The Forex Market Represents Opportunity for the Small Investor
The Forex, foreign exchange market, has a lure for the person with little investing experience; it is a huge market. More than $5 trillion dollars of volume takes place every day. Like all markets, it goes through phases and cycles that some people feel are signals for future movements. Some see it as a get rich quick scheme where a little information is the key to riches. There are decided advantages to the small investor, but caution and education need to take place before the first dollar is ventured in the Forex marketplace.
Forex is a Unique and Simple(?) Market
Every investor, including future Forex investors, should be familiar with the New York Stock Exchange (NYSE) and the American Stock Exchange (Amex) both located in New York. These markets offer more sophisticated investors opportunities to own a small piece of any publicly traded entity listed on the exchange. Usually an investor buys a lot (100 shares of a listed company), for example General Motors trading around $29. a share, an investor would need $2900. to hold a position in GM. The investor would buy and a commission would be paid to the brokerage that made the transaction for the investor. It would, usually, take months for the investment to show any profit. Forex is a different market, it is tailored to the small investor; there are no minimums for having a position and the investor can simply buy or sell the position (which is the value of one currency against the base currency). In stock markets there are sophisticated “puts and shorts” which operate like the buy/sell option in Forex.
Necessary Education for Success in Forex
For a basic education in the movements of any market, read the “Reminiscences of a Stock Operator” by Jesse Livermore. It showcases how markets move, and how Livermore made a killing on the NYSE. Armed with this information it is time to continue your education, there are many people writing in the Forex and investing fields, as well as countless websites. Don’t forget to take notes. Knowledge is power and studying Forex is key to success.
Now is the Time to Invest or Not
Before you wager your first dollar, you must open a demo account, which allows you to trade without risk. The numerous platforms for dealing the Forex markets are numerous, from AlfaTrade to the end of the alphabet. You can try one, or many demo accounts, and begin your trading career without the fear of loosing the mortgage payment. Brokers offer various trading and charting platforms to ply your trade. MetaTrader 4 is the most popular and a new investor must know how to configure his chart to suit his trading ideas.
When You Are Profitable on a Demo Account It is the Time to Go Live
At this stage the neophyte seems ready to go live, but and it is a big but, will the pressure be too great to “pull the trigger”. It does change when the money comes out of your own back pocket. Making money is fun, more fun than golf or fishing, so consider loosing the amount of money you’d spend playing golf or going fishing, say $35. Make sure you are alert and ready to invest, there is no golf range to go to and practice before you go live.
The Process for Success in the Forex Market is Continual
Continue to learn, read, analyze and maintain your balance in this marketplace.