2Bull Forex Blog

Trading, in general, is a great “business” opportunity. But why is currency trading the forex market the greatest of them all. Did you know that the forex (foreign exchange) market is 30 times larger then all other US markets combined. Did you know that trillions of dollars are traded on the forex. And, no, it’s not all traded by huge banks making huge trades and huge currency exchanges.

Truth is a great deal of currency trading is done by speculators, which is how the majority of small investors are defined. You wait for a good opportunity to present itself and you jump into the forex market.

Forex trading, like all other trading, is about timing and money management. However, trading currency on the foreign exchange does come with some very unique characteristics. No slippage on your stop orders, guaranteed fills regardless of the size of your orders, 24 hour trading 5 days a week. These are all amazing benefits not offered by any other market in the world. This is why so many traders are drawn to the forex. The recognize that by using the same skills they are learning to trade equities, or futures, or bonds, they can be trading the forex and make an exponentially greater amount of money.

Now, it is not suggested that you drop everything that you are doing and go invest every dollar you have in a market that is new to you. You should, of course, educate yourself and make certain that all the proper steps are taken to ensure your success. Only you can determine when you are ready to take the plunge into forex trading with real money. Until then, trade a demo account, eliminate all risk and build your skills. You’re probably thinking that demo accounts are worthless since they don’t mimic live trading very accurately, but in the case of currency trading the forex, you would be wrong.

The demo accounts mimic live foreign exchange trading perfectly. There is no trade that you will get on a demo account that you wouldn’t get on a live account. So there really is no reason to make any live trades until you can consistently make money trading a demo account. This is a lesson that you will be thankful for 3 months from now. After going through your second or third $10,000 demo account, you will realize how valuable this advice really is.

So, take your time, get educated and join the world of successful currency traders. The foreign exchange (forex) market is waiting for you.

Any journey starts with a single first step. Everyone agrees that this is true, but what is the first step for the beginning option trader? The vast amount of information can appear to be overwhelming, and is full of terminology that might as well be ancient Greek for all the sense it makes. Everyone you meet, and every website you visit has some different advice. There are a few things to think about even before you ever make that first trade.

What are your Goals

It is important to have some idea of where you want to go before you begin. The field of Options trading is large, and there is a lot of variety in it. It is better to take a general look at the different types of investment opportunities available, and select the ones that interest you the most.

You are going to have to do a lot of research and a lot of study in order to be successful, and it is going to help if the topic is one that you find to be fascinating. Also, you need to have a good idea of how much time and effort you are willing to invest in your investment strategy.

Options are time critical investments, and if you are only planning to dabble a bit in the market, it would be better to either keep your Option portfolio very small, or even to seek a more long term and less interactive type of investment.

In for a Dollar or a Dime

One of the most important options trading terms a beginner needs to completely understand is risk capital. Most reputable brokers will advice you to invest in options with risk capital. Risk capital is that portion of your total investment capital that you can afford to lose. Long term bonds, savings accounts, mutual funds are the places for your retirement income, and your landlord’s checking account is the place for the rent money.

A beginning investor in the option market needs to know exactly how much he is willing to invest, and once this amount is established, he needs to stick with it. There are practical reasons for this. One of them will be investor’s personal financial security concerns. If you are overly worried about loss, you would not be able to make decision with a clear head and in a confident manner. Determine what amount you are going to invest, and set it aside, and stick with it.

Do you Speak the Language

Calls, puts, strike price, margin, leverage, long position, expiration date, bid, and ask are all Option related terms. If you are unsure of the meaning of any of them then you need to go to Option’s language school for awhile. Investing has its own unique terminology, and you can not afford to be confused.

Take the time to learn what everything means. It is going to be important to give yourself a bit of education in quite a few different areas of trading. You are not going to be able to evaluate Broker’s websites, or decide on a personal method of analysis until the basic framework is in place. And the basic framework is terminology. Start in First Gear

You have to crawl before you can walk. Learning to invest your money in any market, and even more so the complex Option Trading market is not the kind of thing that is best served by jumping into the deep end of the pool right at the start. You are almost certainly going to drown. Experience is very important here, and experience is only gained by the actual doing. Start slowly and make a few small investments.

It is good to have a sample option trading strategy in place. It should be on a rather small scale involving only a small percentage of your available risk capital. Once you gain a little confidence, you can increase the amount of your investments. How long this takes is going to depend completely on you. Remember that there is no magic formula here.

The beginning investor should not be too nervous. There may be a lot to learn and it may seem a bit confusing, but it is learnable. In the end, it is going to be his own intelligence, and his own instincts that are going to determine his success or failure. Most people would ask for nothing else, but to have their financial fate in their own hands. Remember the words of a wise old investor who once said, “Every Option Trader was a beginner at one time, even if for some, it was only a few minutes.”

There are many good reasons to consider trading currency. Here we will discuss some of the benefits you will enjoy as an online currency (or forex) trader.

1. Easy start up with many online forex brokers giving you the ability to open an account with as little at $25 to $250.

2. Many of these forex brokers allow you to open your account with a credit card, saving you the hassles of mailing or faxing an account application.

3. An abundance of forex related training material on the internet. You can easily learn all the basics of trading forex for free by just doing a simple internet search on the terms; forex trading or currency trading.

4. An abundance of good forex related forums. Again, a simple internet search will give you several forex forums. On these forums you will find anyone from the forex beginner to the veteran forex traders. Some are even trading full time for a living. These forums are always very active, with some traders sharing their trading strategies.

5. The ability to control a large amount of money with risking only a small amount of your own money. This is referred to as margin trading. For instance, with your $1,000 account you could potentially be trading as if you had $100,000.

6. Trading can be done 24/7. Online forex trading can fit into anyone’s schedule. If you work all day, you can trade in the evenings. If you work at night, trade during the day. You can even stay in trades over the weekend and take advantage of interest rate differences.

7. Online forex trading can fit almost any style of trading. If you like technical analysis (reading the charts and following trends) the forex market seems to do a lot of trending. Or, if you like to be in and out of trades quickly, you can trade the news. On major news announcements a currency pair can move very quickly, sometimes up to 50 or 100 pips.

8. You can trade forex online from anywhere in the world. All you need is a laptop computer, internet connection, and an account with an online broker. Many traders travel and use a laptop or internet café and trade wherever their travels take them.

9. If you look at online forex trading as a business, you probably can’t find another business you can start for less. You don’t need to worry about office space, staffing, inventory, paperwork, government licensing, legal fees, insurance, or any of the hundred other things a conventional business has to deal with at startup.

10. You set your own hours. Trade the London session at night and have your whole day free. Trade the opening of the US session (the London and US sessions have the most price movement) and be done by about noon and spend the rest of the day on the golf course. Whatever your schedule is the forex market will be open for you.

11. Quick profits. If you take the time to learn a trading system or spend a little money on an already established system and customize it to fit your trading style, you can possibly see profits that you would be unable to achieve with any other business or investment. Be aware that quick losses are also very possible and will happen. Trade conservatively until you have a system you can count on.

12. The excitement of online forex trading. Once you have gotten your system tweaked to give you consistent wins, there is nothing more exciting than knowing you can, at any given moment, set down at your computer and make a few hundred dollars in a very short time.