Forex As A Home-Based Business

[ejayz]

Forex As A Home-Based Business

Forex is a short name for Foreign Exchange, a financial function that facilitates international business of every kind. As a home-based entrepreneur, you may be losing opportunities and money if you are unaware of how this system works. As in every business operation, there are risks involved. It’s the reason for profits; they reward entrepreneurs for taking chances to bring consumers goods and services. Forex is often traded as a business, in itself and there are significant risks associated with it. J.P. Morgan has been quoted as saying “financial markets will continue to fluctuate.” So true, so true!

What, exactly, is Foreign Exchange?

It is the act of converting the currency of one country into that of another. A familiar example is a US citizen going to Germany on business. Whatever she buys in Germany will be paid for with Euros purchased with US Dollars. The difference in price between these two currencies makes a bonus or an extra cost for the traveler, depending on whether the US Dollar will buy more or less Euros per USD.

Importers, exporters, and global businesses of every sort are engaged in changing from one currency to the other regularly. All of this activity works to make foreign exchange the largest of the global financial markets. Estimates are that on many days, $1.9 trillion dollars changes hands. Those who make this market include international banks, multi-national corporations, and large brokerage houses trading in huge currency volumes.

Except for some kinds of options to purchase or sell currency, there is no central trading floor for foreign exchange. It is all conducted through individual contracts with participating banks and brokerage houses. There is generally no regulation of this market in the United States, nor in most other countries of the “free world.” Forex options are mostly traded on the Philadelphia Stock Exchange (PHILX) or the International Monetary Market part of the Chicago Mercantile Exchange (IMM). These options have standardized expiration dates, sizes, and strike prices.

Investors can make money by speculating in currency transactions because most currencies freely float against the others with no controls or regulations. This condition -- price fluctuations of one currency against another—gives rise to profit opportunities.

Forex may be used as an investment medium in much the same manner as day trading of stocks. Risks are high in both of these practices. This investment function is the subject of this article, and the successful entrepreneur using Forex can make quite a lot of money right out of their bedroom.

Some will say Forex is too big and too risky for a home-based entrepreneur. Definitely not so! The opportunity for home based-business Forex trading is similar to day trading in stocks; 80% to 90% of stock day traders lose money after subtracting margin interest and other costs associated with their trades. The risks associated with Forex are not the same as the stock market. Rather than a strictly win or lose situation, the exchange risk involves elements of risk management where you can perhaps make a few bucks and cut losses rather than win or lose it all as a stock day trader might.

Many financial businesses began as small home-based operations, and it is likely most of the day traders and Forex investors still are that small. Real estate investment is another financial area that might have started on the kitchen table. These few examples should convince you this can be done.


Our first example is someone you probably never heard about—Malon Wilkus. He is a specialist who buys sick or under-performing businesses, turns around, and sells for profits. Twice a college dropout, he tried shrimp farming in Costa Rico which was a bummer, and then joined a commune to prove socialism can work in America. When he realized that system is not viable here (some businesses he started within the commune were supporting all the other dead-beats), Wilkus began to buy a lot of company deals too small to be interesting to larger buyout companies. In 10 years, he bought into 105 deals including the likes of Piper Airplanes, Aamco transmissions, and Riddell football helmets. Here’s what you should get from this story: according to an article in the April 23, 2007, issue of Forbes Magazine, Malon Wilkus started his private equity firm in 1986 in his two-bedroom condo in Bethesda, MD. He went public in 1997 as American Capital Strategies (ACS) which pays him $3.5 million a year. Not bad from your bedroom, is it?

The other example is John Maynard Keynes, considered the father of modern macroeconomic thinking. You have probably heard his popular expression, “In the long run, we are all dead."

After World War I, Lord Keynes returned to his academic duties at King’s College. He continued to write widely on economic conditions in Europe. Now here is where you need to pay attention. Shortly after the war he borrowed small sums of money from members of his family and invested first in foreign-exchange deals, later in commodities, and finally in stock-exchange securities. By 1937 he had built up a private fortune of over half a million pounds (then valued at U.S. $2,500,000). It has often been said he conducted most of his investing while in bed eating breakfast! Isn’t that the ultimate home-based entrepreneur? And a big part of it was Foreign Exchange Trading.

Do you believe this can be done now?

By now you are wondering how in the world to get into Forex. One way that may appear to be very simple is the use of software to make your purchases and manage your account. As in every investment trading program, there is risk attached to each transaction; this is the reason you can make a profit—you are willing to assume risk. All of the trading firms have a risk statement and they all say to use only surplus funds you can afford to lose. Here are three software trading platforms we found:

Computrade Foreign Exchange Currency Trading is based in Australia with worldwide availability. Its risk warning reads, “CURRENCY TRADING INVOLVES HIGH RISKS AND YOU CAN LOSE A LOT OF MONEY.” This program has a training program that includes the software and may be a little pricey, $4,400 AUD.


4XFindMe is another Forex Currency Trading Advisory Software program and its risk warning reads, “It should be understood that Currency trading involves high risk and you can lose a lot of money.” You subscribe to this service for about $295 USD per month. It does have a 10-day trial for $99 USD.


Easy Forex Trading Platform is Web-based, so there is no program to download. It is tied in with its own Forex trading operation, and the only costs are the spread and other fees normally associated with currency trades. Their risk advisory reads, in part, “Trading foreign exchange may result in a substantial or complete loss of funds and therefore should only be undertaken with risk capital.” EasyForex offers a free 110-page e-book which tells you many things about how to start Forex trading and shows you how to use their trading platform.
Other companies offer free programs for potential investors to use to get a feeling for trading. Here are a few found on Google:

Forex.com—This site has several different platforms, including wireless, to enable trading from cell phone, PDA, or Blackberry. There is a free practice trading account. The standard account minimum is $2,500 USD and there is a mini-account requiring only $250 USD. You can take their Learn To Trade Forex course for $99 USD.

Global Forex Trading—GFT offers a $250 Mini account and free demo available from anywhere via a web-based application or from your computer. The forecasting system, Foresight-A.I.™ , requires a subscription of $500 per month with a minimum $5,000 deposit. Other forecasting software is available with large deposit volumes and all accounts have live technical and customer service help.

NobleTrading—Noble offers a Mini account of $300, free online mini trading software, and 30-day free online demo for Mini accounts.

Google reveals many other Forex trading sites, but they all require larger deposit accounts than many home-based entrepreneurs will want to put down, so I’ve left them out. But look at this next site, Oanda FXTrade. It is by far the best site for a home-based entrepreneur to learn the principles of foreign exchange trading. Oanda allows you to trade with as little as $1 USD. That’s right, $1 USD! Oanda provides many training resources including FXGame Practice Accounts.

If you want something different and possibly very profitable in a business, try Forex. Look for my next article about Forex which lays a solid foundation of knowledge about exchange trading.

[vladtess]

sounds like that time when I went to a free workshop. What happened was that they wanted me to pay them $200 before I start to make money.
Thanks Jess.

[1000feet]

Doesn't sound like a business so much as a get-rich-quick scheme to me...

[finandom]

Thanks for the informative article. However I think the title should be changed to "Forex As A Home-Based Investment". I think this is more about investment. Just my thought.