The Foreign Exchange (Forex), also abbreviated as “FX”, is the world’s arena for exchanging one nation’s currency for that of another. The foreign exchange market is the largest financial market in the world, with more than $5 trillion exchanging hands each day. This is seven times the aggregate amount of U.S. Equity and Treasury markets. The Forex market is unique in that it has no physical location and no central exchange.
The Forex market is made up of several different players, ranging from multi-billion dollar corporations to just one individual trading from his/her home. The market is segmented between commercial participants and retail participants. The commercial players include central banks, investment managers and hedge funds and corporations, just to name a few. Retail traders are individual speculators. These traders make up a much smaller group that produces $50 to $100 billion in turnover each day.
Leverage in the Forex market refers to borrowed funds and varies by broker as well as your country of residence. In the United States for example, the maximum leverage permissible is 50:1. This means that for every $1 you put up, you are able to trade $50 of a major currency. This gives a $1,000 account $50,000 worth of buying power.
The Forex market never sleeps. It’s open 24 hours a day, 7 days a week. A common misconception is that the market closes over the weekend. The truth is that the market continues to operate even on Saturday and Sunday in order to facilitate international business transactions, among other things. However retail trading is restricted during this time, thus giving the retail trader a chance to make money between Sunday at 5pm EST and Friday at 5pm EST.
Making money trading Forex involves trading “pips”. Pips are just another name for points in the Forex world. The idea is to capture pips. The value of one pip depends on the amount being traded. For example, trading one standard lot means that each pip is worth $10 when trading a major currency pair. So if you capture 100 pips on EURUSD while trading one standard lot, you just made $1,000 in profit.
A "lot" is essentially a bundle of units in the Forex market. There are three types of lots – standard, mini and micro. A standard lot represents 100,000 units traded. A mini-lot represents 10,000 units and a micro-lot represents 1,000 units. For example, if you wish to buy 10,000 U.S. dollars, you are buying 10,000 units, or one mini-lot.
Not necessarily. At least not in the traditional sense of gambling. In order to become a consistently profitable Forex trader, you have to start thinking like the casinos. A casino makes business decisions based on probabilities, not possibilities. By thinking in terms of probabilities, you will inevitably begin stacking the odds in your favor. That’s how a profitable Forex trader thinks.
In most financial markets, trading long (buying) is the more common approach. The stock market for example requires special account privileges in order to be able to short (sell) a security. One great thing about Forex is that you can trade long or short regardless of the type of account you have. This is because currencies move in pairs. So if you short the EURUSD, you are actually selling the Euro and buying the U.S. Dollar. Alternatively, if you go long the EURUSD, you are buying the Euro and selling the U.S. Dollar.
Price action trading, or simply price action, is a form of trading that relies solely on the raw movement of prices. It’s all about identifying key levels in the market and then watching for price action strategies to signal a potential trade opportunity. There are several different ways to trade price action, including pin bars, inside bars, engulfing bars as well as a variety of Forex breakout strategies. Like all things when it comes to trading, learning how to profit from price action takes a great deal of practice.
Absolutely! In fact the only thing that separates the successful Forex traders from those who aren’t is the fact that the successful traders never gave up. Although becoming successful is certainly possible, it doesn’t happen overnight. It requires formal training and no small amount of effort and persistence.
Studies show that just 10% of Forex traders actually make money. That means a whopping 90% of traders lose money consistently. Why is that? Simply put, the 90% of traders who lose don’t have a defined edge – something that stacks the odds in their favor. The absence of a sound trading plan and money management strategy are other commonalities among losing Forex traders. But above all else, 90% of traders struggle because they are making emotional decisions on the basis of fear and greed. This is why a comprehensive Forex education is vital if you want to make it to the top 10%.
Getting started trading Forex is easy. There are a number of websites, including this one, that publish free content for the aspiring Forex trader. That said, the ease of getting started trading Forex is part of the problem. Most professions require a degree, typically spanning four years time. But with Forex, you can begin trading today from the comfort of your own home. While this may be tempting, it’s important to understand that only 10% of Forex traders make money consistently. Those traders have studied long and hard to get where they are and you will need to do the same if you wish to succeed. Be sure to do your homework before you start trading with real money. Research the various firms you plan to use as well as the trading strategies you will trade with.
The amount of money you can make trading Forex is largely dependent on several factors. However the true answer to the question is that there is no limit as to how much you can make. At the time of this writing, the Forex market is a $5.2 trillion marketplace and many traders have gone on to make billions – but it isn’t easy by any stretch of the imagination. How much you make depends on several factors including but not limited to your trading education, your ability to remain unemotional as well as how much money you start with.
A lifetime membership with Daily Price Action is all about interaction and immersion. Studies have shown that the best way to learn anything is to immerse yourself in the subject. A DPA membership will do just that by giving you access to written lessons, videos and an interactive forum. I take an active role with all of my members, posting setups with annotated charts and providing feedback. My only goal is to make you a profitable trader by providing an experience that I know you’ll love and that has been proven to work. That’s why I offer a 30 day money back guarantee. No gimmicks, no strings attached. If for whatever reason you aren’t satisfied, just send me an email within the first 30 days and I will refund every penny.