September 27th, 2010 by
young
A few months ago, I had a guest post on my site about trading the forex market, and I had a comment requesting how I should talk about the dangers of forex investing. So because I am responsive (albeit slowly responsive, sorry!), here’s my post on the Dangers of Forex Investing.
Bear with me here, as I don’t know very much about forex investing as I personally haven’t included this type of investing in my portfolio. Well, I guess except for some USD/CAD that I buy when the CAD dollar is up. But it’s more for my personal spending when I go to the United States.
First let’s explain what Forex Trading is:
Forex stands for Foreign Currency Exchange. Basically it’s the trading of the world currencies. You buy a world currency, hold it for a period of time, and expect/ hope that it will rise in value. When (or if) that happens, you sell it. It sounds quite similar to buying and selling equities. Except that it can be much more risky than trading with the conventional stock market. Here are some qualities of the Forex market that makes it dangerous.
Qualities of the Forex market that make it dangerous for your wallet:
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Below is a guest post by Jennifer Gorton. She wanted to offer tips and tricks upon entering the Forex market. Youngandthrifty personally doesn’t trade the Forex market, but can see the advantages of including it in your portfolio (you can trade 24-7!)– but at the same time, Forex is considered more high risk.
If your savings accounts are not earning you enough interest you also don’t want to lock your money up in a certificate of deposit, maybe trying to trade the Forex market is for you. With many brokers to choose from, it is relatively easy to set up a trading account with a Forex broker. To make it even easier to start trading, most of these brokers only require a small deposit of $50.00 to $100.00 to open an account. Although, do keep in mind that once you fund your account you do not need to start trading with live money from the start. Forex brokers will offer free demo accounts to all customers. These demo accounts will allow you to get a feel for how the currency markets move on a daily basis. The trader can then try out trading strategies without putting their real money at risk. For some people the learning curve will be short and for other it might take a few months to learn how to make profits. The demo account will be available for as long as you need it and there is never a time when the broker will require you to trade with real money.
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A few months back, I was perusing on Questrade’s site and saw a free workshop for “Learn to Trade” with Online Trading Academy. I thought it would be helpful to pick up some tips as there was a free lunch. I have trouble passing up free lunch and education! Online Trading Academy is an affiliate of Questrade. One of the main reasons I went was that they said that the Professional Trader course is free and paid for by Questrade through a tuition rebate. More on that later.
The Online Trading Academy has been educating traders since 1997. They have multiple locations throughout the world.
So I signed up for their Power Trading workshop (a half day session). In the workshop, we got to meet with a professional trader and an instructor of their Professional Trader 3-7 day course. It was a good half day session. The trader tells us that he does his thing on the market for 30 minutes before he goes to work, and then he’s done for the rest of his day (and goes to his regular job- that’s the great thing about living on the west coast–the time difference!). I found that for myself, I’m more of a swing trader. I hold stocks and trade them in a matter of days to weeks. The Online Trading Academy was more advocating for a daily trade- they encourage not to hold overnight because you never know what might happen. They exert a lot of control with their trades. They teach you technical analysis and how to trade in any type of market (up, down, sideways).
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