There is no central Forex building. No HQ. No army of paper-pushes squawking about like headless-hens in house. That means any quote you find on the Internet comes from an independent source, and although quotes may appear strikingly similar, they tend to vary slightly.     


You'll find a million and one trading "gurus" out there trying to sell you on their experience. In reality, what they're really doing is selling you on a broker. (Keep an eye out for the link on their page to the Dealing Center, where you'll be asked to open an account.) These gurus teach for money. "Buy my DVD on this selling system and you'll be buying yachts in no time!" Sound familiar? When in actuality, these gurus make their money from brokers who pay them to attract new customers. Take a closer next time you visit one of these supposed Forex sure-thing sites. (On some, you can call and ask a live person questions. Imagine how much that cost the broker.)  


It's not a business. It's a game. And you should only trust those who have something to lose. Like you.

Forex Training

I decided to check out some of the Forex training programs out there, and boy, do they try to sell you on an illusion. On the Forexmentor.com website, Peter Bain claims that the average trader is successful 7 out of 10 times. 7 out of 10 times? I talked to a friend who is new to Forex and he said in his first two months, he's only accumulated 5 successful trades. He has no idea what went wrong. He says he took all the precautions described in some educational material from the Forex site.  But because of the risk by reward ratio, if you can still manage to get 5 out of 10 trades successful then you average 50 to 60 pips every week. If you trade only one pair then it becomes difficult to gain above 50 pips because you can't see positive movement everyday in that particular pair.

So I showed my friend the Forex course I had been looking at, and we reviewed more of their tips. According to them, the best time to trade is just after 2 am (eastern). This is true for the Euro and the American Dollar, but not so for pairs like the Dollar and the Japanese Yen. You should have seen the confused look on my friend's face...

The major disadvantage of the Forex course is that you can't get the chart set up daily. It took us 25 days to see the chart set up exactly as the course had explained. Needless to say, it was difficult to determine the pivot point lines for some of our currency pairs...

After studying this Forex course, we've concluded that you must set your own rules because you can't solely depend on Forex,or Peter Bain's, strategy to identify entry and exit points.  Target 35 or 40 pips because below 35 pips and your risk becomes too high.

Still sound overly complicated? Don't worry. You'll get the hang of it. I have. I think...

A few tips to consider...

Recently I’ve unveiled a number of dangers lurking in the shadowy Forex Market, but today I’d like to focus on solutions. For what are problems but solutions waiting to be discovered?

 #1 Do you have a plan? If not – GET ONE!
Over trading tends to bog down users new to the Forex market. So make sure you have a plan, with incremental goals, to help keep track of how many trades you’re making, where your trades are concentrated, and where your money is going. Your trading tendencies might also depend on the information you’re receiving. Are you normally dependent on the sixty-minute chart or customer support? How often are you logging in? Try slowing things down with longer time frames. Using a longer time frame automatically reduces the number of trades you’ll consider. You won’t be tempted to take a “valid signal” 10 times a day trading via a daily chart.

 #2 Stick to your plan’s goals. Have those goals spaced out, too. 
I set a weekly goal of 100 points. This is a realistic goal for me to achieve and having the number posted on the door to my office reminds me that once I’ve made my weekly goal there’s no reason to take on extra risk. Now, you can focus on other things. Go for a hike! Fix the house up! Take care of those taxes ahead of time! Just don’t allow temptation to get the best of you. And there will be temptation. After hitting 100 your homepage will flash some fantastic opportunity you can hardly believe. You’ll want to drag the mouse over to the button and CLICK. But you can’t. Not this week, at least. Next week – now that’s a different story.  Some “experts” may think a 400 point a month cap is low, but who knows you better than you. If you think you can handle the responsibility of a few extra trades each week, then by all means, trade away. If not – stick to your goals.

#3 When in doubt, ask yourself, “Do I need this?” 
There is a HUGE different between want and need. Desire and necessity. (Just ask the Buddhists.) “Do I need this” almost seems too trivial, doesn’t it? But how many times have you suffered from buyer’s remorse after making a purchase out of anger, spite, or blinding bliss? I know I have. So before you click accept on that trade and take on more risk, ask yourself, “Do I need this? Or do I just want it?”

Ever hear the old saying: if something sounds too good to be true, it usually is? Well, perhaps no adage could better exemplify the Forex market than this. Small firms lure unsuspecting ‘customers’ with elaborate stories of 1000:1 returns and the glory of making a quick buck. And they’ve been doing it since the 70s!
Now, with the Internet, these schemers have a web to trap you with their ‘too-good-to-be-true’ tactics. All it takes is a window and about a million lines of the smallest font you’ve ever seen, followed by the question: do you accept the terms and conditions? We’ve all been there. Don’t pretend you read through every single article of fine print --  you don’t.
But this is how they (the manipulative, greedy Forex firms) get you! Once you hit accept, you’ve cleared them of all legal responsibility. Only – you also just trusted them a ton of money, didn’t you? What happens if something happens to that capital? Are they legally or fiscally responsible?
And the judges' answer – EEERR. Sorry, you’re out of luck. The firm’s lawyers will cite one little word: risk. It all comes down to risk. High reward equals high risk equals greater chance of you losing your hard earned pension, your rainy day fund, emptying out your entire bank account. Of course, you only remember the Trader telling you about the glories of the reward. (They tend to leave out the risk part. It’s just plain unsexy and doesn’t sell well.) So beware when choosing a trading platform! There’s no such thing as easy money or a quick buck. In life, fortune is earned – never bought.

Above all, my advice for beginners is this: don’t work in Forex until you’ve had AT LEAST three years of experience studying the nuisances of this business. Choose your broker wisely. Perform a background check. Personally, it took me five years before I started to consistently make money. So don’t get frustrated if the market feels like too much at first. That’s because it is! People dedicate their lives to understanding currency exchange – why shouldn’t you put in a little effort?

In my opinion, Forex, in Indonesia and abroad, is a way to cheat the system. Unlike the stock market, which is fairly-regulated, even in Indonesia, Forex is not licensed. This means they have free range to do as they please with practically no supervision. Recently, the U.S. Government, realizing Forex presents a realistic threat to uninformed citizens, has begun investigations by the Commodity Futures Trading Commission and the  FBI. It’s difficult to put Forex higher-ups behind bars, because their extensive legal team is quite clever. They protect themselves with signed contracts while walking away with your money.

Indonesia is a mess because of Forex fraud, as is a majority of Southeast Asia. Licenses can be a tricky thing, so make sure you read the fine print before signing your name to a legally-binding document.

More advice to my friend from Jakarta

"Similar to market development in the West, Forex companies began to appear across Asia - Singapore, Pakistan, India and the Philippines. But in the West, people tend to be more educated in market analysis and possess firsthand understanding of how bonds and broker licenses operate. In Asia, however, people tend to be more naive. They have a hard working mentality but their laws are muddy. Government payoffs aren’t out of the ordinary. And ultimately, the paths these Forex firms take resemble those of many Las Vegas casinos -- built on broken dreams and broken homes.

Never underestimate the effects of psychological trauma, either. Forex “clients” can be well-educated, sure, but that doesn’t inoculate them from fraud. Many are shocked to learn how boldly and rudely they have been robbed of their hard-earned money. The moral repercussions, more than the money, leave the deepest scars, too. Turning to the courts, these “clients” are shutout by big shot Forex lawyers equipped with signed documents. Justice, and retribution, become near impossibilities.

But you’ll say, “I want to trade. I’m aware of the risk. I’m a big boy/girl and I can handle the shark infested Forex oceans. Heck – I took a class and read the book. I’m a market expert!”  Not so fast. You see, the Forex people are impervious to discouragement. They’re mentally prepared to effectively communicate with, and pacify, threatening, crying and begging “customers.” Even if you take them to court and win, the settlement – once you factor in court costs and lawyer fees – will be minimal.

These companies are clever. They know exactly who to target. They’re not going after one big fish with a million dollar account. They want the whole school. Besides – if you have a million dollars to invest, you’re probably well versed in market management. No, the type of person they’re after is the regular investor. The entrepreneur with $10,000 to invest. The middle-class American. (A diminishing demographic, I think we’ll all admit.) And worst case scenario, if these companies are brought up on charges, they have the means to evaporate their holdings, open a brand new office in a brand new city in a brand new country – easy money. A sucker born every minute.

Don’t believe in easy money? Just turn on the Discovery Channel and watch predators identify, stalk, and take down the weakest prey in the pack.

Don’t be prey for these Forex frauds.

A letter to a friend

I have a friend who lives in Jakarta, Indonesia. He asked my opinion about firms which draw people of his country into the Forex market. Here’s a brief extract from a letter I wrote him:

"On any professional website providing Forex services, you’ll read that the value of the international market is trillions of dollars, what the major currencies are…., etc. This is true. The global foreign exchange market called the Interbank, and the biggest players are the major banks and governments. Transactions occur frequently. So much so that the involvement of a third party becomes necessary. These third parties number in the thousands, and – to put it politely – aren’t always the sharpest tools in the shed. The brightest crayons in the box. However you spell it out, these people aren’t working in London’s Barclay, with access to key market analysis and information using professional trading terminals. These third party individuals hail from Indonesia, Southeast Asia, and poor parts of the world. And why not? Their $500 aren’t at risk on the Forex market. So they settle into companies that provide Forex services.”

But we’ll discuss that more in depth in my next post. Until then, be careful who you trust with your trading!

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.

Stay informed

The more informed you are, the greater threat you pose in life. In society. But, it's difficult to keep up to date with everything nowadays. As soon as you buy the latest Apple product, they've released a better, faster one. As soon as you learn the name of the country the government just invaded, they've declared war on someone more terrifying. So, how does the average person stay informed with a 9-5 or kids or a music career,like me? The right software. Because that's the beauty of technology - it helps us stay up to speed. For some, it still moves too fast. But I just teamed up with Forex's new Da Vinci trading system, and I'm not embarrassed to admit that it makes me look good. The display helps me keep track of the stock market while offering unique forecasting perspectives. Don't know a lick about stocks, currency trading, or computers in general? That's OK. You still trust yourself over any anonymous trader, don't you? Besides, it's fun to learn money things. And the more you know, the greater threat you pose.

Did you know that gold rose by .5% last week while the GLD etf rose by .64%? Yeah, I had no idea what this meant either. That's why, when investing my money, I wanted to partner up with someone who really understood the market. That someone turned out to be someTHING...in the form of Da Vinci's new currency trading software. The layout simplifies the day's transactions, as well as market trends, and helps me make informed decisions. In the end, that's what's most important to me. I want to know exactly where my money is going. What it's doing. And where it's going to go next. So don't feel dumb when reading the market section of the newspaper. We have technology to make us LOOK smart nowadays.