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The Top 10 Questions Everyone Asks About Forex!
Education | 10 July 2009
By:

How does a person make money in Forex trading?
You make money exactly like how you make money on your currency exchange when you go on a holiday. For example, you just returned from a two week holiday in California, and now you want to convert your unused US dollars back to Singapore dollars. Your immediate desire would be a stronger US dollar; and that is exactly how the process works as well, in the spot forex market.

How much capital do I need to start trading Forex?
There are two ways to do this. You can start with a demo account or trade with a live account. Personally, I recommend that you start with a small live account. Most people tend to be unrealistically brave while trading a demo account. For your live account, you can start with as little as $10, without taking any leverage. Your profits would be small, but your losses would also be small as you practice.

What currencies do you trade?
We trade 10 of the major pairs because they are liquid and more predictable than the exotic pairs. Nonetheless, I specifically trade the usd/jpy and eur/usd for intra-day trades, because that style requires you to be intimately familiar with the patterns of the day.

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How much commission do I have to pay per trade?
In Forex trading, brokers profit from the pip spreads in lieu of commissions. Nonetheless, some brokers do take both commissions and pip spreads. In general, you pay $0.30 for every $10,000, or part thereof, position transacted.

Do I have to pay for any software subscription fees?
There are lots of amazing free software and market data on the internet. I personally use all free online tools to research and trade.

Is Forex trading risky?
Forex trading is as risky as driving a car. You can get into big accidents with it, if you have no proper education and you speed too fast. The key factor is usually the amount of leverage used per trade. Most people focus on the high returns from highly leveraged trades, and tend to be blind to the equally high losses. You should always have proper education before trading the Forex markets.

Will I go bankrupt through trading Forex since we might use high leverage?
No, that will never happen, if you open with any of the major brokers. The broker would never let you lose more money than you originally deposited, regardless of the leverage used.

How long does it take for anyone to master Forex trading?
You would need at least 6 months, after you have acquired a proficient level of Forex knowledge. The 6 months is for you to experience 2 economic quarters as major Forex movements tend to happen quarterly.
What does it take to be a Forex trader?
There are 3 crucial skill sets that you need, to be a successful Forex trader – Knowledge, discipline and market experience. Out of these three, knowledge is the easiest to grasp as there are many books and free resources available. Discipline and market experience are more challenging, and would be greatly sped up if you have competent mentors to pace you in the process.

What is the best way to learn Forex trading?
Learn it through a mentor who puts in the effort to guide you through various market events and tracks your progress to ensure you maintain discipline. We always joke in class that intellectual knowledge is easy: the output after you start clicking on the charts is usually the problem. Your mentor should be able to give precise feedback about your interactions with the market. This will shorten your learning curve immensely to the 6 months timeline.

Profile:
Winston Ng, CEO, Forex Driving School. They conduct Singapore’s only structured 8-week Forex Mastery course that combines knowledge with a guided process through live currency market scenarios. Beginners to advanced traders attest to their amazing education process through the flood of testimonials and referrals to their monthly sell-out courses.


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