Foreign exchange trading (or Forex, as it is more commonly known) is the process of buying and selling foreign currencies from an online brokerage platform.
A "forex trader" is one who trades currencies regularly and methodically with the intention of generating profit.
What makes currencies fluctuate in value?
In the long run, the value of a currency is lead by numerous factors, such as central bank actions, interest rates, and economic strength.
However, the smaller and shorter-term fluctuations are often lead by market speculators. As history would show, speculators as an aggregate are often an emotionally charged group. When hundreds of thousands of them get together in a highly emotional game of fear, greed, and uncertainty – their combined behavior takes on a kind of “herd mentality”. This creates repeatable patterns that occur over and over again. To the professional speculator who is able to remove himself from the emotional oscillations of fear and greed, he may apply strategic, methodical, risk managed actions to profit from this inevitable market rhythm.
The professional trader may find a profitable edge without knowing with certainty what the market will do next. The truth is that certainties in trading are few and far between. Your edge in trading does not come from “making predictions”, as much as it comes from mastering 4 key skills:
- Understanding basic human behavioral tendencies
- Understanding basic mathematical probabilities
- Understanding basic pattern recognition
- Understanding how to transcend your own emotional reactions through strategic foresight and master planning
The 4 skills above are taught in great depth in the Infinite Prosperity course.