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How Much Do You Need to Start Trading Forex? • Benzinga

With the world of traditional finance under fire, individuals are turning to self-taught forms of income generation. You can learn to trade forex and don’t need much to get started. Learn more with Benzinga’s guide.

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With the world of traditional finance under fire, individuals are turning to self-taught forms of income generation. You can learn to trade forex and don’t need much to get started. Learn more with Benzinga’s guide.

You can trade forex with as little as $1. Will you get very far? Probably not. Even Warren Buffett needed $228 to purchase 6 shares of Cities Service, and that was in 1941.

In contrast, the Securities and Exchange Commission (SEC) requires $25,000 in your securities trading account for access to all day trading privileges. 

The global forex market is not centrally regulated. There is actually no legal minimum account deposit required for forex trading, but most brokers do have a minimum deposit policy. Forex brokers, however, can and should be regulated within a jurisdiction to make sure they engage in best practices with clients.

For instance, forex brokers based in the U.S. must generally remain in compliance with The Commodity Futures Trading Commission (CFTC) and the National Futures Association (NFA). If they don’t, they can be barred from doing business in the U.S. 

Still, some online brokers like eToro have chosen other business models to operate within the U.S. and are instead registered as a Money Services Business (“MSB”) with the Financial Crimes Enforcement Network (“FinCEN”). 

This does not stop you from getting into contact with them, however, through whatever means you see fit. But many brokers based outside the U.S. will not take clients from the country. 

And if you are accessing the forex market through a foreign broker that is not locally regulated, the U.S. government will not protect you in case of fraud or theft. High-net-worth individuals with assets above $10 million may not be protected under any circumstance. Regulators often assume you have a high level of sophistication to go along with your hefty bank account.

Leverage

The U.S. also regulates the amount of leverage a forex broker can provide and limits it to 50:1 on major currency pairs and 20:1 on minor currency pairs. Major currency pairs are usually made up of currencies issued by well-developed countries and enjoy high liquidity levels like EUR/USD. 

Minor and exotic pairs typically have one or more currencies issued by developing nations and may have substantially lower liquidity than the majors. Online brokers operating outside the reach of U.S. regulators sometimes try to attract customers through extremely high leverage, some going up to 1,000:1.

The leverage ratio you are allowed to use by your online broker dictates how much money you need in your margin trading account to control a certain position. For instance, if you want to control a $500 position with 50:1 leverage, you must have at least $10 in your account ($10 x 50 = $500). 

With 1000:1 leverage, you would need only $0.50. The higher the leverage amount, the more quickly your broker will either close out your losing position or demand you pay for your losses if the trade goes against you. 

Because they can close out your position at their discretion, you may not even have the chance to ride out a swing if you have a low account balance. For this reason, you should only put funds you can comfortably afford to lose in your forex trading account. 

Why Use Leverage?

Leverage allows you to control a larger position than your account value would otherwise allow, and you can build profit or losses as if you had that larger account balance in cash. This gets around the psychological problem of boredom many low balance traders suffer from. If you only have $1 in your account, you can double it 5 times and still only have $32. (Doubling your account funds in just 1 trade is extremely hard, to say the least.)

Many traders use leverage as part of their core strategy and use market analysis to tip the risk to reward ratio in their favor. Leverage can also be used for trading account  diversification. 

Instead of having to stake the entire account on one trade, a trader can put up only a small percentage of the notional value of each forex trade. This allows a trader to operate in a substantially higher overall trading size  for the same amount of account funds as a single unleveraged transaction.

The amount of leverage you use impacts the risk you have and the amount of money you need in a forex account. Make sure you only take risks you can afford. You must also consider the other side of the coin — margin.

Margin and the Margin Call

Margin is just the other side of the leverage coin. While leverage is the multiplicative exposure you can take on a trade, margin is the minimum amount of cash you need to make that trade. 

In return for allowing you to take a leveraged position, your broker demands a minimum amount of margin to be deposited at all times in your account depending on what positions you have open. When a leveraged trade moves against you, you start losing money in your trading account in real time and at a greater rate compared to taking an unleveraged trade.

When your available margin moves below the broker’s acceptable level, you may receive a margin call. You must then either deposit the amount of money they report to you or allow a  forced closure of the trade. 

Margin calls can be quite frustrating if you are waiting for a trade to reverse itself only to have your broker close it at a huge loss. The higher your account cash balance, the more margin you have to play with, but the more money is at stake overall.  

Most online forex brokers completely avoid the margin call process by simply closing out your outstanding positions once your account margin is insufficient, so check their policies for details on how they handle that situation. 

Best Forex Brokers

Make sure you are doing business with a reputable broker. Here are some you may want to consider.

Forex Risk and Money Management

Some of the most important aspects of forex trading for beginners are risk and money management. Proper management of risk protects you as you scale up into using a larger trading account. Consider the following to manage your risk:

  • Build your account balance. Larger account balances protect you against margin calls and automatic closeouts, but you also have more to lose if your positions get underwater. If you plan on leveraged trading, you should probably either set automated stops for your positions or have extra money you can put at risk to avoid margin calls and closeouts.
  • Trade a max percentage. Risking only a set percentage of your account balance per trade is a common way to limit the amount of money you risk on each trade. If you set a 1% of account size max loss limit per trade with an account balance of $10,000, then you can risk a maximum of $100 per trade.

    At this rate, you would have to lose 100 trades in a row to wipe your account out. If you set the maximum percentage that you will allow your trades to go against you before closing it out, then you can also calculate the cash you’ll need in your account to avoid a margin call or closeout of that particular trade. Things get more complex when you have multiple positions.

  • Trade the majors. Major currencies include the U.S. dollar, the Swiss franc, the British pound, the Japanese yen and the EU’s euro. The 4 major currency pairs involving them (EUR/USD, USD/JPY, GBP/USD and USD/CHF) are generally more liquid, making large transactions easier to execute.
  • Set automated stops. You may not use full fledged trading bots, but you can use an automated stop loss to order a position closed if the market trades at a certain level. Stops do not have to be static either. The trailing stop follows exchange rate movement that favors your position and is useful for protecting profits as a trade moves positively for you.
  • Trade at high liquidity times. The forex market is open around the clock from 5 p.m. ET on Sunday to 5 p.m. ET on Friday. Lulls in activity do occur on holidays and at the beginning and end of the trading week. When less people are trading and making markets, even the forex market can experience higher than normal volatility and lower liquidity.

Forex Trading Examples

On a $100 account. If EUR/USD is currently at 1.1800/05, and you think the exchange rate will rise, you can buy €4,000 against the U.S. dollar on margin with the intent to sell that position later. The leverage ratio of this currency pair at your broker is 50 to 1, so you will only need €80 or $94.44 in your trading account to control a position of that size.

The EUR/USD exchange rate is later trading at 1.1850/55 after 2 hours. The move from the initial offer of 1.1805 to the current bid of 1.1850 was 45 pips, and your profit is (€40,000 x 0.0045) or $18.

On a $500 account. You believe that the current NZD/USD exchange rate of 0.6600/05 is too low. You have a leverage ratio for this currency pair of 50 to 1 at your broker. You want to purchase NZ$35,000 and profit from the subsequent rise in the exchange rate you expect. You will need $462.35 in your account to control this size of position.

If the NZD/USD exchange rate moves up after 2 hours to trade at 0.6645/50. The exchange rate has moved 40 pips (0.6645 – 0.6605), and your profit is (NZ$35,000 x 0.0040) or $140.

On a $1000 account. GBP/USD is trading at 1.3200/05, and you want to buy GBP35,000 because you believe the exchange rate is too low. The leverage ratio at your broker is 50 to 1 for this pair, so you will need a total of $924.35 deposited in your margin trading account. 

The GBP/USD price is later trading at 1.3225/30 after 5 hours. That is a 20 pip gain, and your final profit is (GBP35,000 x 0.0020) or $70 on the trade.

Forex Terms

Forex has its own language you should learn for a better chance of understanding your fellow traders. Here are some of the more common terms you’ll run across.

Pips

Pips are the smallest exchange rate movement in the forex market. It usually corresponds to a movement of $0.0001 in the exchange rate of most currency pairs.

Trading Lots

A lot is a standardized trading amount. A standard lot is 100,000 units of base currency at most forex brokers. You can also sometimes trade in mini lots of 10,000 base currency units and micro lots of 1,000 base currency units at online brokers. 

Stop-Loss Orders

A stop-loss order is an order that closes your trade automatically if the exchange rate hits a certain pre-specified level. You can walk away from the computer, and the order will still be executed if the stop loss level is hit. 

This protects you from taking losses larger than you had expected, although slippage is possible at many brokers. This means that your order might be executed at a worse rate than what you had initially specified. 

What Do You Need to Start Winning at Forex?

The amount of money in your forex account is less important than a winning strategy as part of your overall trading plan. If you trade profitably 100% of the time, then you could theoretically grow your account to any value you wanted given enough time. The reality is that most forex traders lose money. 

There are numerous considerations that go into making your trading business successful, and you must take them into account if you want your goal to become a reality.

If you want to trade forex more confidently, consider taking forex trading courses before committing your money to the market. Once you have the basics down, you can trade using a demo account funded  with virtual money. After this, you’ll have experience under your belt you can use to operate in a live account. 

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Neteller Launches Cryptocurrency Exchange Service

Neteller Launches Cryptocurrency Exchange Service

Neteller  one of the most known Digital fiat currency wallet provider , has started allowing its users to buy, sell, and hold cryptocurrencies including BTC, BCH, ETH, ETC, and LTC.

They do this on the large scale with a pilot in 10 countries and soon another 50 countries to join . They understand that if you do this effort it will only succeed if you can do this on a global scale.

Neteller and Cryptocurrencies

Neteller is a service which is operated by Paysafe Financial Services Ltd.,

paysafe

paysafe

founded in 1999, Paysafe Financial Services entered the market with the mission to provide an online alternative to the known traditional payment methods.

Most of the traders aiming us now neteller as one of the companies through which we made our deposits and if we had any profits also our withdrawals. A couple of years ago they left the Forex and Binary industry behind since the charge-back issue became just too expensive.

But as any companies knows, if you do not adept you die. The binary option market is all but dead and the Forex industry has moved also into the directions of the cryptocurrencies. thus, neteller understands that this is where the future is.

So Lasts week they announced that they are now offering a wallet with buy and sell cryptocurrency options.

As of today, Neteller users can buy, hold and sell cryptocurrencies via a recognized cryptocurrency exchange including bitcoin, bitcoin cash, ethereum, ethereum classic and litecoin, purchased using any one of 28 fiat currencies available in the Neteller wallet.

It may not seem so exciting but for many users that love this service it actually is. More and more currencies will be added making them an true exchange in the near future.

Now one is able to fund their neteller account through many different means (Mobile, Epay, Paysafecard, local bank deposits, and bitcoin)

We think that will make the threshold for many people, who would want to buy or sell cryptocurrencies, lower. This in return is a good thing for the overall acceptance of the cryptocurrencies in the mainstream of every day life.

Conditions for buying and selling cryptocurrencies through Neteller

The rates offered are somewhat in the lower middle of the current market making them go for the save route. The average market rates on the major cryptocurrency exchanges differ all in all not that much anyways, as this is not the main reason to choose to buy Bitcoin through Neteller

The minimum cryptocurrency purchase or sale amount is “approximately equal to 10 EUR,” the firm clarified, adding that the maximum amount depends on the transaction limits associated with each account.

When You open an account with Neteller you have to choose your default currency. This is of course for most people in accordance on their geographical locations, people in Britain will go for the pound most Europeans go for the euro and pretty much the rest of the work goes for the US Dollar, thou other currencies are available

The fee is 1.5 percent for purchasing and selling cryptocurrencies from wallets with EUR or USD as the default currency.

The fee rises to 3 percent for wallets with other default currencies.

Neteller  | Why is this a good move for neteller and one that we should expect from other online Payment providers as well ?

At this moment till last week Neteller users can pay, get paid on thousands of sites, and send money around the world through their system.

The company claims to have “millions of point-of-sale, ATM and online locations” for users to withdraw or spend their cash.

Last July 25, Paysafe ( which as you remember is the company that owns Neteller and Skrill)  announced that another digital wallet provider in its group, Skrill ( formerly known as moneybookers), started allowing customers to “instantly buy and sell cryptocurrencies, including bitcoin, bitcoin cash, ether and litecoin, using any one of the 40+ fiat currencies available in the Skrill wallet.”

We could now see that this was like their test run on this concept.

We do not know the numbers that Skrill produced since they offered this service but it must have been encouraging enough for Paysafe to include their flagship brand in this endevour.

We will see where this leads but we are hopeful that this is the next step in global acceptance to the cryptocurrency revolution. Let me know what you think

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The basics of trading that one should know

The basics of trading that one should know

Things you should be aware of before you start

The currency trading industry and now also the cryptocurrency trading industry have gone through enormous volatile times the last couple of years. Now with trump and its trade wars. The fast rise and somewhat recline of the cryptocurrencies and the fast pace of international politics and economies that create high rises and steep fall of the currencies.

So what does it all mean and what can you do before start to trade on these news headlines.

Good brokers like LegacyFX and UBCFX provide the traders with the latest market news and updates on a continuous basis but if you are new to trading you still have no idea what to do with this.

You start by understanding that the involves a high degree of risk, including the risk of losing you hard earned money. Besides the ones that were lucky enough to have bought Bitcoin a couple of years back and cashed in in the end of 2017, most people don’t get rich overnight.

You have to understand that you only trade with money that you are able to lose, going hungry because you want to open a trade is not the right wy to go about it.

So, What is Forex?

You should by now understand that the value of currencies goes up and down every day.

This in general becomes apparent the moment you go on vacation and what you bought last year with your money now is not the same amount you get today at the exchange.

This is on a large scale, what a lot of people do not know is that there is a foreign exchange market – or ‘Forex’ for short – or “FX” for even shorter, where you can potentially make a profit from the movement of these currencies.

The most known Trader is George Soros who made a billion dollars in a day by trading currencies. This is of course on a scale that we are not able to reach and you need a huge amount of money to begin with. Still he made a billion in one day!!

The internet has played a huge part in making trading in currencies accessible for the masses. You also do not need huge amounts of money to actually do this. Now keep in mind that if you make 10% profit on your investment but the investment was just $50 you basically just end up with $55. still no bank will give you 10% interest on your money.

Many people and I am talking millions are now trading every day, most do this on the side and don’t do this as a full-time job, but there are today enough people that are full time traders and making enough money to live comfortably.

Retail forex market needed Brokers

The Forex market for the retail market was born, it started around 15 years ago to become more serious as technologies advanced and the stream of information became almost instant, this is important for trading as one second can make the difference between profit or loss.

So, the moment the technology was there the people that wanted to trade were there all that was needed were the Forex brokers that offered the platform for trading.

There are latterly hundreds of companies of not thousands that offer this service and there are good ones like LegacyFX and there are scams (these tend to not last long)

Forex explained in short

The Forex market is the largest financial market on the planet and has been for many years now.

Its average daily trading volume is more than $4 trillion. (just let that number sink in for a second). Of this total amount around 5% is the retail market meaning traders like you and me. Still 5% of 4 Trillion is still a number with a lot of zeros behind it.

If you compare that with the New York Stock Exchange, which only has an average daily trading volume of $55 billion. You truly see the size.

To give you another example:

if you were to put ALL of the world’s equity and futures markets together, their combined trading volume would still only equal a 25% of the daily Forex market. Insane right?

Why does this even matter?

It matters because there are so many buyers and sellers that transaction prices are kept low. To explain how trading the Forex market is different than trading stocks, here are a few major benefits.

  1. Most Brokers don’t charge commissions – you pay only the bid/ask spreads.
  2. There’s 24hour trading – you decide when to trade and how to trade.
  3. You can focus on your currencies and become experts in only those pairs that you follow instead of following and selecting out of 5000 stocks
  4. You can trade on leverage, (something to be very aware of as it can magnify potential gains but also your losses).
  5. Forex is accessible for almost everyone– you don’t need a lot of money to get started
  6. In the Forex market you can trade on Demo accounts to learn before you commit your money

How is Forex traded?

The mechanics of a trade are virtually identical to those in other markets. The only difference is that you’re buying one currency and selling another at the same time.

This is also the reason as to why the currencies are quoted in pairs, like EUR/USD or USD/GBP.

The exchange rate represents the purchase price between the two currencies.

Example:

The EUR/GBP rate represents the number of GBP one EUR can buy (relevant now with all the Brexit issues going on) . If you think the Euro will increase in value against the British Pound, you buy Euros with British Pounds. If the exchange rate rises, you sell the Euros back, and you cash in your profit.

Now the same works for strading Bitcoin, ethereum, Litecoin or other cryptocurrencies. this has become an entire new market and has introduced many people to Forex . you should here be also aware that trading cryptocurrencies is like regular trading so you will be able to lose great sums of money.

the Best thing i found about trading cryptocurrencies is that the Leverage by default tends to be very low which makes the risk of losing it all much smaller.

Sounds simply enough?

Why does not everyone Trade.

The same could be asked as to why not everyone plays poker, you can make money. The comparison between the 2 is actually closer than you might think.

All traders that are successful will tell you that 80% of successful trading is psychology and the other 20% is research. It takes time to get the research down, but it can take a lifetime to master the psychology.

People tend to do things differently when real money is on the line and are accepting losses in the hope that the trend will reverse or taking out profit too early because they don’t want to lose what they just have gained. In short, the psychology is the hard part.

One should be aware that you can loose real money and a lot of it very fast if you don’t know what you are doing.

Now most Good Forex brokers offer some educational tools, some more than others that will teach you how to trade. There is also something that is called social trading that will allow you to follow other traders and see what they are doing in order for you to learn and make money at the same time.

So here are some ground rules for those that look to start trading

  1. Get involved in the market, watch read and listen to the news to understand what is happening
  2. Go through a trading course ( a good one is here)
  3. Open a demo account and trade at least a month (my advice to do this even longer)only on this before you even think about trading with real money.
  4. Check out social trading, there are some options for this, this broker offers this also.
  5. Try with an amount that you are able to afford losing. See this as your tuition money.
  6. Take it slow, don’t become greedy and follow the basic rules

Basic Rules (there are many more but start with these)

  1. The trend is your friend
  2. Don’t add money to a losing position
  3. Don’t trade on too many different currency pairs
  4. Trade only with a good broker
  5. Don’t open to many positions (no one needs 100 positions a day)
  6. Develop your strategy and stick to it.
  7. Know that NO ONE is 100% of the times right, everyone loses some.
  8. Last but not least, don’t trade with money you cannot afford to lose.

Now all that I want to say is good luck.  😊

 

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Wanted Cryptography Experts in China

 Wanted Cryptography Experts in China

The sooner we get to the official launch of China Digital Money. the more Cryptography Experts are needed.

it almost is surreal as they pushed against this from the beginning but now S China digital money may soon be a reality.

The Bank of China (PBOC) is hiring cryptography experts by the masses as reported by the South China Morning Post (SCMP)

this is the latest in the Chinese efforts to have a state controlled cryptocurrency for its own means.

The institution is one which worries a lot about the effect of investor activity in the cryptocurrency market. this in great contrasted to the directive issues in 2014 by the PBOC  that Bans any activity related to the cryptocurrency market.

Yet the Central bank of china started to build their own work force for building and developing their crypto in 2017.

something like if you can beat them , copy them.

in 2017 the Yicai Global reported that this targeted workforce would work from central Beijing as was to be names the  digital currency research institute

This research institute would primarily focus on the latest in digital currency technologies and all the different applications that would benefit from cryptocurrencies.

the former deputy director of the PBOC’s science department, Mr Yao Qiann would be in charge of the overall project

since then they are expending with opening a new research institute expanded in Nanjing . the idea for this center is to create more interest n the technologies and its possible applications.

the pilot programs are to be implemented by state controlled banks and academic institutions which should result in blockchain hubs that would attract new developing talent and additional capital to further develop the cryptocurrencies.

“Beijing’s ideal digital currency must ensure the smooth running of monetary and financial stability policies and at the same time protect consumers.”

Apparently, the ultimate goal for the Digital Currency Research Institute (DCRI) was to clear the path for a national cryptocurrency. Reports indicate that the fintech hubs will serve a purpose higher than initially believed. Reportedly, the hubs will serve as testing ground for China digital money. Here, the currency will undergo tests from prototype phase to future mass production.

and thus we get to the point that they are looking aggressively for new talent in the cryptographers and computer scientists sectors. now that more and more student have said good bey to the united states in the last couple of months after feeling they were less welcome this drive for finding new employment has only intensified and is answered by the large amount of brilliant young people coming back to live in chine after their education abroad.

The salaries are even higher then what they would have earned if they would stayed in the US and gone of to work in some of the companies in the Silicon Valley.

So we could expect that China is now also looking to become a world player in this industry as they have become the leaders in so many other fields.

 

 

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