How You Make Money Trading Forex

In the forex  market, you buy or sell currencies. Placing a trade in the foreign exchange market is simple: the mechanics of a trade are very similar to those found in other markets (like the stock market), so if you have any experience in trading, you should be able to pick it up pretty quickly.

The object of Forex trading is to exchange one currency for another in the expectation that the price will change, so that the currency you bought will increase in value compared to the one you sold.

Example of making money by buying Euros

*EUR $10,000 x 1.18 = US $11,800
** EUR $10,000 x 1.25 = US $12,500

An exchange rate is simply the ratio of one currency valued against another currency. For example, the USD/CHF exchange rate indicates how many U.S. dollars can purchase one Swiss franc, or how many Swiss francs you need to buy one U.S. dollar.

How to Read an FX Quote Read the rest of this entry »

Fundamental Trading

Two Types of Trading

There are 2 basic types of analysis you can take when approaching the forex:

1. Fundamental analysis
2. Technical analysis.

There has always been a constant debate as to which analysis is better, but to tell you the truth, you need to know a little bit of both. So let’s break each one down and then come back and put them together. Read the rest of this entry »

Protect Yo Self Before You Wreck Yo Self

Before we go any further we are going to be 100% honest with you and tell you the following before you consider trading currencies:

1. All forex traders, and we mean all traders LOSE money on trades.
   Ninety percent of traders lose money, largely due to lack of planning and training and having poor money management rules. Also, if you hate to lose or are a super perfectionist, you’ll probably have a hard time adjusting to trading.
2. Trading forex is not for the unemployed, those on low incomes, or who can’t afford to pay their electricity bill or afford to eat.
   You should have at least $10,000 of trading capital (in a mini account) that you can afford to lose. Don’t expect to start an account with a few hundred dollars and expect to become a billionaire. Read the rest of this entry »

Technical Trading

Technical Analysis

Technical analysis is the study of price movement.  In one word, technical analysis = charts.  The idea is that a person can look at historical price movements, and, based on the price action, can determine at some level where the price will go.  By looking at charts, you can identify trends and patterns which can help you find good trading opportunities. Read the rest of this entry »

Know Your Profit and Loss

School of Pipsology

Forex education is crucial for beginners.

School of Pipsology is designed to help you acquire the skills, knowledge, and abilities to become a successful trader in the foreign exchange market. Our definition of a successful trader is having the ability to do three things:

1. Make pips
2. Keep pips
3. Repeat

If you can repeatedly do these three things, then you’re on your way! But it’s no cakewalk. Read the rest of this entry »

What is FOREX?

The Foreign Exchange market, also referred to as the “FOREX” or “Forex” or “Retail forex” or “FX” or “Spot FX” or just “Spot” is the largest financial market in the world, with a volume of about $2 trillion a day. If you compare that to the $25 billion a day volume that the New York Stock Exchange trades, you can easily see how enormous the Foreign Exchange really is. It actually equates to more than three times the total amount of the stocks and futures markets combined! Forex rocks!

What is traded on the Foreign Exchange?

The simple answer is money. Forex trading is the simultaneous buying of one currency and the selling of another. Currencies are traded through a broker or dealer, and are traded in pairs; for example the Euro dollar and the US dollar (EUR/USD) or the British pound and the Japanese Yen (GBP/JPY).

Because you’re not buying anything physical, this kind of trading can be confusing. Think of buying a currency as buying a share in a particular country. When you buy, say, Japanese Yen, you are in effect buying a share in the Japanese economy, as the price of the currency is a direct reflection of what the market thinks about the current and future health of the Japanese economy.

In general, the exchange rate of a currency versus other currencies is a reflection of the condition of that country’s economy, compared to the other countries’ economies.

Unlike other financial markets like the New York Stock Exchange, the Forex spot market has neither a physical location nor a central exchange. The Forex market is considered an Over-the-Counter (OTC) or ‘Interbank’ market, due to the fact that the entire market is run electronically, within a network of banks, continuously over a 24-hour period.

Until the late 1990’s, only the “big guys” could play this game. The initial requirement was that you could trade only if you had about ten to fifty million bucks to start with! Forex was originally intended to be used by bankers and large institutions – and not by us “little guys”. However, because of the rise of the Internet, online Forex trading firms are now able to offer trading accounts to ‘retail’ traders like us.

All you need to get started is a computer, a high-speed Internet connection, and the information contained within this site.