows them to obtain a higher income in the case of trading on trend and correctly using of orders, taking into account spreads, etc.
Why do you need a broker?
To start trading on Forex, a trader first of all needs a dealer with a certain amount of experience and reputation, who serves the trading process and provides opportunities for comfortable and profitable work. The broker is, first of all, a serious legal entity providing access to Forex trading, where trading participants carry out their own operations, acting according to the acceptable system framework. It is important to be particularly careful in choosing a Forex broker as there are a lot of companies in the market; among them are as the undisputed leaders as well as new companies. The choice of broker in this case will be influenced not only by the actual reviews of traders in the network, the availability of licenses, and experience, but also by such parameters as the provision of spreads, the accuracy and speed in order execution, the availability of bonuses, loyalty programs, etc.
After signing the contract with the broker, the trader gets access to a free demo account, functional trading terminal, analytics, training materials and other options. However, the broker’s role does not end with this; the broker guarantees the execution of orders in a short time, provides trade (credit) leverage – that is, a kind of interest-free loan, which can be used when working with the currency – as well as a large selection of ways for entering and withdrawing funds, consultations, etc.
Forex trading platform
The brand owner of one of the most popular trading platforms in the world rightly noted that «successful trading in financial markets starts with a convenient and functional trading platform» (from the website metatrader5.com). It is difficult to disagree with this claim. In choosing a reliable broker, you are only halfway to success. The other half requires a well-chosen terminal – one that allows you to understand and carry out a full-fledged trade and take advantages of all its features.
Today, there are a large number of Forex Trading Platforms (for example, MetaTrader 5 (continue to site), NinjaTrader (continue to site), ZuluTrade (continue to site), SpotOption (continue to site), Mirror Trader (continue to site), etc.) and to choose the most suitable from among them, you must remember that the terminals must provide such qualities as:
- Safety, which will allow you to keep money and personal data away from network law-breakers;
- Functionality, or advanced opportunities for trading and conducting analysis with indicators, graphical elements, testing strategies, tracing the history of trades;
- Comfort of the program, the presence of an intuitive interface, user-friendly design, color design—all this should not prevent you from doing the main thing, which is placing orders to receive and increase the income;
- Availability of demo account, which is usually provided by brokers for free. This account is necessary for testing the capabilities of the system without the risk of personal fund loss;
- Availability of training materials, courses, webinars, which are usually provided by all leading Forex brokers.
Forex trading on Android and Apple
With the rapid development of mobile technologies, obtaining income from Forex becomes possible with the help of convenient and functional applications. Apps to trade on mobile devices are offered by the majority of leading companies; often, such an app is a free program that a trader can easily download from the official website of the broker. Typically, apps contain a mini-copy of the trading terminal, a personal account with the ability to replenish and withdraw funds, indicators and graphical elements for analysis and testing of trading strategies.
The advantage of such solutions is that the trader can fully trade in the Forex market (as well as work with the deposit balance, analytics, strategies) when it is convenient: from anywhere in the world, at any time. To access the market today, a personal account PC is not required; it’s enough to have smartphone and Internet access.
Money Management & Forex trading. 10 rules of Money Management
Professional traders confidently say, as one of the main points of successful trading, that money management, or «capital management», will allow you to competently approach income planning so as to ensure the inflow of stable online income. And that’s right: using the rules of money management in trading, you can achieve high results; beginning traders who forget about that rule come to failure. Knowing that the market possesses heightened risks, it is necessary to observe the rules of money management to be able to properly manage capital.
One of the founders of money management rules is the legendary trader D. Livermore, who determined 5 points on which the modern money management is based:
1. Try not to lose money all at once; that is, do not invest all your capital on one trade.
2. Use a protection order to protect your capital from losses and risks as much as possible.
3. Determine the cash reserve, which can be traded on Forex.
4. Allow positions to grow with a profitable trade, allowing for minor losses.
5. Transfer the income to money and keep the money in reserve.
To abovementioned rules, we will add the following, which are equally important for the trader:
6. Prevent large losses, keeping them at a level of 2 to 5%, which is worth remembering when placing stop losses.
7. It is necessary to observe the ratio of profit to loss, to implement the ratio of take profit to stop loss as 3 to 1; that is, the profit should be three times more than the loss.
8. Do not open too many trades at once; the market does not like greed.
9. Do not try to retrieve the losses if the trade doesn’t go in your favor; take a deep breath, calm down, and leave the market – doing so will save you money.
10. Avoid unnecessary emotions; trade calmly and carefully, make clear decisions and be confident.
Sometimes professionals say that money management is much more than a trading strategy; it is an opportunity not only to win, but also not to lose. Remember this and use the rules of money management in trading.
How to trade Forex properly?
How to trade Forex properly and where to start trading is one of the common questions for beginners. In order to succeed, you need to find time for serious preparation for trading, clearly understanding the goals you want to reach and what you want to achieve. In order to trade Forex properly, you need to:
- Pass good trading training, research market fundamentals (to know about the laws of the markets, formation of supply and demand, trends, levels of support and resistance, etc.). This can take the form of both free courses and paid professional training programs. In any case, theoretical knowledge on how to trade Forex properly is the basis of your future success.
- Read books about the market and the experience of successful traders with a worldwide reputation.
- Find Forex brokers and keep track of broker ratings in order for your trading to be reliable.
- Try demo trading on a virtual account in order to get acquainted with the possibilities of the market and trading system.
- Try to make the first trades on a real account, remember the instability of the market and possible losses and learn to treat them calmly.
- Find and test trading strategies that will help to achieve good profitability.
- Develop a trading strategy that takes into account your capabilities and strengths, use the tools and knowledge you have tested and that have brought in a decent income.
- Improve yourself constantly: read books, test trading techniques, get acquainted with traders, build your own psychological preparation for trading.
Forex trading: scam for dummies or truth?
Forex Trading: scam for dummies or still a real opportunity to earn? The answer to this question is of interest to all who are thinking about generating online income. The situation is complicated by the fact that there are a lot of negative reviews on the Internet, stories that Forex took all of a person’s money and did not give them the opportunity to earn. And these reviews are true, but the whole story is more complex. Yes, people confidently claim that Forex is a scam and a fraud. But when they started currency trading, how honest were they with respect to their own training, etc. What was their training and experience on a demo account, what were their actions, etc.? The truth about Forex is that incompetence and unpreparedness – the first cause of negativity on the Internet.
We will not argue that all reviews should only be positive; this is wrong and unnatural. But, the reviews also should not be wholly negative. Indeed, there are many examples of successful traders who appear on television, give interviews, who live a different life than the average person and are not ready to stop trading.
The second reason people claim Forex is a scam is the presence of fraud and scammers whose goal is to take money from traders and disappear.
Distinguishing fraud from a serious company is a lot like being able to tell the difference between a good offer at the supermarket and one that’s pushing a spoiled product; if you make the right choice, you will help your budget. We’re able to choose products, but we cannot choose a broker. Finding a reliable broker is also an important job, which requires studying the reviews of traders and website materials.
The market and its essence are the third reason why more and more traders are confidently claiming that Forex is a scam. When becoming acquainted with Forex, you should know that the market is 100% impossible to predict; it is chaotic and dynamic. You need to be able to adapt to it, properly using risk management, money management, and stop losses. If you take the example of chess, no professional can accurately predict the course of action of his opponent, but he knows much more – how to build a line of defense and not to lose his position.
In Forex, all of these strategies are available only to serious market players. So, what is the problem and why do so many people see Forex as a scam? There’s one reason – the unwillingness and inability of people to spend enough time preparing for the work, their blind hope for immediate money, and greed. And yet, if you are willing to work hard, you have a great chance at succeeding in Forex trading.
How to start Forex trading?
How to start trading on Forex: it is very important for anyone who is trying to get acquainted with the financial market to get an answer to this question. In order for Forex to not become a scam, you need serious preparation, which can be obtained by following several important points:
1. Decide for yourself – is this really what you need? Forex gives you the opportunity to generate income, but are you ready to work for this, always improving your knowledge, learning to analyze the market, and tracking its dynamics?
2. Then, realizing that you want to try Forex trading for yourself, you can start learning: take courses, participate in webinars, read more than one book, etc.
3. Choose a broker to whom you can entrust your capital and reaching the required heights.
4. Trade on a demo account in order to test your knowledge and skills, the convenience of the terminal, etc.
5. Go to a real account and start making real money, being sure to use the rules of money management.
Is it possible to earn on Forex from ground zero?
The whole truth about Forex is that it is possible to make money from ground zero. Moreover, it’s possible for absolutely any trader. To do this, you should constantly follow the news, promotions and bonuses conducted by Forex brokers. Brokers conduct non-deposit shares specifically for market beginners, providing a good chance to obtain decent income for those who are only starting on Forex.
How much can be earned on Forex?
And really, how much can you earn on Forex? It’s a good, but difficult, question to answer, because your income from Forex trading will be affected by a large number of factors: how much you are theoretically prepared to work; how effectively you have worked on a demo account; whether you can really trade within the unpredictability of the market, analyze market situations, and use rules of money management to make better decisions.
In addition, the factors that determine your profit will necessarily be the following: the current state of the market, the size of the deposit, the presence of a profitable trading strategy. All considered, traders, when answering the question «How much can be earned on Forex?», talk about 15-20%, and some investors mention 40% as a good result of the work. Professionals in the Forex market, of course, earn much more than 100%, but you should understand that you’re separated from such income by your experience, your capabilities and desires.