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Forex 101

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We here at Daily Dollars Online are spending countless hours constantly foraging the interwebs to find the most proven ways to create wealth online so that you don’t have to. In fact we pride ourselves on sifting through the very wide array of online wealth building opportunities to find only the most legitimate and profitable ways to create wealth online. From Internet Marketing, Network Marketing and Affiliate Marketing to Commodities and Forex Trading and everything in between. Now with the shameless plug out of the way, let’s get into the real reason why you are here.
Over the years, we’ve discovered one of the most effective ways to create wealth is to invest in the money markets like Forex. Money markets are effective because you are essentially using money to make money. Whether it’s Certificates of Deposits (CDs), Interest Bearing Accounts and the like, Forex is definitely a major player in ways to maximize returns on your hard-earned cash.
Forex, which is short for Foreign Exchange is a multi-trillion dollar daily market that is picking up tremendous steam and popularity due to it’s very high market cap (did we say multi-trillion dollars) and low barrier of entry, especially compared to the stock market. The virtually unlimited income potential is what makes trading Forex so promising and rewarding. In fact, Forex has quietly created considerable wealth for many beginner, novice and expert traders alike.
This article will first explain at a high level what Forex is, how you can use it to acquire tremendous wealth and 5 reasons why you should consider Forex Trading as a way to grow your wealth online.

What is Forex?

First things first, let’s talk about what exactly is Forex. There are countless resources, like BabyPips.com that will dive much deeper into the topic of Forex so we’ll just provide a somewhat high level explanation of what Forex is for the sake of continuing our conversation. Simply put, Forex is the Exchange of Foreign currency or the exchange of one country’s currency for another. This is a very common exchange as folks are traveling in and out of countries around the globe daily, hence the very large market cap (Did we say multi-trillion?).

 

When you visit other countries, an exchange of the source country’s currency for the destination country’s currency must take place. This is essentially what Foreign Exchange or Forex is in a nutshell. Money is made on the difference of the two currencies. Exchange rates determine how much difference between the two currencies and they are always changing. In the past, trading Forex was very difficult because of the need to watch exchange rates and place trades. Nowadays, there are digital platforms and tools like MetaTrader 4 and 5 that allow traders to place trades against the Forex market with a click of a button as well as monitor exchange rates.

Now for the 5 reasons to consider Forex to acquire online wealth:

  1. Low Barrier of Entry
    Most investment opportunities require a substantial amount of money to invest. Not the case with Forex. There are brokers that will allow initial deposits as low as $25 USD in a live trading account. These accounts are called “micro” trading accounts and could be a very good option for people who may be financially challenged or people who want to just start small and build their accounts up over time. Also, trading software for desktop PCs and apps for mobile devices are generally offered for free by brokers to make placing trades very easy, fast and convenient.
  2. Demo Accounts
    Online Forex brokers will provide a “demo” account to trade the Forex markets worth up to $100,000 USD and more. This provides ample opportunity to learn the tricks of the trade (pun intended) before moving to a live account with real money. These accounts have no timeline and can be replenished if needed at any time so you can take your time to master the markets before taking the training wheels off and becoming a very profitable trader.
  3. Education and Resources
    There are countless hours of video tutorials and case studies on YouTube as well as books that you can purchase to broaden your knowledge on the subject. My recommendation is to spend a lot of time educating yourself while using a demo account to really get the hang of things. The idea here is that before you start trading real money, to at least double your demo account using the knowledge and experience you’ve acquired over time. I would recommend not trading a live account until at least 6 months of study, analysis and practice.
  4. No Commissions or excessive fees
    That’s right, no commissions, no exchange fees, no government fees, no brokerage fees. Brokers are generally compensated by the spread, the difference between the bid and offer price. This means traders can trade with the confidence in knowing that their profits are accurate and secure. There is total transparency when it comes to prices and profit.
  5. Leverage
    Leverage provides a way to control a much larger value. Brokers often have ratios associated with leverage. Pay very close attention to these as they indicate how much leverage you are allowed to assume. For example, if a broker is offering leverage at say 50:1, this means that a $50 margin will allow a trader to assume control over $2,500 worth of currencies. This essentially means that for only $50, you can net a $2,500 profit if you win the trade. It works against you for the same amount if you lose. This is how traders are able to earn or lose lots of money very quickly.Leverage is probably the most misunderstood concept of trading in general and is why most beginner traders blow their accounts, leaving them with broke and confused. However, when used properly with risk management, leverage can be a wonderful thing yielding very nice profits. It is certainly a double-edged sword and cuts both ways.  When used with risk management, your account will skyrocket in very short time. Risk management is arguably the single most important thing to master in Forex trading and can determine your success or failure as a trader.

There are many other reasons one should consider trading in the Forex market and probably the most notable one not included in the top 5 is that the Forex market is immune to market manipulation. This means that unlike the stock market, the Forex market cannot be manipulated by governments, banks, politicians, corporations or any other entity largely because of its astronomically large market cap. This evens the playing field tremendously and allows anyone to because a successful trader. Your advantage is created by your education of the markets and the ability to practice using your demo accounts. That is why trading Forex is becoming a very popular way to create wealth online.

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