money talk

Can forex trading make you rich? While you might instinctively say no, there is actually a chance that forex trading might make you richer if you’re someone with a hedge fund and deep pockets, or you’re a very skilled trader of currency. But the thing is, for the average retail trader, rather than being easy to get rich, this can be a very rocky path with a bunch of losses and a lot of potential for screwing up.

This is definitely a potential market, but you need to understand that 68% of traders end up losing from trading currencies in the previous years. While this can mean that one in three traders won’t lose money, it’s not the same as getting rich. You have a third of a chance to get rich in this market, so remember that. 

These number of course, are cited right before there are shocks in the markets, such as in January of 2015 when the Swiss National Bank abandoned the frank, so it had a much higher tradeoff because of it.  Unexpected events are not one of the only risks. There are other reasons why this market is risky, and we’ll tell you why you should be careful of this.

Excess Leverage

While currencies are volatile, the violent gyrations like the frank as we mentioned before are incredibly common.  The stocks, on the other hand, are easily traded up and down, but the thing that allures people to forex is, of course, the huge amount of leverage that brokers give you, which can magnify gains.

The thing is though, that can also magnify the losses too. For example, in some cases, you can end up netting a 416% profit if you trade in a short position with maximum leverage. But the thing is, if you’re in the wrong position, you can leave with a net loss of 25,000 because of this. That’s why, you need to make sure you know the market, and understand that.

The Asymmetric Risk and Reward

Because traders know to keep their losses small, they’ll often offset the sizable gains when the currency calls prove to be correct. Many of the retail traders do it the other way around and will make small profits in a number of positions, but then, they hold onto one and they lose a lot.  The thing is, while you might win on some, one wrong move and you’ll be screwed, and this can cause you to lose more than the investment.

System Malfunction

Finally, imagine if you have a large position and aren’t able to close on a trade because of a platform or system failure, which can be anything from a computer crash to a mere power outage, to even internet overload. This is definitely a problem, and this can oftentimes happen when stop losses aren’t in place. A lot of people might be doing this as well, but the thing is, if you can’t execute the trade, you’re going to miss out on this, so there you go.

You need to understand that while it can make you rich, there’s just way too many factors in this that you’re playing with. You also may not have the information edge, the currency volatility in place, and you might also want to look at the fact that this is an OTC market, which means that it’s not regulated.

So, while yes, profits can be gained, and there is potential, it’s very dangerous and it’s incredibly risky. You need to understand that you can get rich very quickly, but also lose it all again, very quickly. n

money talk

Forex is the largest market in the world, with five trillion being traded every single day. With more and more online brokers coming froth, it’s now easier than ever for traders to speculate on the currency of a country.  You can now access this even more than ever before, and millions are trying to trade online.

But, with that of course, comes the few bad apples which may just be trying to take your money and use you.  When there’s a lot of choice around too, it’s inevitable that there is a lot of questionable scammers on there. So, who is legit? Who is to be trusted, and who is to be kicked to the curb?

Read on to find out as we look over the different factors that determine whether your forex broker is genuine, or not to be trusted.

Precautionary Steps

There are a few steps that you can do first and foremost that give you security and assurances before you deposit.

First, look for accredited brokers that are in safe broker sections.  You should find out what kind of relationship you will have with that broker, and of course, how much contact you’ll need to provide. Also, make sure that you can open dialogue with the broker to assess their transparency.

Also, do some research on the past broker.  This is a good one, because if a broker is bad, others will know.  You also can shop around before you decide to deposit in one.

You can also check sites. A lot of forex sites will have broker reviews. Read them over and look for the affiliate links. If you see links from your review site that will lead to the broker site, this s a great sign, since it lets the person on the other end know your site is upfront about who they are.

You also should read the small print.  This is an obvious, but seriously, get into the habit of reading it.

Finally, if you’ve already signed up for a new broker, you should ensure that you check the statements on the regular as the lots traded, along with the deposits in and out and the account balances are there. If there are discrepancies, you need to address this with the broker.

The Broker Test

Now let’s say you’ve found this really good broker, and you love their features, but you’re skeptical on how legit they are, then you should  put forth a small deposit.  Do one small trade with a low lot size, and from there, request a withdrawal. Why is that? Well, there is absolutely zero reason the broker should be holding onto that.

With you have slow withdrawals and you need to follow up to get the funds, that’s a sign that the broker isn’t being honest, and a huge red flag as well.

Deliver what they Promise

Finally, check to see fit they deliver what they promise. Check the FAQs section of the site and see if they have any little limitations such as the withdrawals are processed within 48 hours.  You can from there test this as you did before. If the broker is in line with that, then they are committed to keeping their promises, and that of course, means that you have a trusted broker.

All of these precautionary steps can be put in place before you get into forex trading. The right broker enhances your experience, so make sure that you always have someone who is not only reliable but someone you can go to and get your money from when you’re ready to exit.

money talk

When building earnings in trading, you might wonder how to do this.  You don’t have to look too far though when looking for ways to improve the commission along with the profits gained from market trades. So where do we start when we want to generate income with this? Well first, you should look at your online following, family members who want to also do forex, or even friends who would like to change to something else because they don’t like their broker. 

If the answer to any of these is yes, then Forex trading is worth it. A lot of brokers even offer affiliate programs or introducing brokers as an initiative.  This is where traders literally refer to others and get a commission, whether it’s a trade that’s profitable or not. So, if you want to introduce people to new brokers, you’ll get the commission on the referral, and you don’t have to do anything about that.

Advertise Online

Consider advertising more online as an affiliate. Links posted to social media, email blasts, and banners are all great for introducing others to affiliate programs. Traders who use these links and advertise on their different platforms will also get more earnings out of this.

American FX Capital takes the extra step to ensure that you have the right tools for marketing, so it’s worth checking to see if your broker has a pack to help people get the referrals that they need to generate more exposure as well.

The brokers as well can also have direct contact with the affiliate managers, so it’s a win for everyone.

How does this work Then

So, if you want to be an affiliate broker, you essentially will get a link from your broker to the IB in order to advertise on social media channels as fit. Each time the person clicks on the link, the affiliate system that’s attached to that will see that there is a new trader that’s been referred. This is information that’s from therelogged into a back office system that belongsto the broker in order to track the commissions that are owed based on the successful referral signups that happen based off the link provided.

Traditionally, these brokers often offer the commission structure, which is basic, in which the person will earn a flat rate for every single client per a lot traded.

So, for example, the broker will pay 3 dollars per lot that’s done by the trader that’s refereed to them. The IB refers one trader to them, and the trader has an asset that has a volume of two lots. So, each lot is three dollars, times two, the IB gets 6 dollars from it. This is of course paid on a monthly basis in your trading account, and you can always get the funds withdrawn or even used as trade capital if you’re looking for that.

The benefits

The benefits are obvious, and both the broker and the client are mutually benefitted if the profitable measures are put in place and marketed effectively. For brokers for example, the standout benefit is of course, upsurge of online brand exposure. By offering the commission, the broker then makes more money by advertising. It literally benefits both parties, so you can get a lot more money, and help your broker grow.  The more the IB puts forth to advertise and refer the clients, the additional income that will grow from this.

Account holders can generate increased income as well without placing trades, which means that you’ll have monthly earnings through the power and ability to market as well.

money talk

When you get into forex trading, you want a good broker.  Forex trades are happening all the time, which means it opens on Sunday afternoon and closes after the traders complete on Friday. The volume of this is huge, and the thing is, you want to make sure that you have a broker that’s by your side. Unlike with stocks, you as a trader aren’t’ borrowing money or securities from the broker, and the broker might have to pay a rollover fee.

The brokers hold all the money, and of course, this changes with profits and loss, and of course, they’ll handle the commissions, give you expert assistance, and of course, handles the withdrawal requests too.  The problem is, a lot of these brokers will hide the fees in their legal jargon, which is hard to find. Instead of fretting about it in a large legal document, here are a few ways to help you choose the forex broker that you want.

How to Choose

Choosing a broker is important, and you first want to figure out what kind of investor you’re going to be, and what kinds of currencies you’re looking to invest. Every broker has their own advantages and disadvantages, and of course, some of them have different fees. The security features of these vary as well. Some of them have the two step authentication on their sites, while others do not.

Many are often regulated by different associations, but not every single forex broker is, so also watch out for that. Some brokers also have an account minimum, and transaction fees on there. Before going to a trading platform, you might want to create a budget for this, including how much you want to invest, what you’re willing to pay in fees, and what the goals are. There’s a lot to explore when choosing this, so make sure to take all of this into account.

The Basics of Forex Currency Pairs

Before choosing a broker, also know about the forex currency pairs.  This is the values of two different currencies that go through a numerator/denominator relationship, with a base and a quote in relation to that. For example, the most common one is the EUR/USD pair, which is used to quote different currencies.  This is the ratio that matches what you’ll pay if you visit one place and the other, and how much that equals to a dollar in respect.

Each one here is quoted in two to five decimals and also comes in a flipped version, which creates a new pair of currencies that move in different directions. These measure the value of the euro against the dollar, and of course, you can see how much it’ll be.  This is how people take their long and short positions, and people will trade with the pair that has the highest volume. This is also based on the most popular versions of this too.

Margin Accounts

There is also margin accounts, which of course let clients get or sell the pairs of currencies with the total trade size that’s larger than the money used to fund. Brokers typically allow for as low as a couple hundred bucks and offer significant leverage. 

But, also unlike stockbrokers, forex brokers wont’ charge interest for using margins, but the positions held overnight do get debits or credits that’s determined by the relationship between the interest rates of both of these the total trade value determines the debit or credit, not just the portion in excess of your account balance. At the basic level, the trader will get paid on a nightly sense when holding long positions in the higher interest currency and will pay nightly when holding position in the lower currency.