Forex,

A 6 Month Fea­ture

Thembu Royals Magazine - - Contents - WRIT­TEN BY IN­TER­NAL STAFF WRITER

Ba­sics and Re­lated Mat­ters:

FOREX sim­ply means For­eign (Cur­rency) Ex­change. The best way to ex­plain it is in a form of an ex­am­ple.

On the 01st Jan­uary 2018, Ja­cob Biggs (not real name) left Jo­han­nes­burg In­ter­na­tional Air­port to the USA, Washington DC. Be­cause a South African Rand is not used in the USA, Ja­cob had to change the rand into a US Dol­lar. He then ex­changed (bought) US Dol­lars. For R1,000.00 Ja­cob was given $100 USD be­cause on that day $1 equalled to R10.00. Ja­cob spent 3 weeks in Washington DC.

Af­ter 3 weeks Ja­cob came back home with­out hav­ing spent that (ini­tial) $ 100.00 that he had re­ceived when he left 3 weeks ago. Dur­ing the past 3 weeks, the US Dol­lar strength­ened, or its value in com­par­i­son to the rand got in­creased. When Ja­cob ex­changed the $100.00 af­ter 3 weeks he got paid R1300.00 (R300.00 more) be­cause on that day of ex­change the value of $1 US Dol­lar was equal to R13.00 mean­ing that the US Dol­lar had strength­ened while the rand had weak­ened dur­ing the past 3 weeks.

When one be­comes a Forex Trader this is what one does. One spec­u­lates which cur­rency is go­ing to in­crease against the other, then buys the one that is likely to in­crease. If in­deed the cur­rency in­creases as one had spec­u­lated, then the Forex Trader wins and makes money. (On the other hand one can spec­u­late which cur­rency is go­ing to de­crease the other spe­cific cur­rency. Then the Trader sells the cur­rency that is go­ing to de­crease in value. This, how­ever, may con­fuse a new Trader as such in this first is­sue fo­cus is placed on buy­ing a cur­rency that is go­ing to in­crease).

If when Ja­cob came back af­ter three weeks sup­pose the value of $1 US Dol­lar was equal to R8.00, that means that the rand be­came stronger against the US Dol­lar which (US Dol­lar) be­came weaker. In that event, Ja­cob would be paid R800.00 (that is R200.00 less). In this event, Ja­cob lost money.

The above pic­ture is pre­cisely what hap­pens in real life trad­ing sce­nario. It must be em­pha­sized though from the on­set that in real life sce­nario smart Forex Traders do not ‘spec­u­late’ (blindly), or at all, be­cause there are tools that are used to as­sist Forex Traders to trade pro­fes­sion­ally with skill, con­fi­dence, and con­vic­tion. It must be em­pha­sized from the on­set once more that Forex Trad­ing is not sim­i­lar to play­ing dice. When you throw dice you have no idea how it will fall. You have no tool to use to pre­dict at all how will the dice will fall. You are re­ly­ing on pure luck to win. Forex does not work like that.

Forex is a risky game. One can lose large amounts of money. This state­ment though needs to be qual­i­fied im­me­di­ately be­fore one gets a wrong pic­ture. Forex is a risky game if a Forex Trader vol­un­tar­ily fails to use the nor­mal trad­ing tools to min­i­mize risk. These trad­ing tools are al­ways at the dis­posal of a Forex Trader at all times. .Forex is also a very lu­cra­tive game. One can make large amounts of money at the same time. The amount one makes de­pends on the amount that one has used to place the trades. It is pos­si­ble to make R100,000.00 (one hun­dred thou­sand rands) per day de­pend­ing on the amount that one has used to place one’s trades.

Driv­ing a car on the road is a very risky game but we drive cars ev­ery day. When driv­ing a car there are at least two cars that are not un­der one’s con­trol. These ‘two cars’ do not ex­ist when trad­ing Forex be­cause ev­ery­thing is un­der the Trader’s con­trol. To this ex­tent, it can be ar­gued that driv­ing a car is riskier than trad­ing in Forex. Few Ba­sic Im­por­tant Rules in Forex trade in order to win is that a Trader must do the fol­low­ing;

Take time to study the game thor­oughly. At best a new Trader must take at least a min­i­mum of three months of hard learn­ing be­fore a Trader can place a real trade us­ing ‘live’ money (or real money). A Trader must use the dummy money that an agency will give out to prac­tice to mas­ter the game well. Make use of the tools of the trade at all times to de­ter­mine what cur­rency to trade, when to place your trade, why to place your trade and the like. This will pre­vent a Trader from ‘spec­u­lat­ing”, and re­ly­ing on luck. De­velop your ( per­sonal) trad­ing strat­egy. This can only be done once a Trader has stud­ied the game very well.

Stop greed. A Trader must make use of a ‘take profit fa­cil­ity’ in small, reg­u­lar in­ter­vals. Min­i­mize risk. A Trader must al­ways make use of a ‘stop-loss fa­cil­ity’ in each and ev­ery trade that has been placed.

To place a trade in Forex one needs to regis­ter with an agency that per­forms this func­tion. It is gen­er­ally free of charge to regis­ter. The Forex Mar­ket is open 24 hours a day but closed dur­ing the week­ends. It is the largest money mar­ket in the world val­ued in ex­cess of $5,3 tril­lion US Dol­lars per day, about $220 bil­lion US Dol­lars per hour…It is strongly rec­om­mended that a new Trader must have an ex­pe­ri­enced men­tor who will take him through the ‘cor­ners’ of the trade as some of the is­sues are dealt with through ex­pe­ri­ence more than through writ­ten aca­demic books. In the next fea­tures we will deal with many of im­por­tant as­pects of this game such as, but not limited to;

A very brief his­tor­i­cal back­ground and con­text; Fun­da­men­tal Anal­y­sis

Tech­ni­cal Anal­y­sis

The me­chan­ics of how to trade like a pro­fes­sional Decoding se­lected tools that al­low Traders to win big, and many more.

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