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Forex For Dummies – 7 Vital Points

1. Forex for dummies – the subtle deception.

You’ve probably read that only around 5 per cent of new forex traders make a success of it, with the remaining 95 per cent losing all their money. Virtually every sales letter you will ever read for forex will use that statistic to convince you that, in order to avoid becoming one of the 95 per cent who fail, you should subscribe to their course or sign up to their brokerage services.

But think about it. These sales pages are nearly all selling a different method of trading forex, or a different brokerage service. They can’t all be right. So who’s selling you a chocolate teapot and who’s got the real deal?

In most cases it’s impossible to tell. So let’s leave that for a moment and consider point number 2 below.

2. Most sellers of “How to make money in forex” information don’t actually trade themselves.

This point alone should have all your alarm bells ringing. Like the nineteenth century gold rushes, it’s a market in which it’s easier to make money by selling information and equipment to the gold diggers than by digging for gold yourself.

Before you agree to purchase anyone’s course or DVD on how to trade forex, ask them how much money they have made over the last 12 months trading forex (not from selling information on how to make money from it). Unless you receive a straight answer that impresses you with the amount then move on to the next. And this brings us to the next point.

3. It’s easy for someone who knows nothing about forex to sell phony information on how to make money from it.

A couple of Google searches will turn up several sites giving away ebooks covering various techniques that have been used to make large profits in forex. Anyone can download these and rehash them into their own unique product, set up an attractive web page with a compelling sales pitch and start selling it for $97 or so. It’s being done all the time.

4. Beware of back tested results.

Nearly any online currency trading system can be back tested against a convenient chart from the past and shown to have forecast the price  movement correctly. This in fact proves nothing. When you’re looking for a particular pattern on a chart from the past it’s not difficult to find it. Then you can “prove” that your system works.

If you are given examples of how the seller’s system has been successful in the past, make sure that it has been tested live in real market conditions, and not simply back tested against a carefully selected chart.

5. It’s almost impossible to make regular profits by day trading.

If anyone tries to convince you that you can make a full time living by day trading the forex market then be very careful. Most beginners are  encouraged, not least by their brokers, to day trade, and we know what happens to most beginners in forex. The few successful forex traders seldom day trade. They tend to hold positions for at least days at a time, and often much longer, even months.

6. Most claims of forex profit potential are vastly exaggerated.

It’s common to see web sites that say it’s easy to turn, say, $500, into $5,000, again and again. The truth is that even successful forex traders only average gains of around 30 per cent a year, and they only do that by having massive amounts of money to trade with, so they can enjoy large stop loss levels and ride the volatility. Now I’m not knocking a 30 per cent gain each year. In fact I’d say it’s a brilliant rate of return, especially at present when savings rates are barely above 1 per cent. But it’s a bit different from “turning $500 into $5,000 again and again”, which is what the sellers of all these
systems would like you to believe. And if you’ve only got $500 to invest, then, please, keep your money.

7. There’s a far better alternative to forex.

The stock market, and trading shares, indices, commodities and futures doesn’t have the color and appeal of forex, it’s true. But it’s much easier to make regular profits in those markets than it is with forex, and you can start with just a few hundred dollars.

Consider finding out more about those markets. There are traders making large, regular profits, without the stress of constantly keeping an eye on forex movements, and who are willing to share their methods with you, if only you ask. Just click through to our home page, fill out the form and click on Submit.

Philip Gegan

FX Trading Software – Who Makes the Most Money – Users or Sellers?

FX trading software is promoted all over the internet. You’ve probably read the sales letters telling you how easy it is to make money with it. The technology sounds convincing and the testimonials saying it works for the people who write them must surely be genuine. But something doesn’t add up.

A particularly interesting aspect is the number of “reviews” of these software packages on the internet. They’re virtually all “independent” reviews, as if the writer had no interest in whether you bought any of them or not. But the hyperlinks are usually to a site that is a sales letter written by a professional copywriter.

The people writing “reviews” of the software are often affiliates of one or more of these packages, and their intention is to sell it to you. Often their heading is used to make it sound as if they are going to reveal the package as a “scam”.

So when you read a “review” with a headline of, “XYZ Forex Trading Robot – Is It Really A Scam?”, you’ll quite likely be told that the writer originally thought it might be a scam but has now investigated further and found – surprise, surprise – that it’s genuine after all and – more surprise – it actually makes you lots of money!

That leads me to the other thing that doesn’t add up in this field. If the software can really make you that much money, why is it so cheap? If this or that program really can double my money every couple of weeks, I’d say it was a bargain if it were priced at several thousand dollars. And why are these people selling it in the first place, instead of quietly raking in the phenomenal profits that it can produce?

I don’t endorse any fx trading software because I don’t believe any actually work. Not over the long term, anyway. In fairness, I don’t believe any human or group of humans can devise any software that correctly predicts human behaviour in any set of circumstances with sufficient regularity. And if any market is driven by irrational human behaviour it’s the forex market.

Surprisingly, though, I do actually have a currency trading account, and make profits from it fairly regularly. There was a time, though, when I lost a fair amount of money trying vainly, with the “help” of fx trading software, to make money from it on my own.

I came to realise, as you will too very soon, that the only way I could profit from forex trading was to find a successful trader (not just someone who sells forex get-rich-quick information or who has created a “trading robot”) and imitate what he does. Just go to our home page, fill in the form, and click on Submit. That’s it.

Philip Gegan

FX Online Trading – 3 Questions to Ask your Broker First

The coming of the internet and now the onset of the recession has caused a greatly increased level of interest in fx online trading. New brokerage web sites are springing up all the time and it’s difficult to decide which one to opt for. But whatever you decide, here are 3 questions you must ask your broker before you open an account.

1. Are you an FCM (Futures Commission Merchant) broker or an ECN (Electronic Communication) broker?

The trouble with FCM brokers is that very often they have their own dealing rooms and tend not to pass on their customers’ trades to the actual fx market. They match one customer with another, or alternatively bet against them.  With all their facilities and the ability to manipulate the prices on their  system, it’s no surprise that they usually profit at the expense of their customer-traders.

By way of contrast, ECN brokers don’t have their own dealing rooms, but pass on all trades to the market, as they should. They therefore cannot bet against you, but simply collect the “spread”, whether your trade is profitable or not. In addition, they have no restrictions on trading or hedging, and tend to have the best prices and spreads.

2. Where are you registered and how much is your capital?

Avoid any broker who is registered in an offshore jurisdiction. If he is then you may have problems if you decide to withdraw your money. He should be registered in the US, the UK, a major European country, Australia or Japan, with the appropriate regulating authority. In the UK it’s the Financial Services Authority and in the USA it’s both the US Commodity Futures Trading Commission and the National Futures Association. Ensure the company’s capital is at least $7 million (USD), or £5 million (GBP). This keeps to a minimum the danger it could go bust and take your money with it.

3. Can I trade with covered warrants and ETFs (Exchange Traded Funds) as well as spread bets?

A spread betting account is the most profitable account for the broker, so  that’s what he will recommend to you. But there are other methods of trading fx which can, once you master them (which is not difficult), be far more profitable for you.

When you make a spread bet on a currency pairing, for example the British pound and the US dollar (GBP/USD), there will be a “spread” that you have to overcome before you get into profit. This is how the broker makes his money.

So, for example, as I write, the GBP/USD pair are trading at 1.6257. If your currency trading account has a 3 point spread your broker may set his buy/sell prices at 1.6259/1.6256, so you can go long (buy) at 1.6259, but the price would have to move up 3 points to 1.6260 (1.6262/1.6259) before you would be at “break even” point. The same applies in reverse if you chose to sell, or go short. You are always at a disadvantage compared to the market or your broker.

Spread betting with absurdly low “stop loss” levels makes it almost impossible for the new trader to avoid losing all his money very quickly. The small amount of capital required by most brokers to open an account, which is presented as being generous on their part, enabling the “ordinary Joe” to “open a currency trading account and start profiting”, actually works against you.

Each trade becomes a major risk to your entire capital, and you can only trade with tight stop loss levels. In the volatile fx market, where prices move erratically and seldom go up or down in a straight line, this is crazy. The few successful traders in this market employ large stop loss levels, even on trades they are very sure about. This enables them to ride the volatility of the market.

The only solution is to avoid spread betting altogether, and use instead covered warrants and Exchange Traded Funds. Hence this question. You may, however, have to go further than your broker in order to learn how to trade these instruments. Just click through to our home page and fill in the form. Click on Submit and you’ll be on your way.

Philip Gegan

The Online Currency Trading System Racket

The rapid increase in the popularity of online currency trading systems in recent years is a logical development from the increase in currency trading itself. Now anyone with a computer and internet connection and a couple of hundred dollars can take part in this exciting and glamorous market.

Just as in the gold rushes of the nineteenth century, there are people making more money selling information about how to succeed than those actually doing the mining, or trading. This should ring alarm bells!

There are dozens of different trading systems for sale – ebooks, courses, DVD sets, videos, software and “robots”. And there’s a lot of money to be made in selling it. But is there money to be made in using these systems?

Money is certainly being made in currency trading, or Forex. But bear in mind that this market does not actually create wealth. It simply re-distributes it. When a trader says he has made millions out of forex trading, what he really means is that wealth has been transferred from probably thousands of other traders, over time, to himself because he made better trading decisions on the whole than they did.

Many of the successful traders in Forex work for large banks or other financial institutions, and have millions of dollars behind them. They can afford to have massive stop loss levels, so they can ride the volatility of the market. They can weather large potential losses before any given trade veers back on course and becomes profitable.

The few successful traders who trade purely for themselves also use massive stop loss levels and trade over a period of several days to several weeks per trade. They follow the trend, once it has been established, take a safe slice of it and exit the trade usually before the trend ends. They average a sober 30 per cent profit per year.

30 per cent is in fact an excellent return. Where else can you average 30 per cent on your investment? But contrast that with the extravagant claims made by people selling you online currency trading systems and you’ll begin to see my point.

Most people selling currency trading information are affiliates who know little about the Forex market. When they write their own stuff their ignorance shows. I’ve just read an article written by someone selling Forex systems that says only four currency pairs are ever traded on the currency markets!

The truth is that the Forex market is like a headless chicken on steroids. It’s the most erratic, volatile and most difficult to predict market of all time. Logic doesn’t come into it. Prices of currency pairs seldom go up or down in a straight line. If all the indicators say the price has to go up, don’t be surprised if it jumps up and down by two or three points at a time and then dives further down by 50 to 100 points before going up.

It happens all the time. The big traders, whether corporate or private, who have millions backing their trades, can shrug off this volatility. But if you’re day trading with a bank of only a few thousand, and a stop loss level of no more than 20 or 30 points (as recommended by most Forex trading systems) then you’re toast, time after time.

No doubt this isn’t what you want to hear, but it’s the truth. But don’t despair, because it actually is possible to make steady profits on the financial markets, though not by day trading Forex. Stocks, bonds, indices and commodities may not have the razzmatazz of Forex, but they have the means whereby the ordinary trader with limited capital may safely trade for regular profits with minimal risk.

Some traders have made millions from doing this, and at least one is willing to divulge what he does, so you can copy him. Just click through to our home page, fill in the form, and click on Submit.

Philip Gegan

FX Trading Software – The Keys to the Safe?

FX trading software is being sold by more and more people from colorful web sites that impress on first sight with their professionalism and message of hope. And we all need a little hope in these troubled times, so what better than to read about how we can make easy money from home through fx trading?

That’s the message the sellers of these software packages give us. Let’s take a look at some of their claims and see if they measure up to the cruel reality of the foreign exchange market.

Right now the leading fx trading software includes FAP (Forex Auto Pilot) Turbo, ForexAmbush, FAPS (Forex Auto Pilot System) and Forex Avenger. There are others as well if you look for them. When you pay your money for one of these packages you are in effect buying a crystal ball to see into the future. But the trouble is, no matter how fast and advanced the software is, it can’t predict the future behaviour of the market, especially one as volatile and unpredictable as the Forex market.

The sales page of FAP tells us it can double your money every month and that there’s live proof of turning $5,100 of real money into $36,000 in just 90 days. The Forex Auto Pilot Robot sales page tells us that it can “make thousands of dollars every day”.

I’ve just read a “review” of this package by someone who claims to have been earning around $3,000 every day from Forex trading, and in it he enthuses how he earned $1,900 in a week from it by using this “robot”. Eh? I thought he said that before he used it he was earning $3,000 a day. Something doesn’t add up here. And it’s not just the fact that the cost of this miracle software is only $79.

Another person selling these “robots” without knowing much about them tells us glibly that “Forex MegaDroid” is the software to use if you want to play it safe and go for slower and smaller profits. Yet when you look at the bottom of his page it says that MegaDroid is “coming soon”. So how come he knows it’s safe to use? Has he had access to a beta version that he has used successfully to make “slower and smaller” profits?

The truth is that the few successful Forex traders average profits of just 30 per cent a year. That’s actually very good and I’m not knocking them at all. But they have had years to practice, and have experience oozing out of every pore. The chances of a newcomer even making as much as them using the latest program to hit the market are remote in the extreme.

One question I would like to ask anyone selling currency trading information is, if it enables you to earn such fabulous amounts of cash so easily, why does it cost only $197 or so? If the claims were true, the price would be at least ten times that amount.

And what are these people doing trying to sell the software anyway? If they’re raking it in as they claim then why do they bother trying to sell it? They could take it easy. Something definitely doesn’t add up.

I’ll finish up now with the truth of the matter. If you want to make money through financial trading then forget Forex. Instead, find a successful financial trader, and copy him. Simple. Just fill in the form on our home page and click on Submit.

Philip Gegan
Join me in making profits such as 70 per cent in less than a week on gold. Just visit http://www.onlinefinancialtrading.com/