Why Doing Paper Trades As A Forex Beginner Is Vital To Success As A Foreign Exchange Investor

Forex Basics

Why Doing Paper Trades As A Forex Beginner
Is Vital To Success As A Foreign Exchange
Investor

Like anything in life just going full guns a blazing into anything can be detrimental to your health or wealth. it may look good at the time,and be attractive,but hazardous to your bottom line.But if you're strong enough mentally to handle losing a lot of money in business,stocks or even what this article is about, Foreign Exchange Trading;by all means forge ahead. But most people don't understand what they're doing investment or business wise, and that's why I always tell people to understand an investment and educate yourself as well. And even more vital is to use money you can afford to lose.

But what most people should do when investing in the the Forex market is not to just invest small amounts in currencies of various countries,but do actual paper trades. Don't actually put your hard earned cash in the currency market. Or what you can do is dip your toe cash wise into buying one currency,and do some paper trades buying, or simulating buying a currency. Don't buy more than   one currency at a time. You're not a swash buckling cowboy Forex Trader yet there, "Pecos Bill."

Now see what would happen if you bought a foreign currency on a certain day and time,and watch it over a week,or two weeks. Buy a very small amount on paper. Remember this is a simulation. Don't use your money for this. Just do what I call a pretend Forex buy.

Give yourself a time period of two weeks to see if that currency went up or down. Buy US dollars or Canadian dollars first if you're not educated on foreign currencies. Remember this is a simulation. Buy anywhere from 10 dollars to 100's at the most. Even though it's simulated,a lot of new traders think if they make a bunch of cash doing paper trades,that automatically will make them a profit in the future if they invest actual money.No,this is a long term education,and you have to use money you can afford to lose. This is a high risk investment guys. The best investors are educated,use small amounts of money,and strategically invest in the Forex Market,and aren't easily swayed buy what everyone else is doing currency buying wise.

As well,when you use money to buy a currency,or do simulated buys,figure out how much a currency will cost you to buy,especially if you don't have cash in that particular currency in a bank account. Because there is an exchange rate to just buy a foreign currency,and that's why you have to educate yourself,invest small amounts--and do paper trades. Yes, you can make some paper trades using thousands of dollars,just don't get drawn into it thinking just because you made a nice profit with some paper trades that if you use thousands of dollars of your own actual money,it will result in   even more profits. Doesn't work like that guys.

Remember to dip your toe in if you're using your own money.

I know this seems like a lot of hard work,and yes it is. But well worth it if you follow my silly little rules Forex Trading wise.

Forex Charting Basics---Bars Versus Candlesticks

Forex Charting Basics---Bars Versus Candlesticks

This Forex article is fairly simple regarding understanding charts that show you where a currency is trending,and how to use it as leverage to make intelligent moves currency investment wise.

Forex Chart: A Forex chart is a numeric guide that shows you currency prices and if they were up,down,stable or being very volatile and spiking up and down price wise.

Bars and Candlestick charts are the two most common types. A bar shows the price of a currency if it goes up or down and what it eventually closes at each trading day. Or where a currency trends at,at various times of the year.

Daily Charts: They represent a number of bars in a given day of trading a certain currency.

There are even shorter charts charts that specify even short periods of time in a given day of trading because certain currencies may be spiking more than others---or trending in time frames as short as 10 to 20 minutes.

Bars and Candlesticks:

Why these currency charts are vital to success with Forex trading

There are certain patterns currency wise which indicate where a currency will end up during the normal day of FX trading. So, educating yourself as a trader to see where the prices are trending helps you determine if a certain currency is being held longer periods;or people are losing faith in one and either selling or pairing totally different currencies.

You can even short a currency like you do when you buy a common stock, and wait until a currency spikes and trends downward,and starts going back up. If you and other traders can corner the market on a currency, and sell at a nice profit,you can do well as a trader.

This is not a Forex ploy I would do very often though. There may be legal issues involved.

But obviously you want to make a profit trading FX.

Bar Graphs:

A bar that is trending downward is considered  a bearish type trend. These bars are red in color. This just means that what you closed at was lower than what you bought it at,at the opening.

Candlestick Graph:

Okay,next we have the good old candlestick bar. These are green in color and bullish. Meaning prices are going up and higher than what they started at. Even though this is basic numeric info on a certain currency, it gives you the exact info you require to make a decision to buy,sell or trade currencies.

What I suggest as well even for you the savvy FX trader;even if you’re not sure on whether to invest in a currency, is to do paper trades. Yes paper trades. Be your own FX analyst. Think about Hedge Funds and major mutual fund companies. They hire 100’s of analysts and they understand the markets more than an individual who buys common stock. You can’t beat them. You can’t.

Study currencies like crazy,and read articles from top FX traders as well.

Going back to what I was saying….

Paper Trades:

Do paper currency trades for a number of weeks before you plunge into the FX market. Actually, even if you are a great FX trader,continue doing paper trades. That way you have actual data of your own to refer to. Not just some top traders results. His results don’t parallel yours,so do the work you need to do to profit.

If you’re an emotional investor that’s worse,and why you have to do your homework FX wise. Study it like crazy,do paper trades,and even interview top traders. Do what you need to profit. Work harder than the next guy to get the information no one else is willing to get.

As well, when you start investing in FX, take small risks with money. Money you can afford to lose. And do what you need to educate yourself and get the info no other FX trader is willing to get.

Don’t blindly invest in FX.

You can do this. Much success to you.  

When Can You Trade and Buy Foreign Exchange Currencies---Worldwide?

When Can You Trade and Buy Foreign Exchange Currencies---Worldwide?

The Risks and Why You need To Educate Yourself

In essence you can buy and trade Forex currencies 24/7.

Forex trading runs a little different than the regular stock exchange being that it starts Monday in Sydney,Australia. Then goes to London and Tokyo then New York.

One of the greatest things about Forex is that you can trade it or buy it any day, time or city. With the advantage of a 24 round the clock cycle, if you're one who lives for volatility,then you can grab a currency, or pairs when they're way down rate wise,and sell on the way up.

All of this done 24 hours a day.

You can easily get on your computer and tap the Forex market in any country all by watching the digital "ticker tape" so to speak.


Mind you just because a currency is down for the count does not mean it's going to rise,and you'll easily get a buyer.

Fair Warning: The Forex market is even more volatile than the conventional stock market,and if you're more of an emotional investor who is very conservative, I would make sure that first of all you educate yourself like me on the Forex market--and do some what I call "paper trades" or simulated trades,and see if you come out ahead.

Do some very conservative and risky trades. This way you'll know or at least have a slight idea as to whether you're a conservative or risky investor. Remember, I said slight idea.

Just because you did paper trades of a risky nature, does not mean you'll have no issues with losing money on certain forex buys and trades.Most people are very conservative like me,and can't really handle the emotional ups and downs of foreign exchange buys.

Educate yourself every day if need be,and do paper trades for a number of month's if you have to before dipping your toe in the shark-infested waters of Forex. When you do start investing in Forex,take very small amounts of money that you can afford to lose. If not,don't do it yet. or not at all.

The choice is yours.

The next article I'll have up on the blog is: Do you really want to trade in the Forex market? If so, why, and how to do it properly without losing a boatload of dinero. Cash that is.

Forex Basics 101 Currency Market Tips When Investing In Currency Pairs

With issues such as financial woes in the Euro-zone,and quantitative easing devaluing currencies as well, buying,trading and selling currencies can be dicey at best. But this Forex piece focuses  on currency markets and what currency pairs look like. Key factors influence exchange rates,and if you were implementing currency trading models such as “Spread Betting” would assist you in deciding whether a currency will rise or fall; there by hedging your bet so to speak---and more likely to profit from a currency buy.

Spread Betting Definition: Basically you're taking a bet on price movement of currency pairs. A company that offers spread betting usually quotes two prices,Bid and Ask price. This is known as   the spread. Traders bet whether the price of a currency pair will be lower than the bid price---or higher than the ask price. The narrower the spread the more attractive the currency   pair is to the trader. Like spread betting, traders do not need to carry actual currency.

Key Features Of Forex---Or Foreign Exchange Trading

The Forex market is 24/7 and many times larger than the equity or stock market. Also, Forex is very liquid and easier to cash out or make a profit. Or,limit your losses more than the stock   market. All can be done with Forex without taking a big hit financially. And if you speculated correctly on whether a pairing of currencies will go up or down.

Forex Risk:

The Forex market is mot for the faint of heart, or one who wears their emotions on their sleeve investment wise. Then it's not for you. You must educate yourself daily on how to to come out ahead in the foreign exchange market,and if not,just the slightest currency rate drop will have a negative effect on your ability to invest wisely in Forex. Currency exchange rates can drop like a stone,and if you're not ready investment wise,you can be wiped out. But you can use something to at least minimize the damage, or losses to your Forex investments.

You can use what is called: a Stop/Loss to limit money losses. Especially if you're using a Spread Bet tactic. Unlike trading shares,currency trading is known as zero sum game.What this means is you could buy shares that rise or fall together,but the Forex or currency market you're betting usually on one currency against another. One obviously rises and the other falls. Currencies can can rise or fall depending on the value of commodities like Oil,Gas or even Gold. You're hedging bets or taking a major risk when you're betting one currency against another. So,you're picking a currency pair;not one at a time.

Being Bullish On Forex:

If you're aggressive about one currency, the US Dollar, you're most likely laying off on a completely different currency,like the Japanese Yen.

Foreign Exchange Quotes And How They Work:

Like I keep saying Forex does not work like buying or trading shares. There are major currencies globally. The US Dollar/Canadian Dollar/The Euro/Japanese Yen and Swiz Franc. Because traders and various currencies fall at a very fast rate the window of time a trader has before it climbs like a rocket, or falls like a stone is literally at times seconds,or even micro seconds like high frequency trading.

For example when spread betting or speculating you always see currencies described in 3 letter acronyms such as the US dollar--which is USD. Make sure you know and understand what major currencies and pairings look like--as well as where each currency is at that moment--rate wise--and that you're buying and trading the right currency. You could read the currency letters wrong and bet on the wrong horse,so to speak,or currency in this case and lose money.So when you buy currencies there are rates for each one and you have to understand where those currencies are going rate wise on certain factors to do with the economy of a country.

As well,and this is vital,you must have an understanding of the BID and OFFER rate  on each currency. Ask yourself this,are you buying to sell a currency to make a profit immediately, or betting on a currency to rise or fall and hold that currency for a while based on current rates you will get with certain pairings. For example; lets say you have a bid rate of 1.2256,and an  offer rate of 1.2258. It might be shown with,or without decimals but they are still the same rates as they are listed. These are dollar rates. The offer rate is what you buy at from a bank or brokerage,and the bid is what you sell at. For the numbers we're using here,the difference,or spread in the dollar rates here is very little. It's known as a PIP or a 3 PIP spread. And the price you pay buy a currency is 3 of those. So,the less liquid a currency is,the wider the spread.

So,just what makes a currency worth a certain rate?

There are many things that make a currency worth a certain amount. A country's trade balance can have a definite effect on whether a currency goes up or down. When people buy a product or service they require dollars,and  if demand for certain products or services of a business is strong,it will make the demand for currency of that country stronger. So,interest rates and inflation go down or up in concert with the economy and it's ability to attract a strong currency. I'll have more on how to actually invest profitably in the Forex market in coming articles. I hope this gives you some insight into what's involved in the Forex market. You need to be educated first. Then you can slowly dip your toe in and get started making money with various currencies on a global basis.

Forex---Or The Foreign Exchange Market What It Is And And Why It's Bigger Than The Stock Market

Forex---Or The Foreign Exchange Market

What It Is And And Why It's Bigger
Than The Stock Market

The foreign exchange market is a type of investment or market that buys and sells currencies of various government's worldwide; and is literally a multi trillion dollar market.

That's right Multi-trillion!

While most stock markets trade in tens and hundreds of billions,the Forex market dwarfs even the largest stock exchanges globally, of major countries that buy,sell and trade stocks and equities.

The Forex market is actually larger than the USA,Japanese or Euro Zone based stock markets as a whole grouping.

Any type of financial institution trades in the foreign exchange market.

Where as the stock market has exchanges where every major country is, Forex or buying currencies can be easily bought and and traded by anyone in front of a computer at home, or in a day trading office in your town.

And, you can buy,sell and trade foreign currency 24/7.

So,just what is involved in the buying and trading of currency in the Forex
market?

In essence you're buying the currency of one country and selling a different country's money--or currency.  

How Do You Make Money In The Forex Market?

How you make money or profit being in the Forex market is by buying and selling,or the swapping of various country currencies.

You do all this by figuring out which way you think a currency is going to go. Is it going to go down,go up or just crater and go into negative territory?

As well,you're determining if a currency is going to go down or up for either a very short time,or possibly a long time period.

Yes,there are similarities to buying and selling stocks,but the Forex market is much more volatile,and can wipe you out,make big,small or modest gains. You must understand why and how a currency is going down or up. That can be based on trading policies,interest rates and even how well major multi-nationals are doing globally as well.

Here is a list of the world's major Forex currencies. With the country name and the symbol
which specifies the country and it's dollar or currency.


Country:        Symbol:

Japan           JPY
 
Europe          EUR

United States   USD

Switzerland     CHF
   
Great Britian   GBP

Canada          CAD

New Zealand     NZD

Australia       AUD

In my next article on the Forex market I'll talk about what countries are the best to either take more risks for larger gains,or how to play it conservative. As well, what currencies to pair up and trade.

Much Forex success!