Essence of the transaction

I feel very sorry for beginners in the Forex market. Fresh with a college degree and twelve credits worth of economics classes under their belt, a lot of young people feel that they’re ready to step up to the plate. Play the big game.

Except…they’re not. 70-80% of college graduates are struggling to make it on their own. The job market is slim. Opportunities are limited Most are forced to move back in with their parents. So, what solution have they been turning to in droves?

The Forex market. Try to make money from the comforts of the living room couch.

The problem, though, is that beginners generally fail to ask the question, “who am I really working with?” when deciding on a broker. The market is so complex that it’s difficult to understand all of the little intricate working components. Therefore, we trust a broker with our portfolio, our finances.

What happens when this trust is broken? Empower yourself by taking the time to educate yourself on how the market  works. Let’s start simply: what is the essence of the “transaction?”

Forex offers the following definition in some of their promotional materials: the purchase, and management, of currency and foreign-exchange holdings. In actuality, and in accordance with the terms of agreements concluded by the majority of Forex companies, you DO NOT BUY your own currency, but try to guess where the quotes will move - up or down. You then pocket the difference between the current price and the exchange rate, which can rise at any point in the future! Ownership of the currency is never transferred - the client only receives the right to require the currency.

My advice for beginners: NEVER work with a broker who:
1) fails to explain the essence of the transaction,
2) fails to give you license for work in the foreign exchange market.