Forex Trading

A.J. TrillzynskiA.J. Trillzynski the IC's Patrick BatemanPosts: 2,101 ✭✭✭✭✭
edited February 2012 in Strictly Business
I've been trading on a demo account for 2 weeks now and about to go live. anyone else do foreign exchange trades or want to learn? It's a very lucrative way to earn extra cash online.

http://en.wikipedia.org/wiki/Forex_trading

Oanda is probably the best forex broker for beginners as well as one of the best in general, open a demo account here:

https://fxtrade.oanda.com/demo-account/

and go through these easy lessons before you start:

http://fxtrade.oanda.com/learn/intro-to-currency-trading

it's pretty simple once you understand leverage. It works like this:

How to make profit?
One of the most difficult things for forex beginners to understand is how you make profits trading currencies. At the same time, since we don't charge commissions, many people don't understand how we make money either.

Here are the answers!

How do you make money?
Let's take an example based on the graph below:

You open an Classic Account with €2,000
You think the Euro will go down against the US dollar
You decide to sell 200,000 Euros once the bid price reaches 1.2850 US dollars
Because you are on 1:100 margin, this costs €2,000 – we provide the other €198.000
There is no margin left in your account at this point
The Euros you sold are worth $257.000 US dollars
You decide to buy Euros once they go down to an ask price of 1.2750 US dollars
The Euro ask price reaches 1.2750 US dollars and you buy
This costs $255,000 US dollars
You have now sold 200.000 Euros for $257.000 and bought them for $255,000
The difference is $2,000 US dollars or €1568 Euros
Your profit for a €2,000 investment is €1568 Euros – a 74.43% return!


Here's another example:

This time you think the Euro will go up
You open a Cent Account with 20 US dollars
You decide to buy 1500 Euros when the Euro ask price goes down to $1.2750
It does and the cost is $1912.50
Because you have 1:100 margin this only costs you $19.12 – we provide the rest
The Euro then goes up to 1.2850 US dollars
You sell your 1500 Euros for $1927.50
Your profit is $15.00 – a 75% return on your $20 investment!
How do we make money?
You've made money trading Euros and dollars. We don't charge any commission, so how do we make money?

Notice in the example above that we talked about bid prices and ask prices. These aren't the same:

The bid price is what you pay when you're buying currency
The ask price is what you get when you're selling - and is less than the bid price
The difference between the two is known as the spread. This is where we make our profit. In the first example above, the spread is 0.0002 or two points, and so our profit is about $30 on $200,000.

Replies

  • A.J. TrillzynskiA.J. Trillzynski the IC's Patrick BatemanPosts: 2,101 ✭✭✭✭✭
    When doing the practice/demo trading it's important to stay in the mindset that this is your own money, and trade with the same volume of cash that you would in real life. I've been simulating the same $5,000 margin I plan to deposit with only 50:1 leverage (you can do up to 500:1) on EURO/USD.... I net at least $300 a day and have had a few trades go over $2,000 net gain. Of course when I start in real life I will up the leverage. It's not as risky as you think, it's up to you to set a 'stop loss' which can be right under the amount you bought so if the currency goes the other direction you'll lose just a few dollars. this might happen a few times but as long as you have a tight stop loss set you're ok, then the 1 time it goes in the direction you want you can either cash in for a few hundred bucks or so or keep moving the goal post up to hope for more. there's a ton of different strategies and the possibilities to make easy cash are virtually limitless, i'm just starting out so will track my progress right here in this thread.
  • Judah BackJudah Back Posts: 6,387 ✭✭✭✭✭
    My dad does Forex trading. He put me on it a couple years back, though college got in the way and I couldnt stick wit it. Shyts fun though. When I get my money back up Imma get back into it.

  • SionSion Moderator, AHH Content Producer, AHH Editor Posts: 23,613 Regulator
    Great thread fam, keep it up. I will try to add on a little here & there.
  • SionSion Moderator, AHH Content Producer, AHH Editor Posts: 23,613 Regulator
    Hey beware of taxes guys, with Forex trading you must be very careful on the tax implications. Sit down with an accountant because there are a lot of loopholes but there are also a lot of ways Uncle Sam can get a huge chunk of your pie which will also bite into returns. I have decent knowledge of taxes but it varies greatly from State to State, Country to Country. It also depends on the amount your moving around too.
  • A.J. TrillzynskiA.J. Trillzynski the IC's Patrick BatemanPosts: 2,101 ✭✭✭✭✭
    Didn't go live yet, wanted to do the demo for a while longer to get a better average. maybe it wasn't the right decision though because i've been getting between $200 to $400 yield a day. i've had my best day today, so far did 3 trades and earned $127 + $201 + $212. i'm starting to get a good feel for when is the best time to trade Euro/Dollar - when its less volatile i can easily tell in what direction the line is trending rather than trying a 50/50 chance to catch many of the up and down swings in either direction.
  • AmotekunAmotekun Posts: 7,820 ✭✭✭✭✭
    Need charts and graphs post.
  • A.J. TrillzynskiA.J. Trillzynski the IC's Patrick BatemanPosts: 2,101 ✭✭✭✭✭
    talking to my economics professor that does a lot of Forex he had some great tips. Primarily, selling USD will be the way to go for a medium term to long term strategy. if you want to do a carry over trade for a few weeks to a few months you will make bank because the dollar will steadily rise throughout 2012.

    posting some screenshots won't help anything. read the links, start the practice trading and get a feel how it really is. come back and discuss if you're serious.
  • valdez21valdez21 Posts: 136 ✭✭
    reaperbong wrote: »
    talking to my economics professor that does a lot of Forex he had some great tips. Primarily, selling USD will be the way to go for a medium term to long term strategy. if you want to do a carry over trade for a few weeks to a few months you will make bank because the dollar will steadily rise throughout 2012.

    posting some screenshots won't help anything. read the links, start the practice trading and get a feel how it really is. come back and discuss if you're serious.

    Starting to practice. Any tips you wanna share?
  • @reaperbong when you start trading how long do you have to have per day dedicated to it?
  • A.J. TrillzynskiA.J. Trillzynski the IC's Patrick BatemanPosts: 2,101 ✭✭✭✭✭
    edited November 2012
    With Forex you choose a currency pair like Euro/USD and that's what you trade in. of course you can trade in as many currency pairs as you want as there's a gang on offer but its usually a good idea to stick with one pair so you can get to know the trends. First thing to do is to find a currency you like (Yen, GBP, Euro ect.) and just casually follow its rate against the USD for a while to get in tune and interested - keep up with news related to that country/region even for a while to start to get a good feel for it. The thing with Forex is there are real trends that can be identified its all about how much you know how the currency pair moves though. Also currency exchange rates track with news and economic developments related to the country as a whole a lot more consistently and predictable than stocks.
    The foreign exchange market is unique because of the following characteristics:

    its huge trading volume representing the largest asset class in the world leading to high liquidity;
    its geographical dispersion;
    its continuous operation: 24 hours a day except weekends
    the variety of factors that affect exchange rates;
    the low margins of relative profit compared with other markets of fixed income; and
    the use of leverage to enhance profit and loss margins and with respect to account size.

    I've had trouble getting back into Forex lately for the same reasons I'd have trouble Day Trading, too much going on in my life. When I was doing it that shit took all my attention from work and I was borderline obsessed with it throughout the work day, eventually I took my $5k I put in + $800 I made and dumped it into shares/debts because I got too busy. Now, I spent a good year doing the real + virtual Forex and I'm confident that if I lost my job it might be something I'd do full-time.. but my attention is more turned to my work and college lately (and my failing marriage but that's another issue lol) Will try and get back into it in 2013 though, I have a lot to learn and gotta keep up with developments that's for sure..
  • A.J. TrillzynskiA.J. Trillzynski the IC's Patrick BatemanPosts: 2,101 ✭✭✭✭✭
    edited November 2012
    @reaperbong when you start trading how long do you have to have per day dedicated to it?

    It all depends if you will go with long to medium term carry-over trades or if you're trying to trade daily and make your $ bit by bit during each day, opening and closing positions in the same day. Same-day type trading I find more difficult as it can be time-consuming and a bit addictive like gambling but if you set your stop loss right you can probably walk away without risking much and just check in on it periodically.

    It's all what you put in mayne there are so many different strategies and ways to go about it, only thing I can recommend is start up virtual trading and get a feel for both general strategies. spend some time trying to make gains with tight positions you will close out before you're done each day and see how that works.. then also try opening up the spread really wide and going for something that's like a week or 2 weeks to a month and try and catch a predictable trend towards a certain direction. So hard to explain fam believe me you just have to do it and once we have some people actually trading (virtual of course) that's when we'll be able to compare notes and talk strategy.
  • black caesarblack caesar Posts: 8,969 ✭✭✭✭✭
    edited November 2012
    List of Forex Brokers:

    http://forex-brokers-review.toptenreviews.com/

    http://www.stockbrokers.com/forex/reviews/bestforexbrokers

    How to avoid being ripped off by Forex Brokers:




    FXCM review:



    Onada review:



    Valentinez A. Kaiser
  • A.J. TrillzynskiA.J. Trillzynski the IC's Patrick BatemanPosts: 2,101 ✭✭✭✭✭
    edited November 2012
    great post, there are so many companies offering Forex now its getting ridiculous, just watch CNBC nowadays and there are constant commercials for Forex.

    speaking of which CNBC has a pretty informative show on the currency exchange market called 'Money In Motion' probably the only show about Forex - check it out if you watch the channel or here's the website: http://www.cnbc.com/id/41157529

    also:
    Forex Factory: http://www.forexfactory.com/
    FX Street: http://www.fxstreet.com/

  • black caesarblack caesar Posts: 8,969 ✭✭✭✭✭
    Ok. I just signed up for a free practice account.
  • black caesarblack caesar Posts: 8,969 ✭✭✭✭✭
    edited November 2012
    Calculating profit and loss with Pips

    *This comes from Currency Trading For Dummies 2nd Edition Chapter 4, Page 57-58

    Pips also know as points have to be broken down into decimals or fractionals. Decimals or fractionals refer to one-tenth of a pip. What does this mean for traders? It means narrower trading spreads.

    For now, though, to get a handle on P & L (Profits and Loss) calculations, you're better off sticking with whole Pips. Most currency pairs are quoted using five digits. The placement of the decimal point depends on whether it's a JPY currency pair (Japanese Yen) - if it is, there are two digits behind the decimal point. For all other currency pairs, there are four digits behind the decimal point. In all cases, that last itty-bitty digit is the pip.

    Here are some major currency pairs and crosses, with the pip underlined:

    EUR/USD: 1.30053
    USD/CHF: 1.0567
    USD/JPY: 84.23
    EUR/JPY: 110.65

    Focus on the EUR/USD price first. Looking at it, if the price moves from 1.3053 to 1.3073, it's just gone p by 20 pips. If it goes from 1.3053 to 1.3003, it's just gone down by 50 pips. Pips provide an easy way to calculate the P & L. To turn that pip into a movement, all you need to know is the size of the position. For a 100,000 EUR/USD position, the 20-pip move equates to $200 (EUR 100,000 x 0.0020=$200). For a 50,000 EUR/USD position, the 50-point move translates into $250 (EUR 50,000 x 0.0050=$250).
  • black caesarblack caesar Posts: 8,969 ✭✭✭✭✭
    edited December 2012
    I found some past issues to Currency Trading Magazine. I never read this mag. Looks interesting:

    http://www.filestube.com/c/currency+trader+magazine

    Here's a torrent link for issues from 04-09:

    http://thepiratebay.se/torrent/4676936/Currency_Trader_2004_-_2009

    Enjoy.
  • black caesarblack caesar Posts: 8,969 ✭✭✭✭✭
    Found this website looking for a book. If you sign up you can download the pdf files:

    http://worldwide-invest.org/forum.php
  • blakfyahkingblakfyahking The IC's Resident Father Figure Posts: 14,663 ✭✭✭✭✭
    any of you cats trading futures or got a connect to do any forward contracts?
  • A.J. TrillzynskiA.J. Trillzynski the IC's Patrick BatemanPosts: 2,101 ✭✭✭✭✭
    big shout out to black ceaser for holding this thread down! i'm done with Forex, not because I didn't make money (I did) but you need to devote some serious attention if you will get into this, it will be on your mind constantly.

    Since I study and work full-time + already watch the markets every day and have a family I just felt it was too much risk that if I got distracted for a few days I might get fucked.

    Totally legit business to get into though.. only probably is really you need to have about $5k to start with. in that case I would much more recommend to invest in stocks/options and exchange traded funds. this stuff is not to be taken lightly and not for the faint of heart.
  • BrazilianHairMoneyBrazilianHairMoney Posts: 1,705 ✭✭✭✭✭
    ive been studying forex.. im thinkin about going with trade rush.. any opinions on this broker?
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