Forex trading for a beginner

Forex trading for a beginner

Author
Discussion

robinessex

Original Poster:

11,046 posts

180 months

Thursday 4th September 2014
quotequote all
Guys. Can the ‘man in the street’, (that’s me), without any knowledge of the financial markets (that’s me again) make (some) money from Forex trading ? I’ve seen these on the net, and obviously they ALL imply you can make money. My mate in the pub (we all have one, don’t we ) reckons that if you keep it simple, say only speculate with the pound, dollar and euro, so one doesn’t get to confused, stop when/if you make a small profit each day, and shut shop and go (back) down the pub if you make a loss, you can come out smiling. Comments from the PH’ers who actually do this for a living would be appreciated. Oh, nearly forgot. The target is to make enough to buy a Lamborghini Aventador after a year !!!! Go to have an objective !!

megaphone

10,692 posts

250 months

Thursday 4th September 2014
quotequote all
Probably the easiest method is to use a spread bet platform, you can 'bet' on forex or the FTSE or others. Simple to set up and cheap. I use

http://www.capitalspreads.com

Lots of info on there and you can set up a demo account to try before you lose your shirt!

Hoofy

76,253 posts

281 months

Thursday 4th September 2014
quotequote all
Agree with going down the spreadbetting route and playing with a demo. Search through PH - there are LOADS of threads on trading and forex.

As for your mate down the pub, he's not entirely wrong. The hardest bit for most people is knowing when to cut your losses. And then how you react when you've taken a loss. Many end up chasing or refusing to accept a loss/close the trade.

gregf40

1,114 posts

115 months

Thursday 4th September 2014
quotequote all
No.

Luke.

10,944 posts

249 months

Thursday 4th September 2014
quotequote all
gregf40 said:
No.
How so?

vescaegg

25,489 posts

166 months

Thursday 4th September 2014
quotequote all
My friend trades FOREX for Goldman Sachs; mainly asian currencies.

He has about 10 screens of news channels and websites open at one time trying to keep track of anything (of which the list is endless) which can cause currencies to fluctuate. I havent seen him in action personally but it sounds insane and he has said FOREX is one of the hardest things to trade.

Start on something easier perhaps?

mcbook

1,384 posts

174 months

Thursday 4th September 2014
quotequote all
I think that trying FOREX trading as an easy way of making money is slightly mental. To give yourself any chance you'd need to be sitting at your Bloomberg screen all day, ready to deal when the time was right. And with no background in the industry, how do you know when the time is right?

If you're thinking of doing it on top of your day job, you're kidding yourself. You might make £100 now and again but you'll also lose £100 now and again.

When I see the ads for trading platforms proclaiming you can make easy money, I always think "If it's so easy to make money on the FOREX markets why don't you shut down your platform business and focus on trading yourself?". The answer to that one IS easy.

essayer

9,008 posts

193 months

Thursday 4th September 2014
quotequote all
vescaegg said:
My friend trades FOREX for Goldman Sachs; mainly asian currencies.

He has about 10 screens of news channels and websites open at one time trying to keep track of anything (of which the list is endless) which can cause currencies to fluctuate. I havent seen him in action personally but it sounds insane and he has said FOREX is one of the hardest things to trade.

Start on something easier perhaps?
:nod:
And that's one of the largest banks in the world, huge leverage, probably using a custom built forex trading platform, on a good PC with loads of monitors, fast Internet, full access to commercial news feeds/financial data etc; and no doubt, lots of experience.
Not for the faint hearted, that's for sure.

If you want to try trading why not try dabbling in something related to industry that you have a good knowledge of?





robinessex

Original Poster:

11,046 posts

180 months

Thursday 4th September 2014
quotequote all
The reason I ask, is some years age I sat next to a guy where I was working who did Forex trading on his laptop during the day. He ONLY traded the dollar against the pound. He certainly made a steady profit, as he showed me his account. He started with £25k. Had £85k a year later. His 'system' was simple. Log on at about 9pm, and watch the £/$ trades for about an hour. If/when he was 'happy', he'd buy as appropriate. If the rate was moving pretty steadily in any direction, he'd gear himself quite high. If the market was bouncy, gear low. Then watch. If he was making a profit, wait for a while, then sell. Don't get greedy or ambitious. If he was loosing, sell quick. Start again tomorrow.

Fotic

719 posts

128 months

Thursday 4th September 2014
quotequote all
robinessex said:
The reason I ask, is some years age I sat next to a guy where I was working who did Forex trading on his laptop during the day. He ONLY traded the dollar against the pound. He certainly made a steady profit, as he showed me his account. He started with £25k. Had £85k a year later. His 'system' was simple. Log on at about 9pm, and watch the £/$ trades for about an hour. If/when he was 'happy', he'd buy as appropriate. If the rate was moving pretty steadily in any direction, he'd gear himself quite high. If the market was bouncy, gear low. Then watch. If he was making a profit, wait for a while, then sell. Don't get greedy or ambitious. If he was loosing, sell quick. Start again tomorrow.
Do it, sounds failsafe.

robinessex

Original Poster:

11,046 posts

180 months

Thursday 4th September 2014
quotequote all
Fotic said:
robinessex said:
The reason I ask, is some years age I sat next to a guy where I was working who did Forex trading on his laptop during the day. He ONLY traded the dollar against the pound. He certainly made a steady profit, as he showed me his account. He started with £25k. Had £85k a year later. His 'system' was simple. Log on at about 9pm, and watch the £/$ trades for about an hour. If/when he was 'happy', he'd buy as appropriate. If the rate was moving pretty steadily in any direction, he'd gear himself quite high. If the market was bouncy, gear low. Then watch. If he was making a profit, wait for a while, then sell. Don't get greedy or ambitious. If he was loosing, sell quick. Start again tomorrow.
Do it, sounds failsafe.
It looked genuine. But was I being shown porkies. That's why I'm asking people who know about these things. If it's to good to be true.................!!!

walm

10,609 posts

201 months

Thursday 4th September 2014
quotequote all
People often ask the same question about equities (which is my area) and I believe the answer I always give then applies now.

The simple economics of what you are suggesting don't make sense.

You want to make a consistent profit with a (presumably) small capital sum to start with, working part time and you have zero experience.

Isn't it quite likely that if such a thing really worked THE ENTIRE fkING WORLD WOULD BE DOING IT!!!!!!!!!

Zero barriers to entry = minimal return. It's fundamental economics.

You will lose all your money. It is as simple as that.

Firstly any alpha you might possibly generate will be eaten by the spread.
Secondly don't forget you would need a bloomberg terminal (for live news feed) which is c.$2k a month IIRC.

You are effectively asking whether you can reliably make money playing roulette. Sure the house is only taking 10bps not 1/36 but it is still going to win.

Hoofy

76,253 posts

281 months

Thursday 4th September 2014
quotequote all
robinessex said:
Fotic said:
robinessex said:
The reason I ask, is some years age I sat next to a guy where I was working who did Forex trading on his laptop during the day. He ONLY traded the dollar against the pound. He certainly made a steady profit, as he showed me his account. He started with £25k. Had £85k a year later. His 'system' was simple. Log on at about 9pm, and watch the £/$ trades for about an hour. If/when he was 'happy', he'd buy as appropriate. If the rate was moving pretty steadily in any direction, he'd gear himself quite high. If the market was bouncy, gear low. Then watch. If he was making a profit, wait for a while, then sell. Don't get greedy or ambitious. If he was loosing, sell quick. Start again tomorrow.
Do it, sounds failsafe.
It looked genuine. But was I being shown porkies. That's why I'm asking people who know about these things. If it's to good to be true.................!!!
Ask him how he is doing now.

mcbook

1,384 posts

174 months

Thursday 4th September 2014
quotequote all
robinessex said:
The reason I ask, is some years age I sat next to a guy where I was working who did Forex trading on his laptop during the day. He ONLY traded the dollar against the pound. He certainly made a steady profit, as he showed me his account. He started with £25k. Had £85k a year later. His 'system' was simple. Log on at about 9pm, and watch the £/$ trades for about an hour. If/when he was 'happy', he'd buy as appropriate. If the rate was moving pretty steadily in any direction, he'd gear himself quite high. If the market was bouncy, gear low. Then watch. If he was making a profit, wait for a while, then sell. Don't get greedy or ambitious. If he was loosing, sell quick. Start again tomorrow.
His system sounds like nonsense, if you ask me. What was it that made him "happy" and how did he know he was happy if he was doing his day-job at the same time?

"If the rate was steadily moving" - did he use proper volatility measures or just a gut feel?

Seriously though - you should try it if you are curious. Start small and don't be fooled by success when no money is at stake. You will make different decisions when risking real £.

All I'm saying is that I think it will be incredibly difficult to make any kind of consistent profit. Might be fun though.

mcbook

1,384 posts

174 months

Thursday 4th September 2014
quotequote all
walm said:
The simple economics of what you are suggesting don't make sense.

You want to make a consistent profit with a (presumably) small capital sum to start with, working part time and you have zero experience.

Isn't it quite likely that if such a thing really worked THE ENTIRE fkING WORLD WOULD BE DOING IT!!!!!!!!!

Zero barriers to entry = minimal return. It's fundamental economics.

You will lose all your money. It is as simple as that.
Great post.

The truth hurts.


robinessex

Original Poster:

11,046 posts

180 months

Thursday 4th September 2014
quotequote all
Thanks for the above guys. Being an Engineer, I'm of the 'proove it' principle before I believe anything. And as you say, if it was easy, everyone would be doing it. I've long lost touch with the guy i watched, and he may have been pulling the wool over my eyes. I must admit I didn't know enough to aske the right questions. And yes, I think he was doing it by gut feeling. Well, that's what he told me. I think I'll just have a flutter on the lottery instead !!!!!!!!!

mcbook

1,384 posts

174 months

Thursday 4th September 2014
quotequote all
Don't give up that easily! I think we're just saying that you shouldn't expect to make lots of (or any) cash.

Open an account and play around with a grand or so, stay safe and do not use leverage! Take a more long-term approach and bet on macro trends rather than daily news - that'll mean you won't need to be glued to Bloomberg.

I dabble in shares (no leverage, small amounts) because I enjoy it and because the bank don't pay you any interest on savings. Haven't made or lost a fortune but it's another thing to keep the mind active.

megaphone

10,692 posts

250 months

Thursday 4th September 2014
quotequote all
Have a go with the Capital Spreads demo account, nothing to lose (or win) but it will give you an idea what's involved. I spread bet on the FTSE for a bit of fun, if I have some free time I have it running on a separate screen, usually have a few hundred £ sitting in my account and do a pound a point, I'm usually up a few hundred £ over a year and that's it.

Shaoxter

4,048 posts

123 months

Thursday 4th September 2014
quotequote all
FX is the most macro of all the markets, meaning that you need to keep up to date with all the news and data releases. Even then a random political event or war could throw your strategy out of the window.

Your friend was just day trading, yes some people do make money out of it but for every one of those people there's 2 people who've lost all their money.

You're better off trying your luck at online poker to be honest.

robinessex

Original Poster:

11,046 posts

180 months

Thursday 4th September 2014
quotequote all
Shaoxter said:
FX is the most macro of all the markets, meaning that you need to keep up to date with all the news and data releases. Even then a random political event or war could throw your strategy out of the window.

Your friend was just day trading, yes some people do make money out of it but for every one of those people there's 2 people who've lost all their money.

You're better off trying your luck at online poker to be honest.
I can't bloody play poker either !!!!