Forex trading: Is it real?

Many people wants to know whether forex trading is real or not and the minimum amount one needs to start and whether there is any possibility of really making profit.

Forex trading is definitely real. Some of us are doing quite well, and living as if we do not work. Secondly, in forex you can start with as little as a dollar, depending on the broker. There are plenty of opportunities to make profit in forex, but there are also many more opportunities to loose money. What separates the chaff from the wheat is training and most importantly, experience

(a) How do I place a stop loss and take profit order?

(b) How do I prevent slippage while placing a buy or sell order?

(c) Must there be a specific time to trade daily or you can fix anytime that suits you?

First, I must say, you need proper training. You may read all you want to online, and learn ever so much online, but there is no substitute for practical demonstrations and learning from the experiences of others, except you are able to get that online also. It will be difficult to explain how to place a stop order because for one thing, it differs from platform to platform and I do not know which platform you are using. But try running a search on www.youtube.com for videos on how to “place a stop order” or something of the sort, download and watch the videos you find relevant.

You can not prevent slippage in forex. It is one of the risks of our business. All you can do is manage it. You can leave commands on the platform (depending on the platform) that mean “if the slippage is more than 2 pips (you decide how many pips), then do not trade”.

That way you manage your risk. But brokers differ in their willingness to honour that maximum slippage setting. Some will honour it, some will not, that is, some will take the trade anyway, regardless of your maximum slippage setting and leave you to bear the brunt of the results, after all, you decided to buy or sell at that volatile time. Some brokers do not even provide the maximum slippage feature.

Nevertheless one sure way to reduce slippage is to use pending orders but again this depends on your strategy. If you buy or sell through market orders, be very wary and conscious of slippage, as it is a constant companion of market orders. Pending orders are not subject to slippage as such but rather, can suffer from another phenomenon called “market gaps”.

This usually happens either at market openings after weekends or at the release of a volatile news report affecting the currency being traded. Brokers will not honour a pending order at a requested price if the market price “gaps” over it. This in reality means that there was no one willing to buy the currency from you or to sell the currency to you at your requested price due to the sudden revaluation of the currency as a result of the market moving event or report.

Brokers will usually fill your pending order at the next available price which may be miles (pips) away from where you intended to get in at, putting your trade in a potentially serious deficit.

For your third question I would say you should choose anytime that suits you, as long as there is an opportunity to make money at that particular time. “Forex is a 24 hour market” does not mean you should trade 24 hours, or sit glued to your screen all day and all night. You will break down sooner or later.

If you do not breakdown, your powers of reasoning, alertness and intuition will weaken considerably and you will wind up loosing money. The best times to trade differ from individual to individual and definitely from trading system to trading system.