Forex 101

f22raptor

f22raptor

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When trading forex, why would you sell at a lesser price than you bought for? Is there a time limit forcing you to sell?

Which platforms are best to trade commodities such as platinum and palladium?
 
f22raptor said:
When trading forex, why would you sell at a lesser price than you bought for? Is there a time limit forcing you to sell?

Which platforms are best to trade commodities such as platinum and palladium?
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You can use IG markets, or Think markets both regulated in SA.

You always sell for less than you bought if you sold immediately you need to wait for the price to move to make a profit or loss.

There is also a spread that you need to exceed.

For example.

FX buy is 10 Sell is 9.8 which means spread is 0.2

SO you buy at 10.

It moves to 10 you make zero profit if you sell. if it moves to 10.2 and you sell you make 0.2 if it moves to 9.8 and you sell you lose 0.2
 
Thank you. Why then do people sell for less and not wait when they are certain they can make a profit?
 
f22raptor said:
Thank you. Why then do people sell for less and not wait when they are certain they can make a profit?
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Cause there is absolutely no certainty that they would make profit.
If I buy anything now I cannot say for certain it will go up or down. its an "educated" guess.

If you knew for certain 1000x leverage that and retire...
 
On 12 July 2023 at 2200hrs Platinum was R950.38. Twenty fours later it was R973.86. If I had bought R10 000 worth on 12 July and sold 24 hours later I would have made a profit of R247. Am I correct?

Screenshot (1135).png
 
f22raptor said:
On 12 July 2023 at 2200hrs Platinum was R950.38. Twenty fours later it was R973.86. If I had bought R10 000 worth on 12 July and sold 24 hours later I would have made a profit of R247. Am I correct?

View attachment 1558909
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be very careful here the platforms you requested are HIGHLY leveraged like 200-500 times so make sure you understand the risks.
 
Don't people also sell for less if shorting? Most these forex platforms are essentially selling contracts?

If you enter a trade by selling (shorting), then you want to buy(exit) low.
If you enter a trade by buying (longing), then you want to sell(exit) high.
 
f22raptor said:
On 12 July 2023 at 2200hrs Platinum was R950.38. Twenty fours later it was R973.86. If I had bought R10 000 worth on 12 July and sold 24 hours later I would have made a profit of R247. Am I correct?

View attachment 1558909
Click to expand...
Why not put some crypto on an exchange and trade as a way to get you familiar with order types and how exchanges work. Doesn't need to be a huge amount.
 
f22raptor said:
Thank you. Why then do people sell for less and not wait when they are certain they can make a profit?
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Here's my take on the matter:

If you are 100% confident and your position is not leveraged, then sure, technically you can adapt a hodl strategy and hold the losing positions for days / weeks / months even when the prices goes against you at first, until such time that prices comes back in your favor. Under normal conditions, most of the time the price do eventually comes back even if it runs away from you at first, assuming you did not chase prices with your entry. But know that in the few % of chance that it doesn't come back, this type of strategy will wipe you out completely. Also, depending on which currency pairs and the direction that you are trading, you will incur swaps (interests) that will either eat into your margin or provide profit. Not to mention that there is also an opportunity costs associated to holding a losing position for an extended period. I believe people that adapts this kinds of hodl approach normally doubles down as price move against them, essentially employing a martingale system, eventually building up to a catastrophic loss, remember that the market can stay irrational longer than you can stay solvent. Besides, getting the direction right is only part of the equation, you can get the optimal buying and selling price with hind sights, knowing when to exit without it is more difficult than many expects. And if you leverages with this type of strategy, it is most likely that that you will find your available margin vanishes earlier than you expects, follow by a margin call from the broker soon after.

I really recommend against the masses doing any active CFD tradings on forex, commodities or stock market inidices, the odds are so stacked against the laymen that most are just providing liquidity to your counter-parties. But if you really have to go down this rabbit hole, probably best to start on babypips to get the basics, read some books on trader psychology, market structures to understand the rules of the game and who your counter parties are, demo for months or years before putting real money in. It's really much easier and better for your health if you spend that time in finding a good EFT or financial adviser to invest your money.
 
kota said:
Here's my take on the matter:

If you are 100% confident and your position is not leveraged, then sure, technically you can adapt a hodl strategy and hold the losing positions for days / weeks / months even when the prices goes against you at first, until such time that prices comes back in your favor. Under normal conditions, most of the time the price do eventually comes back even if it runs away from you at first, assuming you did not chase prices with your entry. But know that in the few % of chance that it doesn't come back, this type of strategy will wipe you out completely. Also, depending on which currency pairs and the direction that you are trading, you will incur swaps (interests) that will either eat into your margin or provide profit. Not to mention that there is also an opportunity costs associated to holding a losing position for an extended period. I believe people that adapts this kinds of hodl approach normally doubles down as price move against them, essentially employing a martingale system, eventually building up to a catastrophic loss, remember that the market can stay irrational longer than you can stay solvent. Besides, getting the direction right is only part of the equation, you can get the optimal buying and selling price with hind sights, knowing when to exit without it is more difficult than many expects. And if you leverages with this type of strategy, it is most likely that that you will find your available margin vanishes earlier than you expects, follow by a margin call from the broker soon after.

I really recommend against the masses doing any active CFD tradings on forex, commodities or stock market inidices, the odds are so stacked against the laymen that most are just providing liquidity to your counter-parties. But if you really have to go down this rabbit hole, probably best to start on babypips to get the basics, read some books on trader psychology, market structures to understand the rules of the game and who your counter parties are, demo for months or years before putting real money in. It's really much easier and better for your health if you spend that time in finding a good EFT or financial adviser to invest your money.
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Spot on playing with CFDS with minimal knowledge is gambling.
 
When shorting, you want the price to go down, ie, you want to close your position for a lower amount than what you entered at. It's the polar opposite of going long (ie buying).
 
f22raptor said:
Thank you. Why then do people sell for less and not wait when they are certain they can make a profit?
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To limit your losses.

Remember it’s leveraged trading…you can lose way more than you bargained for.

So do you want to take a small loss, a medium loss or a monstrous loss? It’s why you have stop/limit orders and modern day dynamically adjusting orders to go up with the market and sell/buy when it turns.

There are also overnight charges for staying in the market which will further hurt you if it’s busy going wrong.
 
acidrain said:
Don't people also sell for less if shorting? Most these forex platforms are essentially selling contracts?

If you enter a trade by selling (shorting), then you want to buy(exit) low.
If you enter a trade by buying (longing), then you want to sell(exit) high.
Click to expand...

Yes but OP very specifically said selling lower than buying.

As per your example it would be the other way around. You’d enter the market by selling and exit by buying.

OP was talking about entering the market buying and then selling at a loss.
 
kota said:
I really recommend against the masses doing any active CFD tradings on forex, commodities or stock market inidices, the odds are so stacked against the laymen
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That was me, losing money after trading behind someone that gives calls when to buy or sell. In the end I had no idea what I was doing and pretty much ended up donating my money to the other "players".
 
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