Few questions from a total newb

Hi I got to this site from google to your “School” which I found to be a unvalued resource. I’ve been toying around on a practice account from forex.com as well and I a few questions arose.

Are forex profits taxed in any way or form (I’m from US)?

What is the difference between opening a position and placing an order?

Why can’t say buy JPN against the Euro. Why can I buy certain currencys, but I cant sell them against each other ?

Say I put in $1000 into a micro account, do I purchase a whole “lot” or what? How much money am I risking ? If I want to buy a lot of USD/Euro at $10,000. How much money am I risking and whats the maximum I can earn and how much can I lose ?

After reading and learning at the BabyPips school, I don’t really understand the ‘leverage’. How can I be able to control $10,000 with only $1000 ? Who lends the money and where does it come from and who covers it if I lose it?

Any contriubutions are greatly appricated. :slight_smile:

Absolutely.

What is the difference between opening a position and placing an order?

Placing an order is the step required to open a position.

Why can’t say buy JPN against the Euro. Why can I buy certain currencys, but I cant sell them against each other ?

You can. When you sell EUR/JPY you are buying JPY. You have to think in terms of pairs.

Say I put in $1000 into a micro account, do I purchase a whole “lot” or what? How much money am I risking ? If I want to buy a lot of USD/Euro at $10,000. How much money am I risking and whats the maximum I can earn and how much can I lose ?

These questions cannot be answered directly because they depend on a great many factors.

After reading and learning at the BabyPips school, I don’t really understand the ‘leverage’. How can I be able to control $10,000 with only $1000 ? Who lends the money and where does it come from and who covers it if I lose it?

Leverage is how you control more than you have in your account. It’s using other people’s money. Your broker “lends” you the money. The losses are yours and no one else’s. Your broker will close out your trade (in most cases) before you lose more than your account balance.

Thank you for taking the time to answer my questions rhody, it’s greatly appriciated. But I’ve got some more questions sorry…

Do the brokarges make money on the spreads ?

When am I taxed?

What brokarge do you recommend ? I’d prefer one in the US and one that accepts VISA.

Thank you.

Yes they do. The spread is important to take into account when trading because certain pairs have wider spreads, can definitely be a profit killer.

Correct me if I’m wrong, but I believe it is up to you to pay yearly capital gains taxes in the US.

Oanda is the best if you you are looking to trade micro lots, you can actually trade any lot size you want. But I don’t think they take credit cards, only wire transfer, check, or paypal.

Hope that helps.