Forex for a Beginner

Rooster71 · #1 10-11-2005, 01:59 PM

I have always been interested in forex trading, but I am seeking input on how to get started (or if it is even worth the risk). Is there anyone here that can provide their experiences with forex?

joshman1204 · #2 10-17-2005, 06:20 PM

bump as I would also like some more infor on forex.

MMMMMM · #3 10-17-2005, 08:14 PM

Trade small (like 3-1 leverage instead of the 50-1 or whatever is available) and don't trade too often or you will get screwed. Also be very selective about entering trades; it is often better to do nothing than it is to trade. Think of it like waiting for a premium hand in a low-ante game.

buffett · #4 10-18-2005, 10:08 PM

For small-timers (like most of us) one of the easiest ways you can get in this game is through Everbank. IIRC, you need $10k to get a single-currency CD or money market account and $25k to get a multi-currency version.
-web

Sniper · #5 10-19-2005, 02:23 AM

Buff,

You can open a "mini" forex account with $300, and actively trade the currency pairs directly.

Rooster71 · #6 10-20-2005, 11:17 AM

[ QUOTE ]
Trade small (like 3-1 leverage instead of the 50-1 or whatever is available) and don't trade too often or you will get screwed. Also be very selective about entering trades; it is often better to do nothing than it is to trade. Think of it like waiting for a premium hand in a low-ante game.

[/ QUOTE ]
Thanks for the info. This is along the same lines as what I was thinking. I don't want margin calls, I'll be leveraged much lower than the 50:1 or whatever they advertise.

Your second point brings up a question I have - When you make the trade (buy the currency pair) is there any sort of time limit on how long you can hold it? Or fees involved in holding?

MMMMMM · #7 10-20-2005, 07:29 PM

[ QUOTE ]
Your second point brings up a question I have - When you make the trade (buy the currency pair) is there any sort of time limit on how long you can hold it? Or fees involved in holding?

[/ QUOTE ]

No time limit, as far as I know, assuming you're not doing options. Fees for holding the position: none, but you will either be charged or receive interest based on the interest rate differential of the currencies that you have paired--and that will be based on your fully leveraged position, not on the funds you have committed for margin. Some people even take positions mainly for purposes of gaining the interest differential over time.

I read that George Soros trades around 3-1 or 4-1 leverage. Yes, you could probably go a bit higher on really strong-looking trades, but if you go like 50-1 you are just asking to get taken out at a loss due to relatively small fluctuations. The more reputable houses usually recommend you don't go over 10-1, although they will allow you to go far higher. Also, I have read recommendations by good experienced traders that you should risk no more than 1%-2% of your available capital on any one trade. I can vouch by personal experience that there is wisdom in what they say in this regard, and that it is very easy to get into a bad spot if you overleverage, or overtrade, or take a larger position (percentagewise that is).