I don’t know this guy from Adam but when I asked him to do a write-up on Forex today. He obliged me with this beautiful piece. Please readers, kindly say thank you to Jerome Obada; words can not mention how grateful I am. Enjoy as you venture into the world of Forex – over to you JO:
My thots: Most of the HYIPs in
Nigeria claim that they are into Oil and Forex; if they can make so much money by investing our money in forex, why can’t we do the same?
Let me first start by saying I’m not a Forex expert; my first journey into the world of foreign currency trading started in March 2007 when a colleague told me he made and lost $10,000.00 from online forex trading. I’ve come a long way since then and now make between 20% and 100% on my investments everyday, 5 days a week.
FOREX or Foreign Exchange trading is a financial vehicle that can give you a conservative ROI (Return on Investment) of about 20% or more every day 5 days a week but you can also lose all you money in the blink of an eye if you don’t know what you are doing. The truth is, every Forex trader loses money but the trick of the game is to lose little and gain a lot.
The Forex market is the largest market in the world and has a daily turn over of about $2 Trillion compared to $30 billion in the futures market, this market never sleeps because as one country sleeps, others go to work. The diagram below depicts the different open and close market times for different Time Zones.
| Time Zone | New York | GMT |
From here onwards, I will dwell on my own personal experience in Forex trading.
Armed with the reality that my friend made $10,000.00 from Forex (I mentally blocked out the fact that he later lost it), I googled “Forex” and “Foreign Exchange trading” in as many different phrases as I could think of and noticed that www.fxcm.com was prominent in all my search results and also have the best customer service culture (my opinion).
To cut a long story short, I read most of the materials available on the site; webinars, videos, literatures – and also contacted one of their sales person through chat, he called me and we spoke for about 36 mins. I was advised to start with the practice/demo account to get accustomed to trading in the real market before risking my hard earned dough in the mini ($300) or standard ($2000 and above) accounts.
The practice account allows you to trade with $50,000 demo money in the real market with a leverage of 1:1000 i.e. you can control $100,000 with just $100. This leverage can amplify your profit but also works the other way; you can lose your money if the market moves in the opposite direction to what you bided for. Pls go to www.fxcm.com or www.fxcmtr.com to learn more, I also found the following links very informative;
http://forex.acrobat.com/p75775177/
www.forex.acrobat.com/webinars
www.fxcm.com/forex-trading-video.jspÂ
I lost $15,000 demo money on my first day; this happened because I rushed in without understanding the fundamentals of forex trading. The loss really affected me but I shrugged it off and decided to educate myself more on tools and tricks that the real traders use; I will advise all forex newbies to read babypips.com before starting and also understand the concept of Fibonacci ratios/retracement, Elliot Waves theory and Buy/Sell signal software. These tools and the 25mins video at fxcm really helped me.
The time difference between major trading countries can also be used to make quick profits especially when there is an overlap i.e. Tokyo closes by 9.00 GMT while London opens 1hr before that; the GBP/JPY currency pair is normally at its lowest around 7:30 GMT (this is referred to as “morning low” so you can buy at this time then wait till about 10:30am before you sell. You also make a certain percentage if you keep your open position for more than 24hrs.
Trend and Range: The fluctuations of currency pairs can be broadly divided into 2 i.e. “Range” and “Trend”. Ranging currencies stay within a range (more or less) so you can easily predict how low/high they will go; buy @ low and sell @ high. You can also sell @ high then buy @ low. Trending currency pairs e.g. all pairs that include the USD can move 100 to 200 pips in less then 20 seconds but these movements are not easy to predict so you can either make it big or lose it all. This is for high risk takers. The GBP/JPY is my all time favorite ranging pair even though the spread is quite high (about 8 pips) compared to EUR/CHF, GBP/USD that have spreads as low as 2 or 3 pips. 1 pip is the lowest value a currency pair can appreciate or depreciate and it value lies somewhere between $8.3 and $10 in a standard account and $1 or less for mini accounts.
If USD/JPY = 119.01, 1 pip for this pair will be $0.01, this may look small but the1:1000 leverage allows you to make a sizeable profit because a movement of $0.01 becomes $10 and it’s further amplified by the amount you invest.
Spread: Spread is the difference between the buy and sell price and it’s the only commission your Forex broker will make from your trading.
Fully armed with all these Forex knowledge in my pocket, I was able to increase my $35,000 demo equity to $48,000 in 3 weeks by making an average of $1,000 profit a day. I’ve since moved from demo to mini account which I opened with $400 and made $62 on my 1st day. My all time favorite is the GBP/JPY which oscillates within a band “239.75 Pressure and 236.44 Support” though it may once in a while out shoot these values.
| CURRENCY | DATE | TIME | LOW | TIME | HI GH | PIPS |
Trading Stations: Pls go to http://www.fxcm.com/trading-platform.jsp to view the flash video on how to use a trading station. Most trading stations include a feature that allows you to plot the real time graph of any currency pair over any period of time; this helps you to know the history of the pair’s performance and also watch as the price fluctuates in real time.
You can also read some of my posts at https://www.dipotepede.org/2006/08/28/nospetco and https://www.dipotepede.org/2007/03/22/coup-is-coup for some answers I’ve given to various questions on Forex.
NOTE: Forex prices can be influenced by a lot of factors especially news from the Central Bank of major players like USA, Britain and Japan, I lost $130 in my mini account because I ignored a particular Trading news in my squawk box; the squawk box gives you real time news from different countries and predictions from prominent Forex traders around the globe.
Happy trading!!!
