You’ve probably seen many advertisements for Forex brokers as you’ve investigated currency trading online. Some of their gimmicks range from informative to ridiculous; however, these advertisements serve a purpose, as you will eventually need to sort through them and open an account with a reputable Forex broker in order to start trading.
Many people expect to end up swimming through mountains of money in their own private vault like Scrooge McDuck when they start trading Forex. This is most likely not the case. It takes beginning investors years to develop the skills necessary to excel as a Forex trader.
As with any career, it takes dedication and hard work in order to succeed at trading currency. The old Japanese proverb, “fall down seven times, stand up eight” is very applicable as you start out in Forex trading.
Start researching Forex and you’re likely to see several ads proclaiming ridiculous guarantees such as “2,000 pips a Day!” or “300% Profits in 3 Days!!” Before you quit your day job and start trading Forex fulltime because of these outlandish claims, let’s evaluate how to spot a Forex scam.
Imagine walking into a supermarket, picking up a loaf of bread and when you checkout telling the cashier that you are only willing to pay 88 cents for it. When the cashier looks at you like your crazy, you tell them you don’t need the bread until Monday and to just let you know if it reaches 88 cents by then.
Sounds a little weird? Well Forex brokers allow you to place trades in a manner similar to this. Don’t worry, they also allow you to just buy something right away like you’re currently used to doing.
Pips, Lots, and Leverage – oh my! Pips, Lots, and Leverage – oh my! No, this isn’t the set of a twisted, new production of the Wizard of Oz in which the Tin Man wears glasses and a pocket protector. These are some common words used in currency trading that you will need to add to your vocabulary in order to become a successful Forex investor.
Alright, so your lucky numbers came up and you finally hit the jackpot. Now, where should you invest? There are many options for you to consider, but let’s narrow it down to Forex or stocks. At first glance, you might think that this is a no brainer – everyone knows stocks are the better investment, right?
Your mission as a Forex trader (should you choose to accept it) is to earn as many pips as you possibly can. The more pips you earn in currency trading the larger your profits will be. So, what is a pip and why does earning them help you make money in Forex?
The basic goal of Forex trading is to swap one currency for another currency then cross your fingers and hope the currency you bought will increase in value relative to the one you sold. Then once it increases in value you sell it back in order to receive more of your original currency in exchange.
Have you ever thought of buying or selling money? It sounds kind of funny, but there is a way for you to do just that in the Forex market. Forex is a nickname for what is more formally known as the foreign exchange market.