Saturday, July 21, 2007

Profiting With Forex

The Forex market offers traders many advantages and opportunities that never existed before. Some advantages include: 24 hour trading, guaranteed stops, no commissions, the ability to go short with the click of a mouse, and the use of leverage without having to pay interest.

However, there are many risks involved with trading currencies, and it can be a dangerous market if you don't know what you are doing. This is why it is essential to learn as much as you can before you actually start trading.

To learn as much as you can, I would start off by reading this book. Profiting with Forex is probably the best book out there for those who are new to Forex. John Jagerson and Wade Hansen, the authors of this book, give you the information you need to know before you enter this market.

The authors start off with the history behind the Forex market and how it developed. From there, they explain all the essential lingo that make up the Forex lexicon, and then go on to describe the advantages and disadvantages of the currency market.


Once you delve deeper into the book, you will learn about the fundamental forces that drive the Forex market, such as the actions of the US Government, the behaviour of the stock market, and how gold and oil affect the currency market.

After running through the fundamentals, the book discusses what technical analysis is, and the basics you need to know to survive in the Forex jungle. Support and resistance are defined, and the authors even mention how to use Fibonacci retracements.

Finally, the authors wrap it up with some sound risk management strategies, which is actually the most important part, in my opinion. The key really is not how much you can make, but also how much you can prevent from being lost.

What I liked most about this book was the plain, and easy to understand way that it was written. Many other books on the markets fail, I believe, because they are so esoteric and recondite that the general public cannot understand them. In other words, I feel that this book ideal for those new to trading and who want to learn more about this fascinating market.

One thing that I did not like was the authors fail to really mention how dangerous currency trading can be. The leverage that is available in this market is frightening, and if you don't know what you are doing, the currency market will eat your money.

Personally, I opened an account to try it out, and within 1 month, my account was blown out. Even though I read this book, and other books on trading currencies before I started, I still lost.

I know now that the main reason for this was because I only invested $250, which was the minimum needed to open an account. This means that my $250 was controlling $10,000 (the smallest contract you can get) of investments. This was 40:1 leverage, which is way too much.

In summary, if you are interested in learning about the currency market, I would recommend this book, as it is a great place to start. But remember, learn from my mistake, and don't use too much leverage!


Overall Rating: 8/10

5 comments:

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