When we buy one currency and sell another one, lets say i have a 100 us dollars and im trying to buy Euro, so i have 73.38 euro now and the dollar rate goes down, now i can sell euro and make money. The thing is i can sell or buy whenever i want to so why cant i just wait for the market to see what happens, its not like im gonna lose money cuz im not gonna sell it until i see that its worth to sale, i dont get it how can you actually lose.
And one more thing is 4k enoguh to start trading on forex or whats the best other website for trading money ?
if you have 100 dollars and buy Euros, then you havn’t lost anything. You could even go to Europe and spend those Euros. Or you could put them in a drawer and forget about them. But what happens if you want to turn them back into dollars? Maybe you gain, maybe you loose? Maybe you stay even?
To simplify it, when you trade Forex you are not physicaly converting one currency to another you are betting on the currency price either going up or going down.
If it goes the way you bet it would you make money.
The more it continues to go your way the more you make.
If you get it wrong, and the currency value falls when you bet it would rise you lose money.
The further it goes the wrong way the more you lose untill, worst case scenario it wipes out your whole account.
That is how you lose money.
You can try to prevent that happening by:
a) closing out the losing order before it wipes out your whole account thereby taking a reletively small loss.
b) setting stop loss positions on your orders which automaticly close out a losing order should it reach a level at which you set the stop loss
c) letting the losing trade ride by funding your account with more money before it reaches zero, because you believe the market price will soon reverse and bring your losing trade back into profit.
d) having other open trades running up profits which outweigh the losing trades losses so that you can allow the losing trade to ride if you believe the price will soon reverse and turn it around into a profit.
[/B]Sure with anything a loss is only a paper loss until you sell. You could in theory wait forever and maybe sometime in the future you’ll get your price. But since you’re probably trading with some kind of leverage you might be forced to sell at some point. And even if leverage doesn’t take you out it’s poor money management to let one trade bring your account down more then 2-3%.
I agree it is poor money management to do as I said in scenarios C and D, and I know most people would strongly disagree with using that strategy.
I was just covering all the options, not exactly recommending them. Although sometimes to make the money you do need to break the rules and take risks.
To simplify it, when you trade Forex you are not physicaly converting one currency to another you are betting on the currency price either going up or going down.
Now I understand, i really thought you actually buying it because thats how you can make money without risk. I remember when i use to live in europe there were little shops where you could acutlly buy all kinds of diff currencies and then sell it. I llive in USA now and i dont see them around here.So basically forex is more like a blackjack game, you use econony information and then you say how much you want to bet, in blackjack you bet on true count +1 and above to win more money than lose.
Any websites besides forex where you actullly trading currency but not betting ?
Does banks in usa trade and sell diff currencies ?
with 4k how much would be lets say one pip with the lowest risk in trading ?
You better open Demo account with a FOREX broker while learning here. Trade as much as you can with virtual cash then you will get the practical knowledge.
you can determine your pip value/size. depending on how big your SL is and how much you are risking (1, 2 or 3% or more) you can determine a good position size. with a 1000$ account, a 30 pip SL (3% risk) a .10 standard lot would be the appropriate position size, a standard lot is 10$ pips, .10 standard lots is 1$ pips.
if you were to stick with a 30 pip SL and 3% risk you can trade 1$ or (.10 standard lots) for every 1000$ in your account, in this case 4$ pips (.40 standard lots)
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