Equities are the center of attention among undergraduate students at my university but they never appealed to me the same way. I had a few trading simulations and opened up a brokerage account but it never really got my fire going.
I recently started looking into the foreign exchange marketplace. As a newcomer im spending time learning how the market works and trying to develop a strategy. The Forex.com simulation has been a pretty good platform for learning and executing on the knowledge. The next step for me is funding my account. Are there monkeys out there who are interested in Forex or have any tips?
I am trading when I see an opportunity, and besides doing pretty well its a blast.
Pros/Cons:
Pro: Its a global marketplace, you can trade virtually any floating currency almost every day 24 hours a day.
Con: You can lose your shirt while you are sleeping, even if you sleep naked.
Pro: No transaction costs!
Con: I got nothing.
Pro: Forex is macro data driven, if there is a large announcement or release coming in a currency then it will move and the results of the announcement can cause a spiral in either direction.
Con: You need to be aware of all releases and events on both sides of your trade (EUR/USD). This can be difficult to manage especially if you are working in more than one pair... or if you are invested in some crazy currency and can't find news.
Pro: Technical analysis really works! In my experience so far, Forex is a very technical driven market. If you pay close attention to the candlesticks and have your finger on the trigger you can make good money on price jumps.
Con: Being unaware of an economic release throws all technical's out the window and as mentioned above if you are trading some crazy currency you might not see the data release and you will lose your shirt while sleeping (This happened to me.. but at least it was still a simulation).
And lastly:
Pro: You can build yourself a trading bot to follow your strategy and trade for you 24 hours a day!
Con: You better not mess up...
Hopefully this sparks some interest in people who have not looked into the market before, I am really enjoying it.
Any veteran market participants have tips or resources for a newcomer?
How does this type of experience stack up in a job seeking capacity, will interviewers like this?
Any students or people who are not familiar with Forex interested? Or have questions?
Pro: No transaction costs!
Con: I got nothing.
*Transaction Cost = Spreads..
Spreads will suck you dry if you try to scalp/day trade. For example I set up an account with 1k just to mess around. With in a month I had made $200, but if it had not been for spreads I would have made close to $500 as you can see. Spreads suck.
Major Con: Forex at the retail/speculative level is about as negative sum a game as they get. The more you play the more likely you are to lose. Forex is no career, just look at all the washed up guys on FX message boards. All of the "alpha" is soaked up by the prop shops and BB banks that dabble in FX, as a retail trader you will be the dumb money.
Our trading styles seem to differ a lot. Would be interested in seeing some fundamental guys chime in on this.
I've been able to make a living so far off FX and commodities building up a track record to hopefully move into institutional.
Spreads have never mattered to me nor have the transaction costs, all my trades span from weeks to months(Currently still holding a position a year old) but I have only started 1.5 years ago. I use pure fundamentals with near disregard for technicals except for timing entry points.
The only con I can see when people enter FX or any form of trading is their state of mind, lack of confidence in their trades, inability to admit their mistakes in a wrong trade and risk management. Those 3 are the main killers for all traders.
SGkit that is interesting, so you make plays based off of what you see as the fundamental value of the currency? I would love to learn some more from you. Are there resources you use/used? Or books you'd recommend?
And yeah Studio, the spreads are difficult I agree 100%, the currencies im working in right now are very liquid so the spread is about .00021. I usually won't make a move unless im confident I will have a better jump than that. And depending on the wave I am trying to ride I might hold onto the currency for a few hours or the day. I haven;t considered long term plays like SG though.
How specifically are you trading? In and out of futures contracts?
What resources/books would you guys recommend for getting up to speed in Forex trading? I'm pretty much into Equities, CFDs and ETFs but I have literally no idea how the Forex thing is really working. How do you actually trade currencies? Via CFDs, Futures? I would love to use some of your sources to learn the basics and built a solid knowledge.
Above and beyond, This website has some good information: http://www.babypips.com/school/
The platform I am using at Forex.com also has some good learning tools.
From what I understand (and I still have plenty to learn) trading forex is basically just buying into another currency in the form of government bonds (or some proxy - please correct me if I am wrong) from the currency that your account is denominated in. You trade in pairs i.e go long EUR/USD (meaning you are long the euro and short the dollar) and everything is quoted in ratios (e.g. EUR/USD 1.2117 = 1 euro is worth 1.2117 dollars, depending on the spread). The fluctuations are a result of buying and selling pressure as well as rate fluctuations in the underlying bonds.
Again, I still have plenty to learn and would love for someone to correct me but this is what I have deduced thus far.
Nice Post
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