I don’t have to tell you that financially we’re up Shitsky Creek these days with governments trying to take away the paddle for being environmentally unfriendly. Politicians are happily spending us into bankruptcy because it’s not going to hurt them. Unless you’re on one of the Government’s Pay-and-Placate groups, you’re expendable. Short version - nobody’s going to rescue you but you.
But how?
Most people are familiar with real estate investing or the stock market, but there’s another market that people aren’t familiar with and that is the Forex, short for Foreign Exchange. This is a world-wide market where you “bet” on currencies and commodies like gold and silver. It’s the largest exchange in the world and you can get in for as little as a hundred dollars.
For example, gold and the dollar. Gold is currently running around $1700 dollars right now. On the Forex, you can bet that gold will increase or decrease against the dollar. You go in, place a “position,” then watch in real time whether it’s going up or down. Since you are the one in control of your account, you can cash out anytime you like. But how do you know what’s going on? That’s where “candlesticks” come in.
Consider the humble candlestick. Its use is more ceremonial and limited now than it used to be, when candlelight lit the world with its soft glow. Everyone knows what a candlestick looks like.
Are you sure?
Now consider these candlesticks…
They burn on trading graphs around the world. They’re the simpliest object to learn in trading, and if you can read them, you can make money with that knowledge.
Candlesticks are set to display trading activity over any period you choose, although the usual default is about an hour; and can display financial knowledge about Anything being traded - stocks, metals, currency, because it’s just telling you four separate things - what the price was when the time slice you’re looking at started, how high it’s gone, how low it’s gone, and the price when it closed.
But one candlestick is just a snapshot in time. It’s when you start putting them together that things get interesting. Consider this image…
It shows four candlesticks. The white color shows that the price of buying the item has been going up for three periods and trading has been fairly consistent. The individual white candlesticks show that the price of gold has gone up and down within that period then settled between the high and the low, but the black shows that on the fourth period, the upward trend stalled. If you placed a position at the first candlestick and you’re a conservative investor, you might want to get out now with a profit. (The candlestick colors on most charts are green for a positive trend and red for a negative.) If you’re more of a risk taker, you might stay in to see if the black candlestick is indicating that other traders have taken their profits or if traders are holding back to see if the upward trend is going to continue. Here’s a longer term chart showing a typical gold buying and selling pattern.
You can see very clearly towards the end that a massive sell-off (the long red candlestick) meant that traders were taking their profits after the long rise. Gold recovered slightly but still seems to be on a downward trend.
The Forex also allows for “short” selling, where you “borrow” a sale, selling gold for $1700 now, then pay it back when gold has dropped to, say, $1500 dollars and pocket the $200 dollars. The most legendary example of short selling is where George Soros sold borrowed British Pounds just before the Government devalued the Pound and reportedly made over one billion dollars on the exchange.
If you had bought in at the bottom of the first candle on the first chart, you could sell and still make a profit. The black candlestick could show that people are taking a profit or that they’re waiting to see whether the price will continue to go up or down. If you were to look at this chart and think the price of gold is going to fall, then you might short gold and make a profit that way.
You don’t open a Forex account directly but first open an account with a brokerage like E*Trade, then connect that to a trading app like Metatrader which “talks” to the Forex. To help you learn, most apps like Metatrader allow you to open practice accounts where they give you $100,000 dollars in play money to trade with.
This just really scratches the surface of working with candlesticks and trends. Learning more about the Forex and trading is not difficult. There are many traders on YouTube that explain things in further detail. One of the best is a young Singapore woman named Karen Foo, who has won awards for her trading prowess and has made it her mission to help people learn how to trade and escape poverty. She has many YouTube videos explaining the Forex and trading. Here’s one to start with…
I hope you’ve enjoyed this very brief introduction to Forex trading. Happy hunting…