by goomauk

Do You Have The Guts to Sit And Watch While Your Robot Grabs a PIP ?

Forex trading is very profitable without a lot of sweat and equity. You can let Forex Mechanical Trading Systems (a robot) do it.  But more about that later.  It’s a matter of trading foreign currencies world wide buying and selling for profit. One thing you can count on is that you will not have capital gains tax. It is all going to be “ordinary income”.  So just be prepared to pay through the nose unless you move to a tax haven country. Does the Caribbean sound good?

The players in the market are banking institutions, international corporations, and ordinary traders. They make up the 1.5 to 3 trillion dollars that are traded each day.

There is often some confusion as to exactly what forex trading is. Currencies are traded in pairs. With forex trading you are trying to buy or sell a currency at an exchange rate for another currency. This is called a currency pair. You can exchange the US dollar for the Japanese yen or the Euro or the British Pound or the Swiss Franc. You may also exchange the Canadian dollar for the Mexican peso. Stick with the major ones though, because they are a bigger market.

Since this is written in English, we usually start with the British Pound or US Dollar and we use them as the unit to determine the value of other currencies. The less the US dollar is worth the less of another currency it will buy you. Therefore, if the USD versus EUR rate is 1.200 then you get one Euro for 1.2 dollars. Whereas, if the rate is 1.4, it will cost you 1.4 dollars for each Euro. Therefore, the result you are looking for is to buy EUR/USD at 1.20 and sell at 1.400 because it only costs you 1.200 dollars to buy, yet the person you sell to is paying 1.400 dollars for that same Euro. At this time the Dollar has lost so much value, it costs almost a dollar and a half to buy one Euro. Wow… talk about an overspending government. Your kids and mine will have to work long and hard to pay off all that debt. But there is always inflation to help us and we can count on that to help balance our books.

What we are hoping for is a “Pip”.

What we are trying to is to gain a ‘pip’.. This is the unit of fluctuation  for your investment. Decimal format is used to calculate the exact exchange rate for currency internationally. For instance a Single Euro might cost you 1.478 US Dollars. You make a profit when the number moves up a point. The more this number moves up the more pips you make. A pip can be a unit of twenty dollars, ten dollars, or even less depending on what type of account you are dealing with and the size of the lot.

No SEC… Well They Didn’t Help Madoff’s  Investors

Trading the forex is not like the stock market which is overseen by the Securities and Exchange Commission (SEC). Most  forex trading is done over the phone or online. Most of the money that is traded comes from ninety five percent of the market…  banks and large corporations. The other 5% comes from small  investors who may have an account for as little as 0 or 0.

Of course just like any industry there is a lot different language involved.  Technical Analysis, Fundamentals, and Fibonacci  retracement.  Fibonacci was an old Italian guy who decided upon a theory of numbers that had a relationship. He lived before Columbus discovered America and we are still using his theories to try and make money.

Retracements are a pull-back of the general trend which is usually accepted to be about 50 per cent. Although, using Fibonacci numbers, it could be somewhere between 33 per cent and 67 per cent.

On the other hand Fundamental analysis simply means information such as drought or a freeze in Florida which affects the price of Orange Juice. That’s right, the same analysis is used for commodities as well as currencies. Why? Because currencies are commodities!

Different nomenclature intimidates some people, but it’s easy to learn and there is no reason why you can’t pick up the language. The great part of this trading business is that you can ‘paper trade’. Paper Trading is easy because you can open a ‘demo’ account with almost any broker on line and trade as much as you want without putting up any money. Then when you feel comfortable with your abilities or your “Robot” you can start trading with real money. That’s where the fun begins!

The basic point is to buy one currency pair at an exchange rate that will rise up enough in value to make you a profit. Don’t forget that there is a ‘bid’ and ‘ask’ price and when you sell, you must cover the difference before you make a profit.

OK. So now let’s get down to what is important.  Almost a thousand years after this ancient Italian Fibonacci, they figure out computers and the little guys like you and me can trade from our own homes and we don’t even have to know what we are doing. We just get a ‘software program’ from some modern day Fibonacci! These things are called Forex Mechanical Trading Systems sometimes called ‘robots’. They are only a hundred bucks or so and the big deal is that they trade for you. You don’t have to know a thing. Ye Gads!

The bad thing about them is that they sometimes miss getting out of the market when you are suffering a loss.  They skip right through the ‘stop loss’ you have so stressfully placed.  BUT… That’s easy to solve… watch the darn thing.  You don’t have to be glued to the computer, but for pete’s sake keep an eye on it.  How lazy can you get?  Remember that some guys are glued to the screen 8 hours a day to make a living this way. You just have to peek once in a while.

Don’t  let it run all night or all day while you are at work.

Well. Maybe you can after you use it for a while and you have developed a comfort level.

If this article has been helpful in helping you to understand just how forex trading works, you may find our website with severalmechanical trading systems even more helpful.
http://forexcurrencyforex.com

I have my own trading theory: the blast theory…  When the market bunches up. it will eventually ‘blast’ through the ‘support’ or ‘resistance’ when the volume increases.  That’s where you can make some money. Believe me, when you get a big hit… it really is a blast.

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Tags: Banking Institutions, British Pound, Canadian Dollar, Capital Gains Tax, Currency Exchange, Exchange Rate, Forex Trading, Grabs, Guts, Haven Country, International Corporations, Japanese Yen, Mechanical Trading Systems, Mexican Peso, Pip, Robot, Swiss Franc, Tax Haven, Trading Foreign Currencies, Trillion, Watch