Updated: Mar 14
1. What is Forex?
-Forex is short for "Foreign Exchange". It's a global financial market where you are trading global currencies against each other in pairs i.e., Euro vs US Dollar, British Pound vs Swiss Franc, Aussie Dollar vs Canadian Dollar, US Dollar vs Japanese Yen, etc...
2. Is Forex a scam?
- NO FOREX IS NOT A SCAM! Forex is the largest financial market in the world. The stock market has a daily volume of approx. 200 billion, and the forex market has a daily volume of approx. 5 trillion.
-The only way you can get scammed with Forex is by someone trying to sell you an indicator that doesn't work, a training course that doesn't explain everything and the mentor is nowhere to be found, some type of Forex alert service that does not work or produce, or someone showing you proof of winnings that do not belong to them while selling you a training course.
3. Can you get rich trading Forex?
-Well, it's possible, but not likely for most people. I say that because MOST people simply will not put in the work required to learn Forex. It takes time to learn Forex! The market will tear you apart and take all of your money if you do not know what you are doing! In essence you are mainly trading against the big banks. The big banks are what makes the market move up, down, or sideways because they hold the vast majority of the volume in the market that can make a currency worth more/less than another. Your few hundred or thousands of dollars does not make the market move like the millions and billions that the banks have. MOST FOREX TRADERS ARE NOT CONSISTENTLY PROFITABLE. I recommend only trade what you are already willing to lose.
4. How do you actually trade?
-You will need a broker (HUGOSWAY, TRADERSWAY, etc...), and a platform to trade on (META TRADER 4).
5. How much money does it take to begin trading?
-You can begin with as little as $10 or maybe even less depending on the broker. The smaller your account means you have to take smaller positions in your trades in order to build your account up to then start taking larger positions to win more per trade.
6. How am I able to join this huge market with such little money? I don't have millions....
-Brokers offer you leverage. There are U.S. brokers that are regulated, and non U.S. brokers that may not be regulated and they may offer you a leverage of anywhere between 1:100 or even 1:1000 in some cases; so for every dollar you have the broker will use $100 or $1000 of their money to move units in the market for you.
-When you enter a trade there is a spread involved. It may cost you 5 pips or more, or less, to enter into a trade, but the spreads change throughout the day. This is one way the brokers get paid. A "pip" means percentage-in-point and is the smallest move measurement in the market.
7. How exactly is the money made?
-You get paid based on the strength or weakness of 1 currency against another. If the dollar moves up against the Japanese Yen, then you would place a buy order. So you want to buy low and sell high. You can also sell a currency against another. So in Forex we trade in both directions to collect pips.
8. How is that some make more than others on the same exact trade?
- Leverage amounts will vary based on what you choose, and the lot size will vary depending on how much is in your account, and how much you want to risk.
-1 person could be risking $1 per pip so 20 pips will pay that person $20, whereas someone with a larger account may be risking $10 per pip and 20 pips will pay that person $200. You can even take multiple positions on the same trade in which you can double, triple, quadruple, etc.. your position for a larger win (or loss).
9. How long does it take to learn?
-Some people learn Forex in a month, some it takes years to learn.
10. Is Forex gambling?
-Yes and no.
-Yes because the reality is no one can predict all the time exactly what the market will do. There are other humans working against you and you have no idea what their economical goal is, and you never know how a future news story will affect a particular currency.
-No because once you learn what is going on, you will look at it as taking a calculated risk when certain market conditions are met. It's more increased probability vs a flat out gamble. Forex requires patience, technical analysis, proper money management, and a proper trading psychology. You will not do well in Forex if you are too emotional, and trust me, Forex will exploit your economical emotions like no other.
-Forex allows for you to trade the real market but with a demo account. So you can learn how to trade without risking any of your money. Once you feel comfortable, then you can use your real money on the same market you were practicing in.
11. What affects the market?
-Big banks moving money, a country's economy, news events, holidays, etc...
Lastly, there are many different trading strategies. There is no one strategy that has a monopoly on being a successful trader, HOWEVER, I would caution you that whomever/wherever you learn from, make sure they can show proof of being consistently profitable.
Here's a crash course:
I've tried my hardest to scare you away from Forex with realistic expectations. With that being said, do you still want to learn how to trade Forex? Are you willing to put in the work that it takes to actually learn the skill set? I never want to give the impression that you will get rich quick, or can be consistently profitable in a few days.
It takes time and the rewards are well worth it!