What is online forex trading and how does it work? (Part2 of 2)

... continued from part 1 

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What is forex?

History of the foreign exchange market

The structure and how forex trading works

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Profitability of Forex

I would be using illustrations to explain this. 

Example 1

At midnight after Brexit results collation

Very recently the incidence of a Brexit election to determine if Britain was willing to get out of the eurozone took place and as soon as results showed an aggregate towards an exit the British pound greatly fell in value over a period of hours. At midnight (GMT) the British pound to a dollar was around the price of 1.49233 and within just some hours was valued at 1.34065 pounds per dollar. So every pound owner had a loss of within just that space of time getting lesser purchasing power per dollar. Imagine how much loss that  would mean for those with large capital.

Example 2

Pre election period in Nigeria (Mar 2015), the US dollar was being sold for around 180 NGN (Nigerian naira) to a dollar. Today 29th August 2016, a US dollar goes for ₦400. Now a resident American has higher purchasing power with respect to his/her previous purchases in Nigeria.

Example 1 showed a profit for dollar owners and a loss for pound owners and similarly in example 2 the dollar gained while the naira had a loss. Ordinarily each national would still get goods and services at the same rates as before but as soon as the money moves to the other locale the effect of profit/loss is felt.  One makes more while the other loses.

For retail traders where does the money we make come from?

From everyone else.

Knowing who loses the money we gain or where it comes from is a litmus test for the authenticity of a business. 



Fellow traders who lose, banks, countries and everybody who is on the wrong side of a forex transaction while the loss becomes gain for another. 

How much can be made as daily profit from the forex market?

The forex market is believed to move the sum of 3-5 trillion dollars around daily. On this, I personally believe around 1% of this would be profits for some (lost by others). Taking the lower value of 3 million dollars then an estimated 30 billion dollars is there for the taking every day for everyone around the world. A prudent trader needs only grab a piece of this and forget the rest and repeat this to create a consistent source of income. 

With risks involved, is forex for me?

Maybe yes, maybe no (you decide).

I would say this though if you are already contented with your lifestyle and your family is doing well then I see no reason for you to risk a certainty for an uncertainty which has over 90% of participants losing money daily (burning a trading account is not a strange thing to hear and for some it is money placed in their care). Take the blue pill and go ahead with other businesses that have limited risks like Blogging for Adsense or creating YouTube videos for monetization.

Should you however decide to take the red pill and take the plunge into a business that would literally mean printing your own money on demand or should I say making money on a seat then I would be glad to take you by the hand and walk you through all you need to know about this ever running 24 hrs 5 days a week business. 
 

What do I need to get started in trading forex?

First, let’s start with your education and I would teach you open and hidden knowledge of the trade. Knowing the right things would help you avoid pitfalls and mistakes nearly every new beginner makes and spare you the costs (mostly financial). I would teach you how to start trading with little or even no money put down at all. 

Wishing you well - Teemy

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What is online forex trading and how does it work? (Part1 of 2)

 

What is forex?

The word forex is coined from the two words Foreign and Exchange or alternatively foreign currency exchange. It is a system of interchanging currencies one for the other. Take for example

Change of currencies for:

• International travels and tourism
• International Schooling
• Foreign trade and Imports
• e.t.c

What you would realize is that either directly or indirectly everyone is affected by forex. From governments, banks,  large and small financial institutions, bureau de’ changes, multinational corporations, money transfer exchanges, forex brokerages, the retail forex trader. Our definition of a forex trader would be restricted to the retail trader (forex speculator) who aims to make profit from the fluctuations in the exchange rate. The item of trade here is money.

History of the foreign exchange market

At a certain gathering known as the Bretton Woods Agreement conference in the year 1944, an agreement was reached to allow currencies be freely bought and sold at perceived acceptable values between parties. The United States Dollar (USD) was set as the currency of reference (‘twould have been the Great Britain Pound - GBP - but Germany’s counterfeiting operations had reduced the trust in the British currency as a way of weakening the economy during WWII) and the US economy was most stable among the world powers after the war. This agreement set the stage for online forex trading.

The structure and how forex trading works

-          Interbank Network – Forex brokers – Retail Trader

Envision a normal trade structure of commodities which looks like below

-         Manufacturer  –  Wholesaler  – Retailer - Consumer

With forex everyone is a buyer and seller of money. So all are traders (with varying levels of financial strength). Forex brokers act as intermediary between you the retail trader/speculator and large volume Liquidity Providers to get you access to the interbank rates providing you the volume of money you wish to buy or sell at any given time and charge you a little commission for each transaction. 

continued in part 2 of 2

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Profitability of Forex

For retail traders where does the money we make come from?

How much can be made as daily profit from the forex market?

With risks involved, is forex for me?

What do I need to get started in trading forex?

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Creating Labels

Just To Create Labels. This page would be populated when its turn comes up. Read up on other pages in the meantime.

Getting ready to get posts online

Eureka! At last after waddling through template structures and lots of layouts I finally decided on the one I would be using as standard for my blogs with a little bit of tweeking for each one. As promised last night I would be placing up the site structure to get you guys in the know of what the site would be like.

Old Forex Trading Tutorials Video Set - Chapter 1

Teemy's Forex Video Course For Beginners on How to be a Foreign Exchange Trader - Chapter 1

Chapter 1   Chapter 2   Chapter 3   Chapter 4

https://www.youtube.com/watch?v=u-tOh5FREsQ

Chapter 1 (Introduction) - Video 1 covers the following topics:

What is Forex
Currencies Traded
Market Hours

Chapter 1

Chapter 2

Chapter 3

Chapter 4

In the beginning

Signs

This would be my first offical post on the blog to my website forexbyteemy.com and am yet to complete the layout look and have the theme correspond with the main site's. In the interim you could contact me in case you have any question(s) via email (teemy) or call +234 8175421199. Now back to work.