What is Forex
Forex is short for foreign exchange and is the largest and most liquid market in the world with an average of 5.3 TRILLION being traded daily leaving an opportunity for YOU to profit from this market. The forex market is open 24hrs a day 5 days week.
Have you ever traveled to another country and had to exchange your currency for their local currency? Or purchased a product or service online from another country, if you have then you have already participated in the forex market. The only difference between this form of foreign exchange and professional forex trading is we use a systematic and methodical system with the objective of making money.
1. Forex is Expensive and You Need a lot of Money to Start Trading
This is one of the most popular misconceptions about currency trading and often people who don’t understand the market belive you need thousands of dollars to open a forex account and start trading. With most brokers, you can open a live account with as little as 50 bucks which makes it easy for beginner traders to open accounts and start trading. However, I do not recommend you open any live accounts and start trading until you have educated yourself on how to effectively trade the market and understand risk management. The great thing about learning how to trade the forex market is most brokers offer free demo accounts for you to practice which looks and feel like a real trading account, this is referred to as paper trading. Durning your learning stage, I highly recommend you do not risk a cent of your money in the market. Demo trading gives you the opportunity to practice and get a feel for the market risk-free.
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2. Forex Trading is Way to Risky
Many people will tell you that trading is very risky and you should not trade or you will lose all your money. I won’t lie to you there is risk involved in every forex transaction or any investment that you will ever make in your life and when you think about it there is a risk in everything we do in life but we naturally find ways to manage our risk and find rewards that out weight the risk. Forex trading is no different, in fact, you can limit your risk by using minimal leverage and stop losses leaving an opportunity for your rewards to far to outweigh your risk.
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3. Forex is a Scam
Alongside many of the other unproven lies, you will hear about Forex is that trading currency is a Scam. Forex trading is just a simple exchange of one currency for another, there is no different from you trading your currency for your morning coffee in the morning. Forex is a legitimate market and without the currency market, it would be difficult for us to go on holidays and conduct business in other countries.
Just like any other unregulated market, there are scammers who will try to take advantage of the uneducated and inexperienced traders who desire to enter the market. The forex market has received some bad press over the years due to the collapse of some retail forex brokers that effect customers to lose their accounts. High Yield Investment Programs also created a bad name for the forex market by making claims of a high level of return for small investment into the forex market which was a form of Ponzi scheme. If it sounds too good to be true it probably is.
Forex is not a Scam, But Please Be Aware There Are Scammers Out There and I Highly Recommend You Educate Yourself Before You Enter The Market.
4. Trading is a Form of Gambling
The popular misconception is that trading is similar to casino gambling has been around for decades. While trading definitely has speculative aspects to it and some inexperience and uneducated traders may treat it as a form of gambling, there is a difference between gambling and professional currency trading. Trading is a form of speculation where you take a calculated risk using fundamental and technical analysis, where gambling is in betting on a certain outcome without any logic except hope.
Trading requires one to obtain knowledge on either technical or fundamental analysis to have any form of success and traders who enter the market without any analysis or preparation are essential gambling but I can assure you, professional traders, never enter the market without doing their preparation on the market.
SMART TRADING IS NEVER GAMBLING
5. Forex is a Way to Get Rich Quick
Marketing and advertising professionals have done a great job of rapidly expanding the retail forex market and selling it to people as a get a rich quick opportunity with little to no effort. Although there is an amazing opportunity for you to make very good money trading the currency market and this can happen quickly depending on each individual, you must understand trading takes patience and you must be willing to do the work. I have never seen or heard of anyone getting rich quick unless they won the lottery. Developing this skill set could be one of the best things you ever decided to do in your life, but you must be willing to put in the work to achieve the skills that can change your life forever. Nothing in life comes for free.
I am not going to sell you the fake pipe dream, I am going to help you learn how you can develop a skill set that can change your life, but it is up to you to make the commitment to put in the work to achieve financial freedom.
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Benefits of the Forex Market
24 Hr Market
The forex market is operational 24hrs a day, 5 days a week. Unlike the stock market, the forex market does not open and close each day. This allows for a smoother market and less gapping which stock markets are known for. In addition, the forex market being 24hr always for individuals to trade part-time around their busy lifestyles.
Brokers realize not everyone can start with large trading accounts and trade thousands of dollars per trade, so they allow you to leverage your positions. Leveraging is borrowing capital to increase potential returns. Although this a great benefit to forex trading its is also very important you do not over-leverage your account, this comes down to knowing and understanding risk management. We can go deeper into risk management later.
It is important to remember in order to purchase or sell and investment or trade there has to be someone else on the other side willing to trade you at the same time. One of the awesome benefits of forex trading is the OTC, (over the counter) which means there is always someone willing to buy or sell to you, whereas the stock market is less liquid and you can get stuck in a trade if no one is willing to trade.
Forex trading has the lowest transaction cost amongst the financial markets, typic stocks cost dollars per transaction whereas currency cost cents per transaction. Transaction costs do vary which are known as spreads, they change throughout the day and you can use this information to maximize the low-cost transactions.
Watch This Short Video to Get a Better Understanding of What Forex is and How You Can Make Money From Forex Trading
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**Disclaimer: This information should not be interpreted as an endorsement of cryptocurrency or any specific provider, service or offering. This information is for research and education purposes. It is not a recommendation to invest or trade cryptocurrency or trade forex **Risk Warning: Trading leveraged products such as Forex, CFDs and Cryptocurrency’s may not be suitable for all investors as they carry a degree of risk to your capital. Please ensure that you fully understand the risks involved, taking into account your investments objectives and level of experience, before trading, and if necessary seek independent advice.