The Forex 1 Club

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Forex Trading – is it gambling or is it a pursuit for well informed currency traders?

If you consider it, forex trading is a straight gamble between two possibilities. One, price will increase. Two, Price will decline.

If you were to enter a casino, then the odds are always greater than 2-1. Even if you were to gamble upon solely “Red Vs Black” then although at first glance this appears to give odds of even, when you take into account the zero and double zero then the odds shit quite considerably away from zero.

If you are drawn towards horse racing then you could argue that there is a possibility to study the form and put the odds into your favour, and whist this is true it is still a fact that unless there are only two runners, the odds are always greater than they are with forex trading.

Why is it then, that so many people fail to make a profit when forex trading?
One of the greatest problems is perhaps that traders fail to accept that they are gambling.

If you have a few hundred dollars to spare , that if lost would not cause you or your family any adverse effects, then perhaps a flutter or two on the currency markets might suit you better than any other form of gambling.

For those of you that want more, then investing in one of the many forex trading systems will be a major addition towards capturing a bigger percentage of the winnings.

One of the better forex systems will assist you to ensure that you keep on the right side of the market. This is important because although the price of a currency can only go up or down, it’s movements can be erratic and it may move up or down a little before making a concerted move in any particular direction.

These moves are referred to as volatility and are the very reason why so many traders lose money.

So if you fancy a flutter on a “two horse” race where the odds are very much greater than 2:1, then maybe trading the forex currency markets could be the perfect venue for you.

Just remember that although price can only go up or down, choosing the direction is much harder than it looks.

When funding a live account we would suggest that you fund it as follows:

For a micro account – minimum $500
For a mini account – minimum $5000
For a standard account – minimum $50,000

Anything less will make money management very difficult, and this is one of the most important aspects of successful trading.

Unless of course you want to just take a high value gamble, in which case there are many brokers and spread betting companies that will be more than happy to accommodate you from as little as $50

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As a currency trader it is very likely that you also keep an eye on the price of gold, because as you well know, there is often an inverse correlation between the strength of the U.S. Dollar and the price of gold.

Never has gold been in greater demand than it is at present. It is almost as if someone somewhere knows that something is going to happen to put the price of gold through the roof.

Do you remember the 1964 film – Goldfinger, Directed by Guy Hamilton?

Goldfinger’s film scheme, codenamed “Operation Grand Slam”, involves breaking into the U.S. Bullion Depository at Fort Knox, penetrating the main storage building with the high powered laser, and detonating a “dirty” nuclear weapon inside, thus contaminating the United States gold reserve and thereby dramatically increasing the value of his gold holdings.

If only Auric Goldfinger had known that all he needed to do was to undermine the strength of the U.S. Dollar, the fictitious multi-billionaire could most likely have succeeded with his task much more effectively by shorting the U.S. Dollar than was the case in the film.

Now it may be apparent to you that as a forex trader you can glean some information by watching gold prices, but did you know that many forex brokers now allow you to trade spot gold on the same platform as the one that you currently use for trading currencies? And most likely if your forex trading system or forex software works well for currencies, it will work surprisingly well for trading gold too.

When trading spot gold, like with forex trading, you are not required to take physical delivery of the gold.

So what do we know that might contribute to the future meteoric rise in the price of gold – or otherwise, for that matter!

In the film, James bond is – at one stage, strapped to a slab of gold with a laser beam cutting through that same golden slab and not too far from splitting the noble Mr Bond in two.

James asks: “Do you expect me to talk?”
Goldfinger replies with the all time classic line: “No, Mr. Bond. I expect you to die.”

Well trying to find out what gold may do next is almost as tricky a situation, but we do know some things for sure…Well almost for sure.

Of all the precious metals, gold is the most popular as an investment.

Investors generally buy gold as a hedge or safe haven against any economic, political, social or currency-based crises. These crises include investment market declines, currency failure, inflation, war and social unrest.
Investors also buy gold during times of a bull market in an attempt to gain financially.

So do we currently recognise any of these situations? I would suggest that we most definitely do.

But is gold a “good” investment? Well from a traders’ point of view, it really does not matter, so long as we can accurately predict what it will do next. But to answer that question I quote from an article in Wikipedia:

“In November 2005, Rick Munarriz of Motley Fool.com posed the question of which represented a better investment: a share of Google or an ounce of gold. The specific comparison between these two very different investments seems to have captured the imagination of many in the investment community and is serving to crystallize the broader debate.[26][27] At the time of writing, a share of Google’s stock and an ounce of gold were both near $700. On January 4, 2008 23:58 New York Time, it was reported that an ounce of gold outpaced the share price of Google by 30.77%, with gold closing at $859.19 per ounce and a share of Google closing at $657 on U.S. market exchanges. On January 24 2008, the gold price broke the $900 mark per ounce for the first time. The price of gold topped $1,000 an ounce for the first time ever on March 13, 2008 amid recession fears in the United States.[28] Google closed 2008 at $307.65 while gold closed the year at $866”.

Coincidentally, at the time of writing this article, gold is at $1036 and the most current google share price is $533.43, so I would conclude that for the present at least, gold can be a very attractive investment vehicle.

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<strong>The forex trading market being the largest trading market of its kind Apart from the addition of new traders, a new type of trader has also come into the picture. These are called automated trading systems or EA (expert advisors) or just robots. In general this process is called automated forex.

How efficient is automated forex? Well the answer can be best described as a mixed bag of beans. To be more specific – the forex robots or EAs that automated forex tend to employ are generally fed in with codes that emulate specific market situations and hence they are capable of working most efficiently when these market situations present themselves in the live market. To add to the mix of issues is the opinion that not all robots are good but some do a fantastic job and can truly achieve automated profits.

Again the limitations of artificial intelligence capabilities in the present day are too severe to enable a robot to produce the best profits considering the generally accepted equation when it comes to forex trading.

Fundamentals + human perception = price

The stability and unpredictability of the human prediction factor is very obvious. This when combined with the limited abilities of artificial intelligence today – robots do not seem to be an extremely viable option.

However robots are not uncommon today and they can indeed be used to reduce the work load of the investor by enabling them to act accordingly when the price reaches certain values etc. Generally most of the experts in the field wouldn’t bet their money on the robot. Quite simply because the robot won’t be capable of replicating the intuition, which has been acquired by an experienced broker or investor over the years.

For those of you who decide to get a robot or utilize the automated forex system. The considerations that are to be taken up while selecting a robot are – examine its past record, make sure the algorithm or method of working is explained. This is because the one who is buying it should believe in the working principle of the robot. Check whether the forex robot can produce results not just in the built in default tests but also in ambitious custom made tests. This is because this is perhaps the only true way to check the ability of the robot as the robot will be made specifically for the built in tests.

To conclude, while fully automated forex can be opted by individuals, it is highly doubtful whether it can produce the best possible results. However a system involving both a expert advisor as well a human is capable of producing good results and at the same time it would demand less from the human too.

Mike Sanders

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Most traders use Forex platforms to aid them in their quest to make more profitable forecast in the currency market. With the introduction of the internet, instant information can now be easily accessed anytime of the day. Because of this advent, there’s a lot of different trading software, also known as Forex platforms, has been introduced in the market. Its basic function is to allow speculators to do their trading online 24 hours a day. Information gathered in real time by these software enable traders to do informed decisions regarding their investments.
Forex platforms are used to manage your accounts when you are trading. All the important information about your recent transactions is stored in the software’s system allowing easy access when needed. They also provide significant reports that are updated every time depending on your setting whether you want to receive an update every 15 minutes or every hour. This is the reason why platforms are very important for online traders because most decisions are based on the gathered information. Some Forex platforms have customizable interfaces that can be changed to whatever style better suits the user. It can even be programmed to show only the screens the user wants to appear in the window.
But not all functions of Forex platforms are the same. Their abilities differ from one another depending on the encoded program of the software’s developer. It can be very difficult to choose which platform works best so you really have to do a little researching before making your purchase. And just to make sure, you can try using free demo accounts available in the market that you can use for a limited time while you are still honing your skills in currency trading. In order for you not to be confused, it is recommended especially for novices in this kind of field to at least take a training for them to learn the ropes and fully understand what is Forex trading is really all about. These trainings could provide you with insights and secrets of the trading business which you can put into use once you start your own trading venture.
You have to understand that familiarity about your chosen platform is of vital importance. Your trading methods must be in line with the software’s approach of the market so as for you not to get confused when making essential decisions. If you are the type of trader who always goes for the high – risks ventures, you must choose also a platform that has been designed to act like you do because there are platforms designed to be conservative when doing their currency trading and they are the best platform for traders who always go after a low- risk investment.
It is not as hard as it seems to be when finding the right platform. All you need to do is a little research and some advice from experienced traders about their views on what could be the best platform to use on your Forex trading.

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