So, Forex (or FX for short) is really what interests me. Forex, Futures, Stocks, and anything else that can be charted has always fascinated me, and I believe, others. Forex is basically buying one currency and simultaneously selling another. You can look at it as currency conversion, but you don’t hold it in your pocket. If you are taking a trip, you can go to the bank, buy another country’s currency, then return home and sell it back to the bank. Same idea, just on a larger scale.
Forex charts are every bit the same as charts in other markets. Visually, charts can be pretty pictures, and pictures lend themselves to unconscious scrutiny. Think about it: anytime you or I look at something, aren’t we trying to figure out a) why we like it, or b) what is wrong with it? Beauty is in the eye of the beholder. People like me, who are technically-oriented, want to pick apart the chart. We want to determine a reason for the patterns (or non-patterns) that are produced. Sometimes, charting randomness is a fun exercise in itself!
If you strip away the names, prices, times, and all other identifying information, every chart looks like every other chart. Anything that can be charted is like that. Now, if you tag a market to that chart, some people will say “it can’t be done” or “it’s too risky”. What does that mean to you, if it is out of context? Did they lose money trading? Are they the “expert” in the field? Is it their company, and they have the inside information? Did they risk it all, or only a fraction of their purse?
I’m here to make money. That’s the reason I trade. Is it fun? Yes! But not in the style of gambling. That type of fun gets old quickly. I like to see results, and the results I like produce some sort of cash flow. Otherwise, I would just sit back and teach. I like to be “in the game”, though.
Forex is not any riskier than any other type of investment. Every time you make ANY decision (should I buy this car?, when to go to the grocery store?, do these clothes make my butt look big?), are you willing to bet all your chips on the predicted outcome? Flip a coin and make that the basis for your living. There are only TWO outcomes. Try to make a living betting, or in trading terms, speculating, in terms of heads or tails. That’s 50/50, right? Sounds easy, but there must be a plan. Risk management is very important in any plan that involves decision making. We’ll talk about that later.
I like Forex mainly because I can start trading on “paper”, which is to say using a virtual, demo account. No financial risk, but I can get familiar with the platform, charts, tools, and everything else that I may need to use. Also, there are micro accounts. These are smaller than full-size trading accounts, so they are easier for entry-level, or novices to get introduced to the Forex market. It is also a way to try out trading systems and methods. I have traded using $5 as my margin. Trading live, using real money, makes a huge psychological difference. Even if it is for pennies (literally), emotions weigh heavily in the decision process. We’ll talk later about emotions. That is probably the biggest stumbling block for most traders.
So, should I dive right in and talk about analysis and charts, or wade in with some more basics? We’ll pick up later with some of both, but using simple charts. Learning by application, that’s what we’ll do next.