BUSINESS - FOREX What is it? What is It?So, you decided to make money on Forex. We found out what it is, registered on the site and can safely call yourself a "trader".
Now, the next step is training, in other words, we will teach you to play on the Forex. There is nothing complicated, you just have to read everything carefully.
So, we begin. First, let's define the forex market. What do they buy there? And what do they sell?
The main commodity on the Forex market is the currency. Yes, the most common currency: rubles, euros, dollars, etc. How to trade in currency?
First, you need to have a little money on the account, enough and five dollars, there's a lot you do not need.
Now we proceed to the trade itself. So, you have five dollars on your account, well, or 150 rubles. At these 150 rubles you buy five dollars. And wait. The market shows prices for all currencies, and if you saw there that the dollar starts to grow, for example, by 3 rubles, then you can safely sell it.
Everything, you sold dollars and now you have rubles on the account, only 165. 150 rubles is what you bought dollars and what you got by selling them. And the remaining 15 rubles is your profit.
Yes, a little, but for a start it's not bad. After all, if you buy not five dollars, but 500, then your profit will consist already 1500 rubles! And this is already very good, but what would make such money you need to learn to play forex and once again, learn to play forex!
That's all the brief information on how to make money on Forex. There is nothing complicated, just need a little practice.
Over the past year, FOREX from an unknown and inaccessible curiosity has gradually turned into a product of almost mass consumption. The threshold of entry to the market has fallen so low that it is possible to trade, having $ 10 (but not the fact that earning .- Ed.). Over the past year, the competition between dealing centers has become much tougher. According to brokerage companies, the number of participants in this market has almost doubled. The players themselves have also increased, but it is not possible to estimate their number. The number of experts voiced by experts is 50-60 thousand people, the experts themselves do not really believe. "EI" tried to find out what is the secret of the popularity of FOREX.
World EldoradoThe international OTC foreign exchange market FOREX (with the English Foreign Currency Exchange Market) appeared relatively recently. This happened in early 1970, after the leading countries of the world abandoned the rigid fixation of the exchange rate against the dollar, and let the currencies float freely. According to the Bank for International Settlements, over the past 10 years, the daily turnover in Forex has increased from 600 billion to 2 trillion. dollars and continues to grow, exceeding the size of all other world markets and industries. For comparison, the daily volume of trading of the entire world securities market is only $ 300 billion, the market of currency futures is $ 40 billion. Such rapid development of FOREX is explained by unlimited opportunities for profit from currency purchase-sale transactions conducted in this market. Trade on FOREX provides 60-90% of the profits of the world's largest investment banks. The attractiveness of FOREX is explained by the excess liquidity (at any time of day, each of the traders can buy or sell the required amount of currency) and the availability of this market - a 24-hour trading regime. The structure of Forex is very complex, and yet its numerous participants can be divided into several main groups. The first and most influential of these is commercial banks. The 10 largest investment banks in the world account for about 60-70% of the world's Forex turnover. In addition to speculative trading, commercial banks carry out conversion operations for their customers. The most conservative category of traders is central banks. They are non-profit institutions and enter the market in order to maintain the exchange rate of the national currency. A separate group is allocated by companies that carry out foreign trade operations that buy or sell currency in order to hedge possible risks associated with changes in exchange rates. Brokerage companies serve as intermediaries between buyers and sellers. They also provide access to the market for private investors - the most numerous, but least affecting the exchange rate fluctuations in the category of traders.
How Forex WorksPrivate investors (hereinafter traders) gained access to the world currency market in 1986, when for the first time it was involved in margin trading. In this case, for the transaction it is enough to deposit a small percentage of the full amount of the contract to the brokerage company's account, the so-called margin or insurance deposit. The broker, in turn, provides the trader with a "leverage", thanks to which the initial amount of the deposit, increasing in tens or even hundreds of times, becomes sufficient for conducting transactions on FOREX. For example, with a credit lever of 1: 100 and a margin of $ 10 thousand, it is possible to carry out transactions with a turnover of up to $ 1 million. In other words, for marginal trading, the investor's equity is only 1-3% of the sums of his operations. The effect of the leverage makes trading high-risk. On the one hand, it makes it possible to extract huge profits, but on the other hand it can lead to no less losses. When making transactions, the customer's losses can not exceed the initial amount of his deposit (or a pre-determined part thereof). When the margin is reduced to a level insufficient for the transaction, the trade stops automatically, and the broker exposes the trader's demand for margin account. Like on any exchange, trading on Forex brings profit due to a constant change in exchange rates. At first glance, the strategy of "success" here is extremely simple: to buy cheaper - to sell more (play for promotion), or to sell more expensive - to buy cheaper (the game for a fall). However, to anticipate the further movement of the price of money is extremely difficult. Exchange rates - a very delicate matter, subject to the influence of numerous factors: economic, political, environmental, etc. In addition, to a large extent, the trend of a currency is determined by the expectations of market participants. And this is the question of "psychology of the masses". Nevertheless, you can still learn how to predict the further course of the course. To do this, there is a whole science, consisting of two main parts: a fundamental analysis that studies the impact on the course of macroeconomic, political, etc. factors or, quite simply, news; and technical analysis - studying the price charts for the previous periods of time. The latter often include probabilistic analysis, which implies forecasting courses using probability theory and mathematical statistics. Unlike the "fundamentalists", "techniques" proceed from the fact that any factor affecting the price is pre-recorded and reflected in its schedule. Therefore, from their point of view, the influence of news on the further movement of the course remains of secondary importance. At first glance, technical analysis may seem like a guessing on the coffee grounds. What relation to the exchange rate can have any abstract "moving averages" or "waves of Elliott"? It may seem strange that, contrary to such an important macroeconomic factor as a decline in GDP growth, the exchange rate, instead of starting to decline, suddenly starts to creep up, as one of the technical indicators showed. This is because among the market participants, non-fundamentalists, and chartists and mathematicians, still prevail. Technical analysis works, because the majority of market participants in the decision-making process are guided precisely by this tool. However, among professional players, there is a slightly different explanation: "if after the publication about the decline in GDP, the rate begins to creep up, then market makers either know something that is not displayed in the public news, or play on the nerves of traders, so that they panic, and then deploy the market in the right side "
Young Merchant CourseSo, before you start trading, you need to learn the wisdom of methods for forecasting exchange rates. Today almost every dealing center offers a variety of training courses in trading costs from $ 200 and above. With educational purposes, so-called demo accounts have been created, on which one can practice for free before going to work with real money. True, the psychology of the trader when working with virtual and real money is very different, so the demo account gives only a very rough idea of the real trading. In principle, those who want to experience all the "delights" of trading, but still do not have enough experience, can use the services of mini-forex. Today you can open a mini-account with only $ 10. On the "ten", of course, do not earn, even unlikely to cover costs, for example, on the Internet. It is rather an opportunity to learn in the "combat situation". One of the experienced traders who devoted the best years of his youth to this business, shared his experience with EI: "You have to come out to the market with solid amounts. We calculated with our colleagues the level of the deposit, which gives us a high percentage of survival in the market for at least a couple of years. This is $ 23.8 thousand for trading with a leverage of 1: 100 and the sum of all open positions is not more than $ 300 thousand. "
How to Choose a Dealing CenterNow in Ukraine there are several dozens of dealing centers. Conditionally they can be divided into two groups: dealing centers of banks and ordinary companies. Unfortunately, the legal framework in which they operate is clearly not yet defined. Therefore, the service schemes, as well as the taxation procedure in these companies vary greatly. As a rule, in order to conclude a service contract, the customer must transfer to the dealer's account a certain amount of money. And when withdrawing profits - to pay income tax. In banks, its rate is 13%. And in companies that work on the basis of a bookmaker license, according to the current legislation, it is twice as high as 26%. However, dealers try to use legislative gaps for the benefit of their customers: as practice shows, when working through both companies and through individual banks, the costs of taxation can be avoided. However, the main problem arising from the lack of proper regulation of this market, still remains unsolved. It is a high risk to lose your money at all. In the event of a sudden bankruptcy or re-registration of the company to prove through the court that it owes you a deposit, it is almost impossible. Dealing centers of banks are considered to be the most reliable in the legal sense. "Banks have a solid capital, they certainly will not go bankrupt and will not disappear anywhere," says Vladislav Stelmakh, chief of the Brokbusinessbank arbitrage sector. However, outside experts pay attention to the fact that dealing centers of banks are often separate legal entities, from which, if necessary, you can quickly disassociate. The dealing center provides access to the market and puts up quotes (ie the price of buying and selling a particular currency), by which the trader carries out all his transactions. A few years ago, it was necessary to pay commissions for each transaction. Now, due to the tightening of competition, most companies refused to charge the commission (although many companies still continue to charge a commission for so-called "overnight" transactions). Dealers say that they, like ordinary exchange offices, earn solely on the spread (the difference between buying and selling rates), which, as a rule, does not exceed 5 points. If you believe this, the dealing center is interested in increasing the number of conducted transactions and building up the client base. The latter is possible only on condition that customers will work more or less successfully. This logic assumes that the dealing center is advantageous when the client works in profit. However, in practice, everything looks a bit different. "If a dealing company incurs losses from an operation, the investor has obligations to it in the amount of this loss, which is covered from the security deposit. If the operation is profitable, then the dealer has obligations to the investor in the amount of this profit, "says Victor Uzun, director of the DC Maxima Trade Index. Theoretically, the dealing center can insure itself against possible losses by blocking the client's currency position in another bank or brokerage company and winning with him. However, there are a lot of legislative and technical limitations that do not allow dealers to quickly manage the currency position. Most trades executed by traders do not go beyond the limits of a specific company or bank. Obviously, with this "distribution" the trader's profit is equivalent to the losses of the dealing center. Experienced traders can tell a lot of examples, when they were separated from the win by only the delay set by the dealer when receiving quotes, an unfair spread or an unexpected failure in the program. Now companies guarantee fair quotes and spreads, clear execution of orders, full automation of trade. However, in theory, no one is insured against this kind of "surprises". Fortunately, it is not often necessary to resort to manipulation of dealing centers: as practice shows, most traders lose even without their "help." Thanks to this, the model of dealing business is extremely simple: if only 10 out of 10 traders win, their profits are paid out of the deposits of eight losers. The remaining amount is the revenue of the dealer.
Game, work, lifeDespite all sorts of obstacles: the complexity of the market itself, the lack of service in dealing centers, there is no doubt that people continue to come to FOREX. They are not even bothered by unsightly statistics, according to which only 8% of traders in the foreign exchange market work in profit. Obviously, the attractiveness of FOREX is explained by something more than just a desire to get rich. To understand this, it is enough to attend a free seminar on trading - a powerful tool for attracting new fighters. At least on that three-hour action, where I managed to visit the author of this article, did not promise the golden mountains and did not tell tales of Soros's exploits. You can list a few basic ideas that tried to inspire listeners of the seminar with the help of very skilful rhetoric techniques.
Consider the real example of how Forex / Forex works.
In the figure, we see a graph of the change in the price of the USDJPY currency pair (the US dollar to the Japanese yen). The axis below shows the time, the axis to the right shows the price.
For example, you decided to buy 0.1 lot - 10,000 US dollars on December 12 at 12:00. This is the opening time of the position. The current market price (quotation) of the USDJPY currency pair for this time is 116.95 / 116.97. For us, this means that to purchase 10,000 US dollars, we need 116,997 yen (10,000 times 116.97).
To complete this transaction, it is enough for us to have 100 USD on the trading account in ForexPrivate, tk. the standard leverage is 1: 100. Those. on the account you need to have a hundred times less funds than the size of the transaction. Thus, by buying 10,000 dollars, we sold 1169,900 yen. The figure is indicated by an arrow with the number 1.
After a while, you decided to fix the profit, i.e. sell 10,000 US dollars and buy yen. For example, you did this on December 15 at 12:00. This is the closing time of the position. The figure is indicated by an arrow with the number 2.
At the moment, the pair USDJPY quotes 118.00 / 118.02. You sell US dollars and get for them 1180,000 Japanese yen. Those. you bought $ 10,000 cheaper and sold them more.
Calculation of profit on Forex / Forex on this transaction: 1180000 - 1169700 = 10300 Japanese yen. As the account of operations on trading accounts is conducted in US dollars, we will calculate how much it will be in dollars.
10300 divide by 118.00 (the closing price of the transaction), we get 87.29 US dollars. This is profit. MetaTrader automatically performs all these calculations.
Note that the currency pair can be any other, the time when you open and close the position is determined only by you (this may be several minutes or several months, there are no restrictions). General principles apply to all financial instruments (currency pairs).
Many readers expect me to have something like a comparative table, where I will list the brokers with their advantages and disadvantages, and where I will recommend who can trade with whom to contact is not worth it. Forced to disappoint them - you will have to make a choice yourself.
Organizations exist for one reason: to help people do what alone they would not be able to do.
The most careful thing is to check the correctness of judgments that seem obvious to us.
Any investment has a whole set of risks. I emphasize - any. Whether you put money into Sberbank, or into a brokerage firm, or lend to a neighbor, there is always a risk that you will not receive the promised interest, profit, and generally you may lose some or all of the money. It is a fact. The level, or likelihood of risks in the above cases, of course, is different. Nevertheless, Russian citizens, perhaps like no one in the world, know perfectly well that the degree of risk is not determined by the presence of a European-quality repair in the office and a lot of certificates on the walls, and even the fact that the financial structure belongs to the state. All is well, until all is well. As soon as it starts to storm, first of all, the deposits of small investors, that is, ours with you, come under the knife. What, then, are the risks? Many factors. Among them, in my opinion, the most important are the following:
1. The main objectives of the company
2. The organization (mechanism) of achieving the goal
3. Management of the company, what determines its successful and long-term operation
4. Availability of sufficient own funds of the company to confront various force majeure circumstances
Everything else, in my opinion (duration of existence, a large building in the center of Moscow under the office, courteous staff) is not so significant. (By the way, any enterprise, like all organisms, has periods of youth, maturity, old age, and, in the end, die. And so, in modern business, the average lifetime of an enterprise is from 3 to 5 years, this is confirmed by statistics on developed countries. So, if the company claims that it has been working successfully for 5 years - the end is near).
The Forex market stands apart from other markets primarily because it is over-the-counter. Why it happened, I do not know, probably because it arose relatively recently, about 20 years ago, and banks became its participants. Due to the development of communication and automation equipment, banks began to trade "directly" without needing special organizations - exchanges. With the further development of progress, such a need not only did not arise, but also diminished. Being born, this market immediately became global, and in no country was it possible to limit, "regulate" it legislatively. Therefore, such dislike and disdain for this market from many "classical" financiers. Nevertheless, for a number of European and North American banks for many years, the main source of income is speculative operations on Forex, while the number of personnel working in other markets is constantly declining.
Here is the second important fact - the FOREX market is not regulated, in spite of a lot of confusing problems and risks in addition to the risk associated with price movements of the market. These problems revolve around trust, fairness of operations, risk management, transparency and marketing forex-brokers. But first we must understand that, unlike highly regulated exchange markets, forex brokerage firms can not be attributed to any particular exchange by the nature of the problems and risks. Brokers can be divided into four broad categories based on the distinctive features and attributes that make this market far from the monolithic industry.
1. Operators of the market. This group includes large commercial banks that are regulated in accordance with banking regulations and laws and offer the highest level of reliability. However, trading with such banks requires bills of considerable size, like those of large and multinational firms, leaving them beyond the reach of the private investor. The minimum lot is about 1 000 000 US dollars. Today there are no such structures in Russia (at least on the scoreboard of information systems Reuter they are not visible).
2. MARKET - MAKERS. These are financial firms that provide for smaller brokerage firms and offer speculative trading opportunities to individual traders with trading capital of more than $ 50,000 or so. These companies are relatively few, but offer a lower cost of trade and usually have a more solid financial base and honesty. But again, the minimum account size for $ 50,000 leaves them out of reach for most day traders. These are some Russian banks.
3. Small brokers. These are small brokerage firms that cater to individuals who want to risk small capital, from hundreds to several thousand dollars, just to probe the soil, as well as their own luck or trading skills. These small brokerage firms often work with a dealer or market maker from the second group to clear their customers' orders. Here the risks of conducting operations begin. Due to the large minimum account sizes that a market maker requires from these brokers, it may be that a local broker will pool funds from all accounts of its customers into one account with a market maker in the name of a brokerage firm. Under this scheme, the trader calls the dealer of the brokerage firm to get quotes for entry or exit from the position, and the dealer, in turn, to get a quotation, calls the market maker. If a quote is appropriate for the trader, he / she will instruct the dealer to enter a new position or exit from an existing position, which the dealer will reflect with the appropriate regulation of the client account. At the same time, however, and this is a critical moment, the dealer will make the appropriate deal on their own account with the market maker. So in theory, if the client's market request or transaction is successful, the client will make a profit (gross profit from the trade minus spreads and commissions) and the brokerage firm will also receive corresponding profits from its own deal with its market maker, which will equal the net profit that they will pay the customer plus their own commission and, possibly, a small spread. The loser in this transaction is a market maker who put a spread in his pocket, but lost the gross profit from the transaction received by the brokerage firm. Keep in mind that some brokerage firms give the client a spread wider than what they receive from the market maker (about twice as large) and this is a source of profit in addition to their commission, although they will never open it to customers. Of course, if the client request is unsuccessful, the brokerage firm will deduct the gross loss from the client's account and pay the market maker a net loss after the withdrawal of its own brokerage fees and commissions. Either way, the brokerage firm receives a commission and a small spread independently of anything, a winning transaction from the client or unprofitable; at least this is assumed in principle.
4. Kitchens. This group is undoubtedly the most widespread in the territory of the former USSR. Their creators proceed from the fact that most customers lose. That is, the income of the "kitchen" is composed of the loss of customers. And the scheme works fine until someone starts to constantly win. Then the "kitchen" closes with the remnants of clients' money, in order to appear under a different name in a couple of months. Here's how their typical scheme works. They offer free "train" you and teach the skills of error-free trading that will easily make you an incredible profit in a short period of time (they firmly assure that 5% per month is actually guaranteed), but only if you open an account for them several one thousand dollars. Their training course is usually taught for several hours by small or inexperienced traders or even by people who have never traded on their own. Sometimes for this purpose clients are provided with programs "simulators" Forex, on which anyone starts to "do" at 1000% per week. In general, the material that constitutes such training courses is the water-filled explanations of some technical analysis tools (head-with-shoulders formations, double tops, trend lines, etc.) that can be found in any decent book on technical analysis. Their coverage of fundamental analysis, if affected at all, is a superficial survey of some of the economic indicators and data, regular information by which even seasoned traders and economists may have difficulty interpreting and acting. Again, such information can be found with a much greater depth of explanation in many well-written books on the subject. At the end of the training they will give you the title of "currency trader - winner", and it does not matter that even many well-known traders with long experience in large financial institutions can not constantly produce 5% per month without having to take greater risks. The vast majority of these students get into losing trades from the very beginning, and after each loss they can feel that they have received a valuable lesson that will make their technique more robust, and their next trade is definitely winning. Some of these students quickly lose their deposit and drop out, while more persistent "top up" funds to their accounts to get another chance and recoup. They eventually lose all their money and leave with a taste of blood in their mouth and bruises on their bodies, as well as in a bank account. This is actually a feast for such companies, as this is their bread and butter. They make the lion's share of the profits from losses on such transactions, and not at all from the spreads or commissions they charge for transactions.
So, the Forex market has practically no legislative regulation in any country, and in most countries it equates to the organization of games. It follows that the Forex broker does not need any licenses and certificates. This is an ordinary legal entity. Some brokers submit certificates for "organizing financial games on the Internet." Linden. There are no such certificates. You can get a certificate for a particular table with a tape measure, or a gaming machine, but this is not the case.
Between the third and the second group of companies there is much in common, often the company applies both approaches to work. At the risk of causing boredom, I will give an even deeper explanation of the mechanism of the functioning of brokers of types 3 and 4.