Despite all the hype you heard about forex everywhere. It does not guarantee that you will become millionaire overnight. Being a forex trader requires fund (yes MONEY) , knowledge, patience (you will be needing that A LOT), discipline and blah blah blah blah….

But to start trading forex, you just need to take these simple steps. Lets get started.

1. Create an E-gold Account
2. Open a trading account with an online broker Marketiva

*Tips: You are advised to use valid information when you register for both Marketiva and E-gold account. As far as I am concern, the registered (full) name for both Marketiva and E-Gold should be identical to avoid problems in funding your account and withdrawing your profits from your trading account to your E-gold account. Also, with Marketiva, you will need to provide your picture identification (Driver’s licence) and utillity bills to confirm your address. All this is necessary to verify your account later on.

And yes, did I mentioned that upon sign up, 5USD will be available in your (Marketiva) trading account ?? That means you can start trading in no time!!

Act now! Click here to register.

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What is Forex?

Well before you jump into the forex world, of course you need to know what it is all about.

“Foreign Exchange” or simply called known as Forex is the simultaneous buying of one currency and selling of another or in other words when one currency is traded for another. The global foreign exchange market is the biggest market in the world. The USD1.2 trillion daily turnover dwarfs the combined turnover of all the world’s stock and bond markets.

How you can make money out of trading forex?

When a currency trader places a trade he wants the currency purchased to appreciate in value versus the currency sold. His ability to determine the direction that the exchange rate will move, will dictate his gain or loss in a trade. Let’s do an example with a currency quote obtained from the forex trading system.

Lets say at current time, the forex price quote is as follows:

EUR/USD (1.2763/1.2766)

This should means that buying one euro would cost 1.2766 US dollars and selling would provide 1.2763 dollars.

Suppose you feel that the EUR is undervalued against the dollar (and the price will rise later) you would buy Euros (simultaneously selling Dollars) and then wait for the exchange rate to rise. So when you execute the trade; you actually purchase 100,000 EUR (1 lot) and selling 127,660 Dollars. True enough, as you anticipated, EUR/USD rises to 1.2863/66. Since you bought Euros and sold Dollars in your previous trade, you must now sell Euros for Dollars to realize any profit. You can now sell 1 EUR for 1.2866 Dollars. When you sell the 100,000 Euros at the current EUR/USD rate of 1.2866, you will receive USD128,660.

Since you originally sold (paid) 127,660 USD, your profit is US $1000.

What makes trading forex different from trading stocks/shares?

Long term vs Short term trading

Stocks/Shares were traditionally seen as long-term investments. So-called “blue chip” stocks, those having proven value over many years, often formed the basis of an investment portfolio.

Forex however, is primarily a short-term market. Most traders enter and exit deals within a 24 hour period - sometimes within a few minutes. Many Forex trades can be made in 1 day without building up a large brokerage fee, because Forex trades are commission-free. Brokers earn money by setting a spread - the difference between asking and selling prices.

5 Days A Week Non-Stop Trading

Moreover, Forex is not based in any one location. Trading markets are located worldwide and, due to time zone differences, trades can be made 24 hours a day, 5 days a week. Trading begins in Sydney, Australia on Monday morning (Sunday afternoon New York time) and continues non-stop until Friday afternoon New York time. Stock in exchanges in contrast have more limited trading hours. While it is possible to trade on exchanges worldwide, each exchange is independent and operates for just 7 hours a day. It is not possible to buy or sell a certain stock that is listed only on one stock exchange when that exchange is closed.

Margin Trading

The forex market is a 100% margin-based market. This is a familiar thing for those used to trading futures.

In fact, spot forex trading is essentially trading a 2-day forward (futures) contract. You do not take actual possession of any currency, but rather have a theoretical agreement to do so in the future. That puts you in a position of benefiting from prices changes. For that your broker requires a deposit on your trades to provide surety against any losses you may incur. How much of a deposit can vary. Some brokers will asked for as little as 1/2%. That is fairly aggressive, though. Expect 1%-2% on the value of the position in most cases.

Now, unlike the stock market, margin trading does not mean margin loans. Your broker will not be lending you money to buy securities (at least not the way a stock broker does). As such, there is no margin interest charged. In fact, since you are the one putting money on deposit with your broker, you may earn interest in your margin funds.

2 Way / Direction Market

In the stock market you primarily hope to buy the stocks when the price is low and sell it at higher price to realize the profit. Also, in stock market, there are restrictions imposed on selling short. In forex there is nothing of the sort. It is just as easy to taking a short position as it is to take a long one and that means you can profit whether the market direction is going upwards (bulls) or downwards (bears) provided your trade position is right.

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