Can we make money at forex online?

Several trading platforms offer information and analysis for online forex. Today, new applications are being developed by these sites to allow you to buy and sell currencies from around the world as well as professional traders. But, it is important to keep in mind that forex is like poker. You can win big as you can lose everything. So, how do you go about making online forex profits?

What is Forex?

Forex is the global currency exchange market. Exchange rates fluctuate, changing 24 hours a day from Monday to Friday. Online forex is the world’s largest financial market. It is on it that the largest volume of trade has been made: several billion dollars (all currencies combined) are traded on it every day. To facilitate online trading activities, forex displays currency rates in pairs. For example, for the euro:

  • EUR/USD (United states dollars = American currency)
  • EUR/GBP (Great Britain Pound = English currency)
  • EUR/JPY (Japan Yen = Japanese currency)
  • EUR/CAD (Canadian dollars = Canadian currency)
  • EUR/AUD (Australian dollars = Australian currency)

Forex is regulated in France by the Autorité des Marchés Financiers and the Autorité de Contrôle Prudentiel. There are platforms that are allowed and others that are not.

Step 1: Register for free on a trading site

To start, you need to select, from the available platforms, one on which you plan to do your transactions and create a virtual account. When making this choice, it is useful to consult the list of brokers not authorised by the Autorité du Marché Financier (AMF) and the Autorité de Contrôle Prudentiel (ACP) in order not to engage in a “one-off adventure”. It is also necessary to find out in advance about the forex operating system.

Step 2: Fund the account

Most sites recommend a minimum bet of 100 or 150 euros in general. But you can bet less (50 euros) or more. As soon as you register, an advisor will call you to explain how a trading platform works and give you training to teach you how to monitor currency fluctuations and the best times for a bet.

Step 3: Monitor the exchanges

This is where it all comes down to. You must be constantly attentive to currency developments and changes to know when to buy and when to sell to make a profit. Just as you can earn money, you can also lose your entire bet. This is the principle of forex. The platforms offer demo accounts (E-Toro) to help you become more familiar with the world of forex. Buying and selling activities are done as if on a real platform.

In addition, there is a copy trader function (E-Toro) on some sites for beginners who still want to maximize their earnings. This function allows you to copy your activities to the best traders of the platform to follow them in their moments of exchange that they choose each time. This is a safer way to make a profit in this financial market.

You can therefore invest in the traders of your choice at specific times or stop copying one or more of them at any time and re-cash your investment and your generated earnings.

Plus500 reviews and tests on a CFD broker

Trading can lead to capital lossesFounded in 2008, Plus500 was able to seduce traders with its offers that stand out from the crowd with its quality offers and services. Its clients can also benefit from the advantages of its Dealing Desk broker status. Plus500 only offers CFDs and Plus500 has offices in London (UK), Lymassol (Cyprus) and Sydney (Australia).

  • Plus500 UK LTD authorised and regulated by FCA
  • More than 500 CY LTS authorized and regulated by CySEC
  • Plus500 AU LTD regulated by the Australian Securities and Investments Commission

A regulated English broker

Plus500 is a duly regulated online broker. Plus500 is listed on the London Stock Exchange. This is a professional currency trader, but also offers a wide range of CFDs. The broker uses high-tech tools to guarantee the transactions of his clients. The latter can be reassured as to the security of their trades

A first trade without deposit

Plus500 stands out from the brokers’ batch by its welcome bonus in real money, without deposit (T&Cs apply)The broker offers 25 € directly usable in trading, allowing to test the platform without having to take out his credit card. A demo account is, as a bonus, offered on the site for traders . When they are ready to launch the portal, investors are then invited to make their first real deposit and a bonus ranging from €25 to €7,000 is then offered by the broker, depending on the amount deposited (T&Cs apply). The bonus must be traded several times before it can be withdrawn.The lowest spreads in the market.

Dealing Desk type, Plus500 defines its own range independently of the order book in the global electronic market. It is therefore free to offer particularly low spreads. For the GBP/USD pair, the spread is set at only 3 pips, while in October 2014, the broker announced a very small spread of 1 pip for the Eur/Usd pair. Plus500 has 33 currency pairs on its platform, as well as several CFD products. The gold spread is qualified as the lowest in the market, at only $0.6

3 trading platformsTraders

benefit from smooth and complete trading on Plus500. The broker provides them with 3 types of platforms:

  • The Webtrader, which is the broker’s official website, offers the possibility of trading directly online, without downloading.
  • The Windows Trader, compatible with Windows, consists of a specific trading software, but operating on the same principle as the Webtrader. It is downloadable on the platform and requires a prior installation before trading.
  • Plus500 has also thought about mobile traders and offers trading applications for iPad, iPhone, as well as Android. This eliminates the need to connect to a computer to trade

Conclusion on online trading with Plus500

What we retain about Plus500 is above all its particularly low spreads that may interest many people. Its status as a broker dealing desk makes it possible to highlight advantageous offers, but there is the other side of the coin to this type of offer: sometimes the broker blocks the withdrawals of traders with too aggressive or profitable strategies, which is even worse because the objective is above all to earn money when using this type of platform. It is up to you to prepare against this, as the broker is regulated, you can always turn against him if there is a dispute. This negative point may be blocking but it is a few isolated cases out of the thousands of trades made with Plus500. His offer ranks him among the best Forex brokers of 2016 and he has received many awards. Remember that CFD trading involves, like Forex, high risks with the use of leverage effects. Misused you can lose more than your capital. Don’t hesitate to practice beforehand, also discover social trading with the Forex broker eToro.

When to stop your Forex losses?

Good Forex traders always know when to cut their losses in the market. Cutting profits early and letting losses run are the big mistakes made by many novice traders.

How to stop your Forex losses?

First of all, it is necessary to detect bad trades.

To reduce Forex losses, traders need to know how to detect a bad trade and be able to exit it without any emotion. A trade that is close to a pivot point is a sign that the trade is not good.
If a candlestick inversion appears, it indicates that the trade may be bad. Even information that gives the price of the currency pair in an opposite position to the one you traded can indicate a bad trade. On the other hand, if the currency you trade with is constantly losing against most other currencies, then it can also be a sign of bad trade.

Then, it is necessary to act on these bad trades

After detecting a bad trade, you must proceed to the step of exiting that trade. Close the trade immediately to reduce your losses. In addition, do not try to recover your losses through other trades you will make in the process since you are likely to make impulsive decisions leading to even more bad trades. You need to assess the extent of your losses, and try to recover them only when the market shows a good opportunity.

Exit strategy

You must also design an exit strategy for each bad trade. This could, for example, be to set an exit amount on each transaction. As soon as this amount is reached, you withdraw from the position. Your strategy can also be based on a percentage of your investment capital and thus stop trading if losses reach this level.

Placing a stop loss at crucial points where traders believe the market is changing is also a common exit strategy. In a bullish trend, many traders put their stop loss below the last swing low. In a downward trend, they place their stop loss below the last swing high. Other traders place stop losses when they detect areas of support and resistance for their trade.

A relatively good exit strategy uses 2 RSI periods. When the trade is in a long position and the RSI falls below line 70, it is time to stop trading. For a trade in a short position, the ideal time to exit is when the RSI passes above the 30 line.

Some traders have also developed an exit strategy based on fixed periods. They remain in a trade for a given period only, and exit that trade at the end of the day trading. The time period is also obtained through in-depth analysis of technical analysis tools and forex charts.

Good traders always stick to rules they have set for themselves to leave a trade. It is important that you also respect the rules you have set for yourself when leaving a trade. This way, you will see that your losses will be significantly reduced.

Not sure which Forex platform to use? We invite you to read our test on the Plus500 broker, our top 1 Forex broker.

Stock market, Forex and Binary Option: what are the differences and commonalities?

Stock market, Forex and Binary Option, all these terms seem technical but it is necessary to learn to differentiate them since there may be similarities a priori but this has nothing to do with it.

For the 3 markets, these are platforms where asset swaps are carried out to hope for gains.

First of all, let’s define the 3 terms to make sure that everything is well defined.

Definition of the 3 financial markets

The Stock Exchange

It is an institution, private or public, that makes it possible to exchange standardized goods or assets and thus set their price. We will speak here of stock exchanges, these are exchanges where company securities are traded (as opposed to commercial exchanges where it is commodities that are traded).

The primary role of the exchange is to finance companies. It is also an investment place where securities are traded.

The 3 largest (or 3 best-known) stock exchanges in the world are:

  1. Euronext Paris, Europe
  2. London Stock Exchange
  3. New York Stock Exchange

The Forex

The word “Forex” comes from the contraction of the English term Foreign Exchange.

Forex is the foreign exchange market on which so-called convertible currencies (Euro, Dollar, etc.) are traded against each other at exchange rates that change over time. Trading in the Forex market consists of combining two different currencies, the euro and the dollar being the most traded currencies. The purpose of the speculator is therefore to trade his euros for dollars in order to make profits.

Binary Options

As indicated in the article about binary options,

The binary option is a means of trading that is based on the rise (call) or fall (put) of a product’s price such as a stock or currency over a specified period.
It is called binary because only two outcomes are possible:

  • or the option ends favourably “in the money” and you receive the fixed amount that depends on the initial investment,
  • or the option ends unfavourably and you lose your entire investment.

What are the differences or similarities between Forex, Stock Exchange and Binary Options?

The Stock Exchange is a highly regulated market. Forex and Binary Options are 2 very trendy investments that have attracted many neophytes since they are very easy to understand. At the same time, unscrupulous brokers wanting to recover a lot of money from investors.

Binary options offer investors the opportunity to speculate on a wide range of financial assets (including currencies), unlike Forex, which is only interested in currencies.

In the stock market, assets are highly diversified, ranging from commodities to corporate equities. In Forex, we only speculate on international currencies.
When investing in the currency market, the quotation is done in pairs, it is a question of predicting the rise or fall of one currency against another. On the stock exchange, transactions concern unit assets listed according to supply and demand.

Forex and Binary Options are continuously opened via the web allowing the trader to invest in everything. This is different for the Stock Exchange where orders can be placed via the bank or the Internet but at defined time slots depending on the Exchange.
In France, the pre-opening of the market takes place from 7:45 a.m. to 9:00 a.m. where buy and sell orders accumulate in the central computer managing the orders of the betting exchange. The latter calculates the opening price. The market opens from 9:00 am to 5:30 pm where supply and demand are directly compared on the market to determine the price of the shares. Finally, from 5:30 pm to 5:35 pm, the closing price is calculated.

5 financial blogs to follow if you are interested in online forex

More than blogs, I advise you to follow enlightened or professional people in the Forex field. You should know that in terms of financial advice, there will always be a blogger who will be right, but it will never be the same over a long period of time. That is why you must follow several of them and draw your own conclusions. The blog or sites are there to provide you with information that will allow you to refine your own analysis. You must therefore be well equipped to deal with Forex in order to understand all the ins and outs and make the best decisions.

That said, here is the list of the 5 French Forex specialists to follow. Not all of them have blogs but they either have twitter accounts or they offer training to improve your Forex analysis:

Daliy FX, Benoît Fernandez-Riou, Philippe Lhermie, André Malpel, Jérôme Révillier and Philippe Verdeil.

  1. It is the reference in terms of Forex. If you only have to choose one, you must follow Daily FX which is the most active. I should say “are the most active” since it is a team of brokers composed of Nicolas Chéron, among others, with almost 5000 subscribers, Adrian Raymond and Vincent Ganne.
  2. André Malpel has worked for more than 30 years on the stock market. He started at the MATIF pit auction in 1987 and today at the trading screens of the trading rooms. And it’s not over yet. His twitter account is monitored by 1140 people. He is regularly invited to conferences to discuss his positions on Forex.
  3. Benoît Fernadez-Riou is a Banking and Finance consultant specialising in financial and currency markets. He is regularly invited to conferences and seminars to inform or discuss his favourite subject, Forex. In addition, it periodically publishes committed currency analyses. In parallel, he provides training at the Waltrade Institute in which he details his approach to trading using the discretionary and directional qualitative method. Finally, he is also the author of the two bestsellers “Introduction to Forex” and “The Private Trader”. His site allows you to know where he can be contacted.
  4. Philippe Lhermie has been a professional Forex trader since 2001 at EDF and has been trading for his own account. It is present on the market almost every day to hedge the exchange risk on the assets of my assets or for speculative transactions. He is one of the French Forex stars.
  5. Jérôme Révillier is a trader, director of Alternative Capital Investments and editor-in-chief of Action Future, founder of Eole Trading. The Eole Trading blog provides regular information on Forex. J. Révillier’s twitter account is followed by 1475 followers.

Finally, do not hesitate to visit the Forexagone blog where you will find regularly updated information on Forex as well as many videos allowing you to learn more about it.

Review of Come Into My Trading Room: A Complete Guide to Trading by Alexander Elder

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If you already read Alexander Elder’s best seller, ‘Trading for a Living: Shifting focus from technical analysis to the overall management of a trader’s money, time, and strategy’ you will agree with me that Dr. Alexander Elder is a widely traveled man, both in life and in business, and how he tells it is kind of special.  In this book, Dr. Elder expounds more on questions raised in his other trading books and takes the reader through the fundamental secrets of success in forex trading, how to identify new opportunities and using little-known indicators to make a trade profitable.

This book is a complete guide to trading for almost anyone with interest in FX, from the beginner who just found out about the global money market to the seasoned professional seeking new methodologies or trying out new trade experiments and need a reference point.  The book is a fresh look at the 3 Ms – Mind, Method and Money and goes in-depth to explain the strategies and money management services that will make a difference.

Dr. Elder wholly reviews the basics of trading in futures, options and stocks besides forex to expound on the whole principle of buying and selling money to make money and also covers the essential psychological tactics every successful trader needs to know to be organized and become successful in this book.  He believes that by showing a prospective or current forex trader that the best ever combination that wins every time is that of the 3 Ms, and mastering them is the perfect solution to being confident, taking bigger but worthy risks knowing how to trade and finally exiting the trade with significant profits.

Dr. Alexander Elder himself was not born a forex trader, he attended medical school in Estonia and worked as a doctor in a Russian ship before seeking asylum in the US and thinking that there are better ways to earn than working harder.  When you pick up this book, you will read about his journeys and tribulations but you will also learn from his mistakes and miscalculations.  He added a lot of new material about himself and about FX in general in this book that was published in 2002 including the less technical methods of analyzing opportunities, more on money management and new materials on the personality and thinking of a successful FX trader.

The book has many interesting methodologies, but its strength is in the details of trading rather than making a plan or managing risks.  If you are lost as to which trades to pick or cannot seem to make the right decision on choosing your markets, this may not be the best book for you because Dr. Elder does not dwell much on how to choose the trades but rather provides the general rules and guidelines to follow.  This being a guide, I would expect more detail but then, I can’t say I have read all his books.  If you liked any of his previous books, you will most certainly find a comfortable spot once you are invited into Dr. Alexander Elder’s forex Trading Room.

Top 5 Currency Trading Books You Will Love

I would be right to say that books are the best source of information to gain knowledge on a specific field, no matter how easy it is to find it on the internet.  If you are learning to secure your life through Forex trading and are looking for information, tips, advice and tricks from a professional, I wouldn’t recommend you read blogs and websites by self-proclaimed internet billionaires with tons of affiliate links on the home page; Buy a nice highly reviewed or recommended book and get first hand unadulterated information and knowledge you need to make a difference in life.  In my opinion, the best 5 currency trading books you should start with are:

7 Winning Strategies for Trading Forex by Grace Cheng

indexGrace Cheng is a full-time forex trader with advanced knowledge in fundamental, technical and sentimental analysis and the creator of the PowerFX Trading Course.  The author of this book, as you can see, is a success story in forex and this book is considered an ideal guide book in improving your trading skills.  The book focuses on teaching you how to come up with winning trading strategies, how to minimize risks and when and when not to trade.

New Concepts in Technical Trading Systems by J. Welles Wilder Jr

stockcharts_2160_4667943_largeThis book is perfect for traders who already understand all the basics about forex.  However, even beginners can find it useful because it is well illustrated and teaches 6 different definitive and truly unique technical trading systems which is more than an average trader knows.  Wilder says that no serious trader should assume there will be consistent profits in both non-directional congestion and strongly directional markets, you should therefore master trading in any situation.

Day Trading & Swing Trading the Currency Market by Kathy Lien

index2This book was written by the director of Currency Research of GFT and FX360.com and in it she presents a wide variety of basic and technical profitable strategies in forex trading that you will find very useful and simple to learn.  It is one of the most recommended forex trading books largely because it describes everything important in forex trading and covers important elements like interest rates differentials, inter-market relationships, news events, option volatility and intervention by central banks.

Trade Your Way to Financial Freedom by Van K. Tharp

index3This book focuses on making you make money, do not be surprised then when it is such an easy read that doesn’t go so deep in detail.  However, Van K. Tharp is a renowned and celebrated bestseller and he wrote this book mainly to address the concerns of a modern market environment.  The book features charts and updated examples, it helps you look into yourself and put aside personal biases that affects your trades and generally makes you a better trader.

The 10 Essentials of Forex Trading by Jared F. Martinez

index4The 10 essentials of forex trading, rules for turning trading patterns into profit was written almost a decade ago (in 2007) but I assure you that this book is worth buying especially if you are a novice in forex trading.  It is a very interesting read and most forex traders find that it has knowledge passed down from experienced traders and penned by one of the most proficient currency traders of the last decade.

Review of Trading for a Living: Psychology, Trading Tactics, Money Management by Alexander Elder

51DG4omF0+LIf you are ever going to be a successful currency trader, you must understand and embrace the fact that when trading in money, you need to have a long-term plan and you must have a principle to lead you both in life and in business.  Alexander Elder explains in his book ‘ Trading for a Living : Psychology, Trading Tactics, Money Management’ that a successful trade must be based on the 3Ms: Mind, Method and Money and only trading in currencies for a living will ever get to you master all 3.

This book is one of the most recommended to young and upcoming forex traders because it is written to help a trader think outside the box and because Alexander says trading is 90 percent an inner game and only 10 percent actual trading, success naturally comes when you build a good strong personal character and establish integrity in all you do.

This is undoubtedly one of the best and most comprehensive forex trading books you will ever read, and Alexander Elder, an MD and a professional forex trader, a teacher of forex trading and author of a series of best sellers did a wonderful job writing this easy to read and understand book.  Most tutors, educators, mentors and successful forex traders consider Alexander among the modern classics of the forex trade.

His life story is full of fun, adventure, risks and suffering but it sure is one of a kind.  He was born in Leningrad, grew up in Estonia, joined medical school at 16 but jumped a Soviet ship when he was working as a ship’s doctor in Africa and sought asylum in the US.  He is currently living in New York.  His biography lists some of his best achievements in life to include his experience as he worked as a psychiatrist and how he got the unique insight to unravel the psychology of trading, being the originator of the ‘traders’ Camp’ weekly series of classes for aspiring forex traders and being the founder of The Spike Group where members share the best stock picks for prizes.

Dr. Elder is among the most sought after public speakers in the US and internationally, so if you can pick his brain by reading one of the best books he wrote, I guarantee that you will learn something that will alter the course of your life.  Some of the how to areas that it covers include:

  • pic_elderBecoming a cool, collected and calm forex trader.
  • Profiting from the reading behaviors of the market crowd.
  • How you can use a computer to find the best trades.
  • Secrets to developing a winning trading system.
  • Looking for, finding and executing trades with the best chances of success.
  • Understanding and identifying the entry and exit points, setting stops and taking profits from trades.
  • Why there are more buyers than sellers, why buyers are more aggressive and why sellers shy away from demanding premium.

Some reviewers say that the book ‘Trading for a Living: Psychology, Trading Tactics, Money Management’ is an amazing book, but it dwells too much on trading indicators and several other external factors.  If this is true, here is another reason to be the best at using indicators and understanding the factors Dr. Elder has in the book.

Review of Market Wizards by Jack D. Schwager

odesk2When eToro launched the ‘Follow’ feature to forex trading, where any trader, novice or already experienced, can follow the trades of another skilled or pro trader, it was lauded as the best feature to fill the trench that most amateur traders fall into as they try to make it to the winners’ circle.  Jack D. Swager attempted this move back in 1988, but because of the technology and trades of the time, the best he could do was put it in a book which meant digesting it would be much harder than just clicking ‘Copy Trader’.

‘Market Wizards’ is not just a book, it is a series of books that provides information to equip you with motivation and skills to follow the paths of successful forex traders as you read about their lives, how they entered into the currency business, their winning trading styles, the mistakes they made and their battles that defined who they are.  This book is more of an interview that will most definitely provide you with a different perspective of the currency trade because you get to see that even extra-ordinary geniuses you admire started humble – maybe even worse off than you are now.

It would be accurate to describe this book as a compilation of traders’ interviews, presented in the simplest and easiest to understand style.  However, there are not just interviews in there, Jack delves deep to investigate the thought processes of the traders he interviews and describes them best as a literature guru would – comprehensively.  The book features interviews from market wizards including Michael Marcus, Bruce Kovner, Paul Tudor Jones, Richard Dennis, Ed Seykota, Larry Hite, Marty Schwartz, James B. Rogers, Jr., Mark Weinstein, Dr. Van K. Tharp and Bill Lipschutz among others.

jack_schwagerIf you believe that you have what it takes to be a forex trader, you should know that it is a torturous and very demanding form of excitement as Jack, the author, calls it.  He says that most people who lose money in forex trading make the mistake of thinking striking a balance between life and trading is easy, and assuming that profits are all that matter.  This book will introduce you into a world of hard workers and you will get to learn how those who have succeeded managed to balance emotion and knowledge and business and family.

Why buy and read this paper book when you can Google and find the answers to all your problems on YouTube, with modern-day successful entrepreneurs telling you what to do?  The answer is simple – anyone can post anything online and getting good high quality unadulterated information like what this book has is not easy.  Even though the book ‘The Market Wizards’ talks of the old wizards in the trade, they were the pioneers that opened the floodgates to the forex market.

If this book impresses you, find the second installment in the series ‘The New Market Wizards’ published in 1992 and the third book in the series, ‘Stock Market Wizards’ published in 2001.

Review of Day Trading the Currency Market: Technical and Fundamental Strategies To Profit from Market Swings by Kathy Lien

kathy_lien_1_enEach single weekday, the world’s financial powers play their massive ‘high stakes’ game that involves moving over $2 trillion worth of currency across the whole planet at the speed of light.  When the chips are counted after the close of business, there’s certainly a group that wins and then there is a bigger group that loses.  If you are a forex trader, there are very many things you can do to always be on the winning team, but it is not easy.  Kathy Lien wrote the book ‘Day Trading the Currency Market: Technical and Fundamental Strategies To Profit from Market Swings’ as a guide to help ordinary traders and those struggling hard to make trades profitable to cross the elusive line and claim a place at the winning table.

The book’s cover introduces the author, Kathy Lien, as the Chief Currency Strategist at Forex Capital Markets where her job involves providing fundamental and technical research reports, trading strategies and commentaries.  She has also worked at JPMorgan Chase, appeared on CNBC, Stocks and Commodities, Active trader, CBS Market Watch, Futures and SFO where her work has been published.

When you pick up this forex trading book, the first thing you will notice is the high quality of writing – the way the words are phrased, how narratives flow and how the tone is just perfect to convince you that the author knew what she was writing about.  Lien begins this book by comparing the forex market with other trading platforms like futures and equities and explains why the forex market holds the most promising chances of success thanks to low transaction costs, continuous trading, customizable leverage and the fact that it is the largest market in the world.

forex-traderWhether you are a beginner or an intermediate trader, the book ‘Day Trading the Currency Market: Technical and Fundamental Strategies To Profit from Market Swings’ is right for you because it does deep to explain the concept of technical analysis, why technical analysis works best for the FX market and trains you to be a technical trader who can identify new breakouts and trends that offer multiple opportunities to enter and exit the trade.  Lien also covers the currency market from a wide angle but in a relaxed style, dwells a little on the market characteristics such as those that identify the best times to trade, daily ranges to watch, how to manage various variable market conditions and the element of seasonality.

Because Kathy Lien is a very respected member of the global currency trading niche, you cannot go wrong learning and adopting her strategies and using her advice and tips to place yourself on top of the pack.  The book covers a lot more than I have mentioned in this short review, but I can assure you that investing in the book will give you back many times the worth of the book in ideas, tips, guidance and advice and real-life illustrations and examples.  The book can be great for intermediate and experience forex traders but even beginners shouldn’t have a problem understanding it.