With Forex getting millions of hits on our site over the past few days I asked Bill Poulos from ProfitsRun to give us his opinion on the Forex markets. Bill has recently released a number of highly educational Forex videos and has over 30 years trading. Please enjoy the piece and watch his latest videos.
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By now, everyone has been well-schooled by the media on how dire the economic situation is in the USA, as well as globally. A massive credit contraction is in the process of wreaking havoc on one and all. After almost 70 years of non-stop credit expansion, the party appears to be over. The result is plunging stock markets around the world, a collapse in real estate prices, commodities, and even oil. Unemployment is moving higher, retail sales are off significantly, and the media has now announced what we already knew months ago - the economy is in a recession.
Now, there is no denying that the situation is very serious and, of course, the government is doing everything they are capable of to stave off the contraction and the consequences of deflation.
So the prevailing mood is one of "doom and gloom" – it's in the air, in the print media, radio, TV – you are programmed to believe that you are a hapless victim that can only hope for the government to save you.
As for us investors and traders – the message is there is little you can do in this environment except wait for our stock portfolios to recover, which may take years.
I strongly disagree with this notion and here's why.
There is at least one market that offers significant profit potential right now, hour by hour, day in and day out. Whether you are a day trader or an end of day trader. And it should be no surprise that I am referring to the Forex market.
The Forex markets have always offered great profit opportunities, but these opportunities get even better in times like these. You see, with all of these economic cross currents and pressures that are working against other investment vehicles, they actually drive even better profit opportunity than normal in the Forex market.
For example, since this past July, the dollar has been in an almost unprecedented rally against other key currencies offering the savvy trader terrific profit opportunities. The EURUSD pair has fallen by 3500 pips or $35,000 per standard lot, the GBPUSD pair has fallen by 5000 pips or $50,000 per standard lot, and the AUDUSD pair by 3000 pips or $30,000 per standard lot. So while other more traditional markets are being decimated, the dollar rally has offered great opportunity. But only for those with eyes to see it and a trading method to take advantage of it.
Make no mistake, there is plenty of risk associated with the Forex markets and for that reason you must have a good trading method to guide your trading that puts risk management first and foremost – because without it, you will lose. But to better put this into perspective, I often use the analogy of driving a car. Driving a car without understanding the rules of the road and without experience would be a very dangerous thing to do. But with the proper training and guidance, as you received when you first learned to drive, you were able to enjoy the benefits of driving by first paying attention to and controlling the risk of driving. I think of Forex trading in the same way.
Whether you are able to trade a large account or small account, standard lots or minilots, the mechanics of Forex trading are quite straightforward and easy to do, again with the proper guidance.
I believe anyone who wants to ditch the "gloom and doom" scenario and take control of the situation has the opportunity to do so by mastering a good Forex trading method that puts risk management first and in the process go from reliance upon others to becoming an independent trader.
For an in-depth technical look at how to spot profit potential today in the Forex markets, click here for a free, 3-part video training series.
Good Trading,
Bill Poulos
Watch Forex Vidoes Here
According to the dollar index (DX), which is a basket of currencies that track the dollar, it would appear as though the dollar is indeed going to be coming under more pressure. The dollar index is much like an index for stocks except in this case it is for currencies.
Adam Hewison
