Forex Advantage (Session 4)
http://www.westcapfx.com/eng/forex-trading/about-forex-and-trading/
The International currency market FOREX is the youngest currency market developed from all segments of the financial markets.
The major principle of work in the currency market consists in an exchange of one currency for another with the purpose of receiving profit on a difference of rates. Exchange rates vary under the influence of a supply and demand on the currency of a stable country. A supply and demand, in turn, depend on macroeconomic news, political and other world events.
Transactions in FOREX market are carried out by a principle of margin trade which allows a trader to conclude transactions for amounts considerably greater than his starting capital. Credit transactions, with a leverage provides the basis on which the trader opens the trading account.
The appeal of investment in this market is also connected with the speed of the fulfillment of the transaction. The market works round the clock; transactions are made on the Internet, through a secured access, or by a telephone system.
My comments:
All financial instrument has the element of compounding.
1) Trading in Dual Direction
However, not all have the element of "economic robustness" - meaning that when you heard the news that the market has crashed, you heard that people jump and oops you cannot make money.
In particular, Singapore shares belong to this group. SGX does not encourage short sell. If you do so, you must recover the shares within a short time frame.
2) Time decaying factor
Time is a vital element, it can worked for you and against you. Take for example, you buy crude oil. You are actually buying into a future contract at say USD120 a barrel, that is to be deliever to you in July 2008. Supposedly, nearing June 2008, the price of crude goes up to USD130, you profited, but if by July 2008, the price of crude goes down to USD110, you must quickly sell away, else the contract will be worthless or you will expect to have the barrel delivered to your house!
3) Derivatives vs pure principal
Options also fall into this group. Moreover, options is a derivatives of stocks, properties .. The price depends on its principal. Nothing wrong with that, but you must understand the principal, in additional to the mechanism of the derivatives.
Stocks, forex are principal commodities.
4) Trading time
The choice is yours.
If you trade SGX, your working time is SGT0930 to 1700hrs
If you trade US stock and US options, your working time is SGT2130 to 0400hrs
If you trade forex - its 24 hours, but of course there are certain hours of perference.
I placed my trade in the morning 0700 - 1000hrs.
For extra excitment I trade live during Euro hours (1500hrs - 1800hrs), US hours (2000 to 2300hrs).
5) Leverage
Leverage can work for you as well as against you.
If you buy $10,000 in stock you stand to lose at most all of them. But you may stand a chance to earn 10% or 20% in a month
If you buy an option, you don't need $10,000, you only use a fraction of it, say $2000. You stand a chance to lose at most all of it, but if the price of the stock move by 10-20%, you stand a chance to plough a handsome profit of more than 100% in that month
In forex, the leverage is in margin. You have a capital of $2000, you can buy say 50 times the amount or $100,000 worth of currency. Protected by margin calls and automatic clousure, you may lose at most all the $2000, but you too stand a chance to gain 1-5% in a day. The reason for so is voltality.
6) Voltality
If there is no movement, you cannot gain in stocks and in options, provide you did a spread (Bear call spread, or bull put spread) and anticipate no movement throughout that month, then you can gain.
But in general, no movement - very difficult to earn money.
Forex by far is the largest market - a trillion USD worth is transacted everyday. By this same reasons, I will teach you what I know, without fear that you snatch away my business! For GBP/JPY pair, except Saturday and Sunday, it will move by at least a 100-150 pips at least.
There are more reasons as to why forex, but the mentality why I choose forex as my finacial instrument for trading is:
Use little money - gain more more
Use little or convient time - so as to spend the best time for my family and God
Exponential Decaying Curve for per period of earnings.
The curve suggest spending less time, but earning more money. Basically, using less and less effort, but not necessary means earn less.
I introduce a term call Earnings per $10,000 invested per 1 hour a day.
Of course if you work as an employee it will be Earnings per period of time.
In stocks and shares, per capital of $10,000, the average earning (for me) is 10-20% ROI per year. This work out to $0.31 / hour a day
For Options, I can get a 20% per month per $10,000, but use 4 hours a day (including stocks research and late hours (x2) of working) = $22 / hour
For forex I can get 10% per month per $10,000, but use 1 hour a day, = $45 / hour
The above assume a 22 days month.
The idea is to find the best stratedy using less time but not earn less. Yes by options I earn more per month, but I spend more time and worse still I need to trade in the wee hours.
Less Effort
Lastly, when I switch from options to forex, one main reasons why I can cut down to so little time is because I only look at one or at most two currencies pair. I did not to search the thousands of stocks and select the few tickers to play.
If everyday, I look a the same currency pair, I bet I will be very very good at it as time goes by. I will know what can cause the movement up or the movement down and even know how the pair is being played.
God Bless
The International currency market FOREX is the youngest currency market developed from all segments of the financial markets.
The major principle of work in the currency market consists in an exchange of one currency for another with the purpose of receiving profit on a difference of rates. Exchange rates vary under the influence of a supply and demand on the currency of a stable country. A supply and demand, in turn, depend on macroeconomic news, political and other world events.
Transactions in FOREX market are carried out by a principle of margin trade which allows a trader to conclude transactions for amounts considerably greater than his starting capital. Credit transactions, with a leverage provides the basis on which the trader opens the trading account.
The appeal of investment in this market is also connected with the speed of the fulfillment of the transaction. The market works round the clock; transactions are made on the Internet, through a secured access, or by a telephone system.
My comments:
All financial instrument has the element of compounding.
1) Trading in Dual Direction
However, not all have the element of "economic robustness" - meaning that when you heard the news that the market has crashed, you heard that people jump and oops you cannot make money.
In particular, Singapore shares belong to this group. SGX does not encourage short sell. If you do so, you must recover the shares within a short time frame.
2) Time decaying factor
Time is a vital element, it can worked for you and against you. Take for example, you buy crude oil. You are actually buying into a future contract at say USD120 a barrel, that is to be deliever to you in July 2008. Supposedly, nearing June 2008, the price of crude goes up to USD130, you profited, but if by July 2008, the price of crude goes down to USD110, you must quickly sell away, else the contract will be worthless or you will expect to have the barrel delivered to your house!
3) Derivatives vs pure principal
Options also fall into this group. Moreover, options is a derivatives of stocks, properties .. The price depends on its principal. Nothing wrong with that, but you must understand the principal, in additional to the mechanism of the derivatives.
Stocks, forex are principal commodities.
4) Trading time
The choice is yours.
If you trade SGX, your working time is SGT0930 to 1700hrs
If you trade US stock and US options, your working time is SGT2130 to 0400hrs
If you trade forex - its 24 hours, but of course there are certain hours of perference.
I placed my trade in the morning 0700 - 1000hrs.
For extra excitment I trade live during Euro hours (1500hrs - 1800hrs), US hours (2000 to 2300hrs).
5) Leverage
Leverage can work for you as well as against you.
If you buy $10,000 in stock you stand to lose at most all of them. But you may stand a chance to earn 10% or 20% in a month
If you buy an option, you don't need $10,000, you only use a fraction of it, say $2000. You stand a chance to lose at most all of it, but if the price of the stock move by 10-20%, you stand a chance to plough a handsome profit of more than 100% in that month
In forex, the leverage is in margin. You have a capital of $2000, you can buy say 50 times the amount or $100,000 worth of currency. Protected by margin calls and automatic clousure, you may lose at most all the $2000, but you too stand a chance to gain 1-5% in a day. The reason for so is voltality.
6) Voltality
If there is no movement, you cannot gain in stocks and in options, provide you did a spread (Bear call spread, or bull put spread) and anticipate no movement throughout that month, then you can gain.
But in general, no movement - very difficult to earn money.
Forex by far is the largest market - a trillion USD worth is transacted everyday. By this same reasons, I will teach you what I know, without fear that you snatch away my business! For GBP/JPY pair, except Saturday and Sunday, it will move by at least a 100-150 pips at least.
There are more reasons as to why forex, but the mentality why I choose forex as my finacial instrument for trading is:
Use little money - gain more more
Use little or convient time - so as to spend the best time for my family and God
Exponential Decaying Curve for per period of earnings.
I will introduce a concept and that will conclude why I finally choose forex as my prefered finanical instrument as a tool to setup a business, in order to and fulfil of a bigger purpose in life.
The curve suggest spending less time, but earning more money. Basically, using less and less effort, but not necessary means earn less.I introduce a term call Earnings per $10,000 invested per 1 hour a day.
Of course if you work as an employee it will be Earnings per period of time.
In stocks and shares, per capital of $10,000, the average earning (for me) is 10-20% ROI per year. This work out to $0.31 / hour a day
For Options, I can get a 20% per month per $10,000, but use 4 hours a day (including stocks research and late hours (x2) of working) = $22 / hour
For forex I can get 10% per month per $10,000, but use 1 hour a day, = $45 / hour
The above assume a 22 days month.
The idea is to find the best stratedy using less time but not earn less. Yes by options I earn more per month, but I spend more time and worse still I need to trade in the wee hours.
Less Effort
Lastly, when I switch from options to forex, one main reasons why I can cut down to so little time is because I only look at one or at most two currencies pair. I did not to search the thousands of stocks and select the few tickers to play.
If everyday, I look a the same currency pair, I bet I will be very very good at it as time goes by. I will know what can cause the movement up or the movement down and even know how the pair is being played.
God Bless
posted by Ernest Seng at 2:53 PM
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