Tuesday, July 2, 2013

Forex not hindered by account size... as much

One of the things I really have to learn to my maximum ability is how to trade forex or foreign exchange futures. The reason is, fees are only giving you costs based upon the forex broker taking a small part of the spreads. As such, as far as I have been able to tell reading about things, the COSTS are no more favorable to someone trading 1% of a contract than someone trading 100 contracts. There are exceptions since those that deal directly with the banks that process the transactions won't be charged much per spread, and commercial interests and such may get a better spread offered. But in terms of ONE retail investor with $100 vs another with $10M, they both get the same spread. That is a great advantage to a small trader, and better yet, if you have just a couple thousand you can trade multiple .01 contracts (1% of a full contract) and get diversified (and reduce correlation). You also can get started with like $100 in theory with one .01 contract at a time if you had to. 50:1 leverage is possible, but with such leverage you can have a loss that vastly exceeds the cost. 50:1 leverage. $100 at 50:1 leverage is $5,000. I wouldn't even come close to that kind of leverage but in theory you could.

I have been practicing on a demo account noticing that some of my chart reading skills do translate, but I still have plenty to learn before I feel comfortable putting any money in it.

If you are looking to build income but are not very well funded and want to learn any particular area, I suggest you read as much as you can abotu it and look for any and every sinstructional video and article about it until it makes sense to you. The spreads alone and customizable position sizes make it much more friendly per trade for those starting off.

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