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Guest post by: Dr Don Yates Sr PhD Become an Author

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In this Chapter, you are introduced to Forex (FX), a favorite subject of mine. Like most online income topics, Forex has not escaped it share of scams and frauds. Because of the high risk involved, most newbies lose their money and blame Forex. For that matter, as we will see, most traders or 67% also lose money.

It is a gamble, yes because for every trade, there are winners and losers. It is high stakes, high risk and fast moving. Like any gamble, there are some winners, winners that have learned the trade, winners have a winner mindset, winners are those that have prepared, learned and understand the gamble. Winners that win more than they lose.

Forex is about you and the trade, it is not about networking, affiliations personal relationship, advertising, SEO and all the other factors that complicate other forms of online income.

Herein we cover the basic Forex tools, selected Robots or Expert Advisors, Mindset and Scams. Forex trading used to be for the “big boys” only. In the late 1990’s, online trading for individuals began, following suite with stock market programs like eTrade. These new Forex sites use software call “bots” to automate your trades. The bots make the decision to trade or not for you.

Because these programs are automated; most vendors advise you can simply install the bot and “walk away” Do Not! We will look at a few of these Bots. This is a grave mistake on your part if you allow the robots to run your Forex business as will be shown in this section.

Never invest more than you can afford to lose! If you do not have time to monitor your trades, don’t Trade

The Foreign Exchange market, also referred to as the "FOREX" or "Forex" or "Retail Forex" or "FX" or "Spot FX" or just "Spot" is the largest financial market in the world, with a volume of over $4 trillion a day. If you compare that to the $ 25 billion a day volume that the New York Stock Exchange trades, you can easily see how enormous the Foreign Exchange really is. It actually equates to more than three times the total amount of the stocks and futures markets combined! Forex rocks! Forex is arguably the best online business, prepare and never invest more than you can afford to lose.

The simple answer is money. Forex trading is the simultaneous buying of one currency and the selling of another. Currencies are traded through a broker or dealer, and are traded in pairs; for example the euro and the US dollar (EUR/USD) or the British pound and the Japanese Yen (GBP/JPY).

Because you are not buying anything physical, this kind of trading can be confusing. Think of buying a currency as buying a share in a particular country. When you buy, say, Japanese Yen, you are in effect buying a share in the Japanese economy, as the price of the currency is a direct reflection of what the market thinks about the current and future health of the Japanese economy. In general, the exchange rate of a currency versus other currencies is a reflection of the condition of that country's economy, compared to the other countries' economies.

Unlike other financial markets like the New York Stock Exchange, the Forex spot 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.

Until the late 1990's, only the "big guys" could play this game. The initial requirement was that you could trade only if you had about ten to fifty million bucks to start with! Forex was originally intended to be used by bankers and large institutions - and not by us "little guys".

However, because of the rise of the Internet, online Forex trading firms are now able to offer trading accounts to 'retail' traders like us. All you need to get started is a computer, a high-speed Internet connection, and the information contained within this site.

BabyPips.com was created to introduce novice or beginner traders to all the essential aspects of foreign exchange, in a fun and easy-to-understand manner. BabyPips

There are five things give trading the Forex market some unique advantages.

Since the Forex market is worldwide, trading is continuous as long as there is a market open somewhere in the world. Trading starts when the markets open in Australia on Sunday evening, and ends after markets close in New York on Friday.

Liquidity is the ability of an asset to be converted into cash quickly and without any price discount. In Forex this means we can move large amounts of money into and out of foreign currency with minimal price movement.

In Forex, typically the cost for a transaction is built into the price. It is called the spread. The spread is the difference between the buying and selling price.

Forex Brokers allow traders to trade the market using leverage. Leverage is the ability to trade more money on the market than what is actually in the trader's account. If you were to trade at 50:1 leverage, you could trade $50 on the market for every $1 that was in your account. This means you could control a trade of $50,000 using only $1000 of capital.

Typical 100:1 leverage is used

The Forex market has no restrictions for directional trading. This means, if you think a currency pair is going to increase in value; you can buy it, or go long. Similarly, if you think it could decrease in value you can sell it, or go short Benefits

Rely on your gut feeling; learn Forex and hopefully, you will do better than the “experts? It is your money. Check your mindset at the keyboard. Many people practice with a Demo account and they learn to make quick and proper decisions, and create profits.

It is “Other People’s Money.” Something happens when suddenly you go live and it is your money. Your fears and emotions take over, and you start losing instead of winning. These same fears and emotions can attack you when you have a few losses in a row from your Forex Expert.

In Forex trading 95% of traders lose money and that is a huge percentage but they don't lose because they can't learn to win, they fail because they simply cannot adopt the right mindset to win and this article is all about getting the right mindset for success. 67% of the retail trader lose money.

When trading Forex you only need a simple trading system to win and anyone can learn a method which can win in a few weeks but even if it’s a good system. You need to trade it with discipline to succeed most traders simply cannot do this and we will look this key trait in a moment but first, let’s start with how to learn Forex correctly and that means accepting this key Fact.

All the best traders know that no one else will give them success and there on their own Most new traders however think they will win by following a cheap piece of software, so they buy one of the numerous Forex robots or laughably named Forex Expert Advisors and think they will make money with no effort, guess what? They all Lose Money! If you want to win you have to accept you need to get an education and this is needed to give you confidence in what you’re doing, because if you are not confident you won't be disciplined and will lose

All the best traders know they are going to lose money at some point and their aim is to keep losses small, they don't mind losing because they know they are going to hit trends again and run them, to cover their losses. To win you need to be disciplined, keep your losses small. This is hard for most traders, they take losses personally and let them get out of control and lose. If you want to be a winner learn to take them and your time will come, when trends and profits reemerge.

All traders have the courage to make their own trading decisions, are prepared to stand-alone, and against the majority opinion, while this can be uncomfortable, keep in mind 95% of traders lose so it’s the best place to be!

The best traders are trading Forex for long-term gains and they have realistic expectations about how much money they can make. Don't try to hurry profits and expose their accounts to unnecessary risks. Many new traders think they’re going to double their account in a few weeks or get rich quick but consider this - the best traders in the world aim for 50 - 100% per annum, in terms of compound growth so if you achieve that, you’re up there with the best.

Forex trading is simple to learn - but you must gain confidence in what you’re doing to trade through periods of losses and have the courage to stand alone and this relies on getting the right mindset. A good method needs the right mindset to apply it and if you can't get it, you will fail - it’s as simple as that. ForexMindSet

If you can get the right Forex mindset, you can enjoy currency trading success and earn a great second or life changing income. Always keep in mind in Forex trading the trader doesn't get beaten by the market, he beats himself.

In the simplest of terms, whether you roll the dice, play a hand of cards, or spin the wheel – or make a Forex trade, someone wins and someone loses. For all practical purposes, and disregarding the potential for side bets, there is generally one hand, one bet and one winner. You can bet all your money with one bet. You can walk away from the dice or the wheel to take a break, and you can leave your hand of cards on the table till you return, or fold the hand. If you do leave your hand on the table; then your hand, the dealers and the other players’ cards won’t change.

You can have several trades (bets) going on at the same time. I will call it a bet, because I am betting that I am going to be right and win the trade. You can bet all your money to the limits of your account, with one or more trades.

Each trade can have difference Stop Loss and/or Take Profit settings, or you can ride the trade without limits and close when you want. You can change your bet, for example if the trade is going against you, you can close the trade to minimize your loss.

If you see a long-term trade that you like, but it is temporarily going against you; you can double up with the opposite trade, take your profits and continue with the original trade. If the trade is in your favor, but weak, you can close the trade. Watch the charts for the optimum time to close.

If the trade is in your favor and going better than you expected, you can increase your take profit settings. If you particularly like a certain trade, you can place multiple trades and bets for that same trade. You can hedge yourself if you are unsure of the trade, place a buy and a sell, or maybe two buys and one sell for the same pair. If you walk away while you have an active trade or several trades, you can lose everything!

I avoided getting into Forex, for years, because I did not have time to learn about it. When I finally signed up, I took a heavy loss due to a robot. Which led to my first Forex blog entry which ended with: Thanks Again - Take Care,Jump in, I love it

Most of my affiliate experiences have been a learning curve for me, the people, the scams, the ridiculous claims, the un-kept promises, false guarantees, the paid and unpaid advertising all provided me little to no results.

Many thousands of dollars and hours after hours were wasted, except for the learning: the big people have got us over a barrel. For me, it did not matter whether I joined a site on the recommendation of my big boy membership, a pre-launch - with advance warning, a new launch, or an older established program – until your prepared yourself and learn, they all just take your money.

It is difficult to compete against the same person who created the program, because they have their established downlines, marketing plans and advertising that the big boys can afford. We all wind up selling the same program; the creator, their downlines and us wannabes. Further, I cannot hype my potential customers so maybe that why I am not so successful online.

Spillover seems like just a word, because I never got any. No sponsoring required never happened for me, Help from my sponsor never was there. Just join have never produced the so-called guaranteed results. Support systems are a farce; you get no response, or you get a useless response.

You success can help change that for me. I think you got the message by now.

Theforex (FX) market has many similarities to the equity markets; however, there are some key differences. This article will show you those differences and help you get started inforex trading.

There are manyforex brokers to choose from, just as in any other market. Here are some things to look for:

• Low Spreads - The spread, calculated in "pips", is the difference between the price at which a currency can be purchased and the price at which it can be sold at any given point in time. Forex brokers don't charge a commission, so this difference is how they make money. In comparing brokers, you will find that the difference in spreads inforex is as great as the difference in commissions in the stock arena.
  
  

Bottom Line: Lower Spreads Save You Money!

• Quality Institution - Unlike equity brokers,forex brokers are usually tied to large banks or lending institutions because of the large amounts of capital required (leverage they need to provide). Also, forex brokers should be registered with the Futures Commission Merchant (FCM) and regulated by the Commodity Futures Trading Commission (CFTC). You can find this and other financial information and statistics about a forex brokerage on its website or on the website of its parent company.

Bottom Line: Make Sure Your Broker Is Backed By A Reliable Institution!

• Extensive Tools and Research - Forex brokers offer many different trading platforms for their clients - just like brokers in other markets. These trading platforms often feature real-time charts, technical analysis tools, real-time news and data, and even support for trading systems. Before committing to any broker, be sure to request free trials to test different trading platforms. Brokers usually also provide technical and fundamental commentaries, economic calendars and other research.
  
  

Bottom Line: Find A Broker Who Will Give You What You Need To Succeed!

• Wide Range of Leverage Options - Leverage is necessary inforex because the price deviations (the sources of profit) are merely fractions of a cent. Leverage, expressed as a ratio between total capital available to actual capital, is the amount of money a broker will lend you for trading.

For example, a ratio of 100:1 means your broker would lend you $100 for every $1 of actual capital. Many brokerages offer as much as 250:1. Remember, lower leverage means lower risk of a margin call, but also lower bang for your buck (and vice-versa).

Bottom Line: If You Have Limited Capital, Make Sure Your Broker Offers High Leverage.

If Capital Is Not A Problem, Any Broker With A Wide Variety Of Leverage Options Should Do.

A Variety Of Options Lets You Vary The Amount Of Risk You Are Willing To Take. For Example, Less Leverage (And Therefore Less Risk) May Be Preferable For Highly Volatile (Exotic) Currency Pairs.

• Account Types - Many brokers offer two or more types of accounts. The smallest account is known as a mini account and requires you to trade with a minimum of, say, $250, offering a high amount of leverage (which you need in order to make money with so little initial capital). The standard account lets you trade at a variety of different leverages, but it requires a minimum initial capital of $2,000. Finally, premium accounts, which often require significant amounts of capital, let you use different amounts of leverage and often offer additional tools and services.
  
  

Bottom Line: Make Sure The Broker You Choose Has The Right Leverage, Tools, And Services Relative To Your Amount Of Capital.

• Sniping or Hunting - Sniping and hunting - or prematurely buying or selling near preset points - are shady acts committed by brokers to increase profits. Obviously, no broker admits to committing these acts, but a notion that a broker has practiced sniping or hunting is commonly believed to be true. Unfortunately, the only way to determine which brokers do this and which brokers don't is to talk to fellow traders. There is no blacklist or organization that reports such activity.

Bottom Line: Talk To Others In Person Or VisitOnline Discussion Forums To Find Out Who Is An Honest Broker.

• Strict Margin Rules - When you are trading with borrowed money, your broker has a say in how much risk you take. As such, your broker can buy or sell at its discretion, which can be a bad thing for you. Let's say you have a margin account, and your position takes a dive before rebounding to all-time highs. Well, even if you have enough cash to cover, some brokers will liquidate your position on a margin call at that low. This action on their part can cost you dearly.

Bottom Line: Again, Talk To Others In Person Or Visit Online Discussion Forums To Find Out Who The Honest Brokers Are.

Signing up for a forex account is much the same as getting an equity account. The only major difference is that, for forex accounts, you are required to sign a margin agreement. This agreement states that you are trading with borrowed money, and, as such, the brokerage has the right to interfere with your trades to protect its interests. Once you sign up, simply fund your account, and you'll be ready to trade! Investopedia

We have hopefully established and will provide some examples that Forex is dangerous and a gamble, especially to the Newbie. Since the platform is one of your main Forex tools, get a demo account and practice, get real familiar with this trading platform. The following videos will be of great help

FOREXMETAVIDEOS

• Play with the platform on your demo account; figure out how things change from a 1 minute chart to a 1 hour, 1 week etc.
• Click and hold the click to move to drag the chart to the right to look at history of the trade
• Click on the dates at the bottom to expand the chart trades; i.e. if you are using “Candlesticks” and cannot read the signals. Clicking the dates with make the sticks more visible

Click on the right hand “values to change the scale of the numbers

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