The Power Of Forex

Welcome to the first of many lessons in the Advent Forex Newsletter If you are new to the forex market then you are going to get some serious emmersion through these lessons.

If you aren't new don't worry, I have some powerful advanced stuff for you as well. One of the most powerful compnents of the Advent Forex Newsletter is the video updates that I do on a regular basis, so be on the lookout for those.

Okay, enough preliminaries, let's get down to business.

Trading in the Forex markets can be an exciting and rewarding venture if you are trading confidently with a trading system that works. Unfortunately, beginning traders are brought into the Forex Market due to broker hyperbole and visions of getting rich quick.

Trading in the Forex markets, like any other markets, should be approached with a business attitude and with a regiment of discipline. If a trader approaches the markets without a good trading plan, and excellent money management system, a good record keeping system, the requisite trading psychology; the trader is going to lose money... plain and simple.

The Forex market is the largest market in the world... bar none! Simply stated, what is traded in this market is cash from all over the world... all day every day. Unlike other financial markets, like the New York Stock Exchange, the Forex market has neither a physical location nor a central exchange. The Forex market is considered an Over-the-Counter (OTC) or 'Interbank' market, due to the fact that the entire market is run electronically, within a network of banks, continuously over a 24 -hour period.

Before I get into who trades the Forex, let me tell you about some of the best advantages of trading an electronic, (OTC), 24-hour market.

1. Low Commissions

No clearing fees, no exchange fees, no government fees, small brokerage fees. Brokers are compensated for their services through something called the bid-ask spread.

2. No middlemen

Spot currency trading eliminates the middlemen, and allows you to trade directly with the market responsible for the pricing on a particular currency pair.

3. No fixed lot size

In the futures markets, lot or contract sizes are determined by the exchanges. A standard-size contract for silver futures is 5,000 ounces. In spot Forex, you determine your own lot size. This allows you to participate with smaller accounts.

4. A 24 hour market

The currency market trades 24 hours a day 5 ½ days a week, providing more frequent investment opportunities.

5. Leverage

The leverage that my trading company Ethos Inc. uses is 100 to 1 which means that for every $1,000 on deposit we can control $100,000. This is needed in the currency market as the smallest denomination is a pip which is 1/1,000th of a cent. Leverage requires that you use the proper money management strategy. That is why as a professional money management company Ethos Inc. places money management as our top priority.

6. High Liquidity

Because the Forex market is so enormous, it is extremely liquid. This means that under normal market conditions you can instantaneously buy and sell at will. So we are never stuck in a trade.

7. Short - Selling without an Uptick

Unlike stocks you do not need an uptick to go short in a currency pair. Trading opportunities exist whether a trade is long or short. You always have equal access to trade in a rising or falling market.

8. Analyst and brokerage firms are less likely to influence the market

Foreign exchange, as the prime market, generates billions in revenue for the world banks and is a necessity of the global market. Analysts in foreign exchanges don't drive the deal flow; they just analyze the Forex market.

9. 8000 stocks versus 4 major currency pairs

This allows us to focus on the real factors influencing the market. It also means that a nation's economic data is not as easily tainted or falsified as stocks and therefore the collapse of a currency is much less likely.

10. Limited Risk

Traders must have limits for risk management purposes. This number is set relative to the money in a trader's account. Risk is minimized in the spot FX market because the online capabilities of the trading platform will generate a margin call if the required amount exceeds the available trading capital in your account. Therefore if a catastrophic event occurs in your account, unlike the futures industry you will receive a phone call from your broker demanding you put additional funds into your account or the position will be liquidated.

So how's that compare to Stocks, Bonds, or Commodities. Well stocks don't offer the leverage opportunity that Forex does. For as little as $50 you can control $10,000 worth of currency. That's 200:1 leverage meaning if you put up $1 dollar the trading vendor will allow you to trade like you really have $200! No stock will ever give you that kind of leverage.

Futures markets are often prone to sudden and dramatic moves, against which you can't protect yourself, even by trading with protective stops. Your position may be liquidated as a loss, and you'll be liable for any resulting deficit in the account. But because of the currency market's deep liquidity and 24-hour, continuous trading, dangerous trading gaps and limit moves are eliminated. Orders are executed quickly, without slippage or partial fills. And finally, there are no margin calls. For your protection brokers will close out your open positions if your account equity falls below the level required to hold the position.

So now that we know the benefits of trading the Forex lets find out who is trading the Forex.

On a large scale, Forex trading consists primarily of the hedging strategies and position trades used by the CFO's of the world's national and international corporations.

When a corporation enters into a contract for the delivery of goods automobiles for example) at some point in the future, the CFO of that corporation will seek to hedge the company's potential losses that may result in the fluctuation of currencies during the period of time from when the contract was signed, to the date that the delivery of the goods is due.

It is this hedging function by the world's corporations that move massive amounts of money through the Forex markets. Every day, at the opening bell at the various markets around the globe, corporations are transacting business and hedging their own goods or the raw material costs for their businesses.

Forex trading consists of simultaneous buying of one currency and the selling of another. When you trade in the Forex, you "invest" in one country's currency as against another country's currency, expecting the currency you invested in to either get stronger or weaker or against the other currency.

There are generally three types of players in the currency market. The first is what we just described above, the hedgers or commercial players. The second is made up of the institutions like banks, hedge funds, pension fund managers, etc. The third is the retail trader. The latter two are in the game to make money. The first is in the game to protect their future business opportunities or costs.

This market is so large that only huge fundamental changes (significant news announcements) or central bank policy changes and interventions can cause reversals in trends. This is good news for the retail trader (you), because no one entity can manipulate the market. As such, the playing field is leveled so that, to a certain point, the average retail trader has the same chances for success as the larger institutional traders. Your goal as a retail trader should not be to attempt to create a trend (which you simply cannot do), but to follow the trends as they emerge.

Now that you know who the players are and that the field is leveled so you can play equally with the big boys, let us remind you one thing:

YOUR GOAL IS TO FOLLOW THE TRENDS THAT THE BIG PLAYERS CREATE PROFITING ALL THE WAY.

To your trading success,

Cecil Robles

support@ethostraders.com
If you have any questions please feel free to call my office:
Office Line - 866-200-1102 M-F 11:00am - 4:00pm PST

 

 

*Any income claims are typical of top performers not all users and your results will vary. These results are as reported in testimonials from members using the Advent Forex course and trading techniques

Government Required Disclaimers:

Risk Disclosure Statement:

The risk of loss in trading foreign exchange can be substantial. You should therefore carefully consider whether such trading is suitable for you in light of your financial condition.

Unique experiences and past performances do not guarantee future results! Results are non-representative of all clients; certain accounts may have worse performance than that indicated. Trading spot foreign currencies involves substantial risk and there is always the potential for loss. Your trading results may vary. Because the risk factor is high in the foreign exchange market trading, only genuine “risk” funds should be used in such trading. If you do not have the extra capital that you can afford to lose, you should not trade in the foreign exchange market. No “safe” trading system has ever been devised, and no one can guarantee profits or freedom from loss. Trading involves high risks and you can lose a lot of money.

Past performance is not necessarily indicative of future results and individual returns may vary amongst participants. Investment return and principal value will fluctuate so that an investor’s account, when redeemed, may be worth more or less than their original investment. All performance figures assume the reinvestment of realized gains and capital gains. There is considerable exposure to risk in any foreign exchange transaction, including, but not limited to, the potential for changing political and/or economic conditions that may substantially affect the price or liquidity of a currency. This is not a solicitation to invest. Please consult a licensed investment advisor and read all risk warnings before committing funds.

Forex, Futures and options trading has large potential rewards, but also large potential risk. You must be aware of the risks and be willing to accept them in order to invest in the futures and options markets. Don’t trade with money you can’t afford to lose. This website is neither a solicitation nor an offer to Buy/Sell futures or options. No representation is being made that any account will or is likely to achieve profits or losses similar to those discussed on this website. The past performance of any trading system or methodology is not necessarily indicative of future results.

CFTC RULE 4.41 – HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING. ALSO, SINCE THE TRADES HAVE NOT BEEN EXECUTED, THE RESULTS MAY HAVE UNDER-OR-OVER COMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFIT OR LOSSES SIMILAR TO THOSE SHOWN.

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