i joined this forum as i am obviously very interested in trading forex but I am wondering, since i have read a few comments, on how trading other instruments might be helpful in doing so. I have never traded before (aside from demos) and I am determined to learn so any suggestions or advice would be appreciated.
Depending on your trading method, trading or monitoring other instruments such commodity prices, stock indices, bond rates, interest rate futures, American Idol, could help. But as a newbie, I’d recommend focusing on one instrument before learning another one. Master A before B. Don’t purposely overwhelm yourself with learning too many new things simultaneously. That said, I’m pretty sure while sticking to forex, you’ll slowly pick up on these other instruments and inadvertently gain intermarket analysis skills.
ok,that makes a lot of sense. thx fxninj
Bent Larsen was once asked: �How do you get better at chess?� His answer was �First you learn one thing really well. Then you learn something else really well. Then you go on to something else. Pretty soon you know a lot.�
I think that applies to FOREX too. Otherwise, you just confuse yoursef.
Good quote. thx
i guess i just didn’t know if forex was not the smartest beginning pt…
Pros and cons… Forex is definitely a tough place to start out in trading. I encourage you to go slowly and be conservative in your approach.
You have never had a brokerage account, mutual fund, 401K, or anything?
hey toptick7,
i definitely plan on going slow.
You have never had a brokerage account, mutual fund, 401K, or anything?
the only thing i did awhile back (2 jobs ago) was a 401k…
Anyway, I have always had an interest in trading and finally decided to take it up about 2 months ago. I eventually would like to branch out into stocks, commodities, etc., but for some reason i chose to start with forex. I feel like i have learned so much already but i guess after reading a few posts i was wondering if i started in the right place…
You really need to take a look at the plus and minuses of all the markets you are considering. Forex is a great market for part-timers because they can trade at any time. It can be a hard market for someone who favors a more fundamental approach - or at least who wants to understand the fundamentals, as they can get rather confusing at times.
A lot of people get in to stocks first, partly because they have a general understanding of companies and products and all that. More people have become interested in commodities of late because they see the impact on them at the gas pump and whatnot.
The market that still doesn’t get as much attention from individual traders as it probably deserves is fixed income (interest rates). One could rightly say that market heavily influences all other markets, but a lot of folks don’t really give it that much attention on a trading basis.
pippy123 � It’s good to be a little bit skeptical. There is a reason I ask about your financial experience. Lately, I�ve conversed with several new potential traders in my city who were introduced to the idea of forex trading through email solicitations, late-night infomercials, or free seminars. It is my opinion that they may not be getting all the information they need to make an informed choice as to whether forex trading is right for their individual situation. [I�m not criticizing people for responding to those advertisements or the people who offer services through these various media. Hopefully, more of those potential traders will make their way to babypips to take advantage of the free content as well as to participate in these forums before taking the plunge.]
Thanks for asking the question, pippy123. In general, it�s my opinion that any potential trader should carefully review their general finances and put them in order before deciding if trading of any sort is right for them (no matter if it’s stocks, bonds, t-bills, or pork bellies! mmm…bacon…) I also believe that forex trading may not be the best introduction to trading in general. Finally, if you do choose to trade, it is worth your time and effort to study the mechanics of how forex trades are executed. This market is different than other OTC markets.
Remember, these are just my opinions, based on my personal experiences and observations. Get the basics right first. Best of luck in your trading…
Guilty! Well, I waasss… But I learned alot from from it, especially more than had I gone slow. However, I do not encourage jumping in, in fact it does a number on your psychological state. Anyways just thought I’d post!
rhodytrader,
yes I definitely like the 24 hour aspect of this market. I also prefer to chart trade at least in this early stage of my trading career. Maybe since I am still struggling to understand the fundamentals and its impact…
Hopefully one day my trading preference will actually be not based on ignorance but on an informed choice 
I also believe that forex trading may not be the best introduction to trading in general. Finally, if you do choose to trade, it is worth your time and effort to study the mechanics of how forex trades are executed. This market is different than other OTC markets.
ok, thx for your honest opinion toptick7. but may i ask why it is that forex, in your opinion, might not be the best intro to trading? just curious…
Also, what makes it so different that other OTC markets?
maybe having this insight will help me out
as always, thx everyone for the opinion and feed back. it’s very appreciated.
P
p, I made a general statement that OTC forex is different than other OTC markets. The following are my observations on the matter. I am not an attorney or securities industry regulation expert. These are only my opinions.
Currently, the handling of customer orders and funds is very loosely regulated in my opinion. You are trading �spot currency pairs�, not futures contracts. None of the rules regarding futures contracts apply to spot markets or spot transactions.
You have none of the investor protections provided by a regulated exchange. Since there is no centralized �exchange� for forex pairs, we may consider forex brokers to be OTC dealers. OTC dealers handle trades two ways. They either act as principal or agent. They may or may not �make a market� in the subject security, which in this case is any given currency pair. If they act as principal, they are taking the other side of your trade for their own account hoping to benefit from market movement or to offset their own position. If they act as agent, they are matching your order against another order (perhaps another customer, perhaps an outside market participant) and keeping the spread. There is no governing body setting forth specific guidelines on the size of spreads or how a dealer may adjust his spreads relative to that dealer�s book or other customers� orders. There is also no disclosure as to the capacity in which your dealer acted when executing your trade. There is considerable room for “conflict of interest” in either case.
If you deposit funds with an NASD securities broker to trade stocks, your account is insured through SIPC against broker fraud or bankruptcy. (You can still trade terribly and lose your money. That�s never insured.) There is no insurance for your forex account. If your forex dealer goes bankrupt, you have no priority in those bankruptcy proceedings. Your money is gone.
CFTC and NFA have some regulatory authority over dealers in regard to anti-fraud and anti-manipulation provisions current law. This assumes that your broker is registered in the U.S. Other countries have their own rules and regs. (Most US dealers are registered and most comply with the above referenced provisions. Supervision of introducing brokers is another matter entirely � that�s just my opinion.)
Bottom line: There is very limited price transparency. You can not know if you are getting the best price. There is very little �industry regulation� except for anti-fraud and anti-manipulation rules. There are no CFTC rules regulating the forex transactions themselves.
None of this is meant to discourage you from the process of exploring the markets or from pursuing trading. Money can be made trading forex. Be conservative in your approach and start slowly. As always, be aware of current trading conditions and conduct your business accordingly. Best of luck in your trading�
thx Toptick for clarifying. I understand these are your opinions. I appreciate you taking the time to share them with me.
I will definitely approach slowly and carefully.
happy trading to you as well : )