Tuesday, August 30, 2016

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

... continued from part 1 

What is forex?
History of the foreign exchange market
The structure and how forex trading works

Profitability of Forex

I would be using illustrations to explain this. 

Example 1
at midnight after Brexit results collation
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.

transference of wealth
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

drop your comments below


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