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Stocks & Commodities V. 30:13 (54-59): Getting Started In Currency Trading by Rudy Teseo
Stocks & Commodities V. 30:13 (54-59): Getting Started In Currency Trading by Rudy Teseo
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Getting Started In Currency Trading by Rudy Teseo
Its Easier Than You Think
Do you think currency trading is too complicated or only for millionaires? Its not.
Not too long ago, the commodity market was the place to go to make big money. But sometimes stock market participants who looked into commodity trading had traumatic experiences when they did, because the difference between the two markets was like night and day. A trader who understood the mechanics of trading AAPL, for instance, could trade any other stock on the exchange. In the stock market, prices are quoted in dollars and trades are made in increments of pennies. However, that isnt the case in commodities; traders find out in a hurry that each commodity is unique. They learn that they must choose three or four commodities and become experts in those few, as it is impossible to trade the entire market.
Fortunately, there is a market where money can be made using all the tools and experience used in the stock market. Its currencies.
Forex 101
The foreign exchange market (also known as forex, or just FX) is where currencies are traded. Today, this market is the most liquid and largest financial market in the world. Upward of $4 trillion a day are traded. The market is open five days a week, 24 hours a day from 5pm Eastern time Sunday to 5pm Eastern time Friday. Not only that, its got a reputation: when traders get together and the subject of forex comes up, beginners and oldtimers agree that currency trading isnt for them, whether because of its complexity or the possibility of enormous losses.
This apprehension is probably keeping a lot of you from dipping your toe into the forex waters. Without trying, youll never know how well you could have done.
Take a look at the two charts in Figure 1. Can you tell which one is the one-minute chart of IBM and which one is the one-minute chart of the EUR/USD (euro/US dollar)? Does this give you some assurance that these two trading arenas are not that far apart? Does this mean you can continue to use the same technical analysis indicators that you have been using for stock trading?
Its Easier Than You Think
Do you think currency trading is too complicated or only for millionaires? Its not.
Not too long ago, the commodity market was the place to go to make big money. But sometimes stock market participants who looked into commodity trading had traumatic experiences when they did, because the difference between the two markets was like night and day. A trader who understood the mechanics of trading AAPL, for instance, could trade any other stock on the exchange. In the stock market, prices are quoted in dollars and trades are made in increments of pennies. However, that isnt the case in commodities; traders find out in a hurry that each commodity is unique. They learn that they must choose three or four commodities and become experts in those few, as it is impossible to trade the entire market.
Fortunately, there is a market where money can be made using all the tools and experience used in the stock market. Its currencies.
Forex 101
The foreign exchange market (also known as forex, or just FX) is where currencies are traded. Today, this market is the most liquid and largest financial market in the world. Upward of $4 trillion a day are traded. The market is open five days a week, 24 hours a day from 5pm Eastern time Sunday to 5pm Eastern time Friday. Not only that, its got a reputation: when traders get together and the subject of forex comes up, beginners and oldtimers agree that currency trading isnt for them, whether because of its complexity or the possibility of enormous losses.
This apprehension is probably keeping a lot of you from dipping your toe into the forex waters. Without trying, youll never know how well you could have done.
Take a look at the two charts in Figure 1. Can you tell which one is the one-minute chart of IBM and which one is the one-minute chart of the EUR/USD (euro/US dollar)? Does this give you some assurance that these two trading arenas are not that far apart? Does this mean you can continue to use the same technical analysis indicators that you have been using for stock trading?
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