Businessafrica.net Newsletter ISSN 1563-4108
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BUSINESS IN AFRICA™
ISSUE - 38 - JUNE 14 - JULY 15, 2002
FEATURED ARTICLE
INTRODUCTION TO THE BASICS OF
CURRENCY TRADING
FOREIGN EXCHANGE INCOME GENERATING OPPORTUNITY
© By Mr. Ian Mvula CEO of Online Forex Trading

Mr Ian Mvula, is the Chief broker (CEO) at Online Forex Trading in Lusaka, Zambia. He has pioneered many new ventures in Zambia and the surrounding region including the first Card payphones, the first Internet cafe and now the first International forex brokerage firm. Mr Mvula strongly believes this business is the future of investment banking.

DISCLAIMER: Mr. Ian Mvula is not a member of AFRICABIZ ONLINE's editorial board. This is a featured article published by AFRICABIZ on behalf of the author. Views and opinions expressed are Mr. Ian Mvula's.

- Online Forex Trading is an affiliate of Capital Market Services LLC. Capital Market Services LLC is a full member of NFA (US National Futures Association) and received the FCM (Futures Commission Merchant) status from CFTC (US Commodity Futures Trading Commission) as it is required in accordance with the Futures Modernization Act 2000, accepted by US Congress in December 2000. Click here for more on The United States Commodity Futures Trading Commission (CFTC).

What is Forex Trading? / Who can trade? / How to start? / Training available /
Risk involved
/ Is Forex trading affordable? / Is it legal? /
How it compares to other Investments
/ How safe are my funds?
SYNOPSIS

Imagine a business with.. no clients, no selling of any kind, no set hours, no billing, no collections or high cost to operate, Spot payment guaranteed! Welcome to the Internet Forex Trading!

Until very recently Global Forex Trading also known as Currency day Trading was the domain of large banks, multinational corporations and large brokerage firms. Individuals needed a minimum of a quarter of a million dollars to open an account with a broker.

Now the Forex market is open to investors with as little as a few thousand dollars or less. The margin is low enough that a small investment ($1,000) can return consistent profits. It is not uncommon to increase an initial $10,000 investment by $200 to $400 daily. Conservatively 10% monthly increase can be expected giving the investor a yearly return of 120%.

The Internet has no boundaries. It would be wrong to say Forex trading has now come to Africa. What is correct to say is Internet Forex trading is now being introduced by African Forex brokerage firms like Online Forex Trading (OFT) a Zambian based company. The company is operating a trading platform that is linked and partnered with a US Forex brokerage firm.


WHAT IS INTERNET FOREX TRADING?

Internet trading of Forex is the changing of one currency to another electronically via the Internet It is the process of attempting to take small profits in a very short period of time, from the constant price fluctuation of foreign currencies, and unlike the stock market, it really does not matter if the currencies traded are going up or down.

Forex is not a "market" in the traditional sense. There is no centralized location for trading activity as there is in currency futures or stock market. Trading occurs over the telephone line and through computer terminals at hundreds of locations worldwide.

The use of new sophisticated computer programs now offer an outstanding ability to give precise buy and sell signals to take the guesswork out of trading while limiting risk. It is not unusual for a person with a reasonable amount of risk capital and a comprehensive training program to make a profit within several hours or days of trading.

Using the computer and a good risk management strategy, traders can limit their losses. Currency traders only assume a risk for which they are well prepared. Traders profit on currency movements according to a predetermined strategy and methodology. Forex trading software offers techniques to limit losses to less than 10 points per lot, per trade. Working with the computer and Forex trading tools like charts takes much of the financial risk out for currency traders. So long as traders follow the various calculated signals they will make money more often than they will lose.

WHO CAN TRADE?

Virtually anyone with Internet access anywhere in the world. Telecommunication technological advancement has attracted many to this industry, Individuals, small businesses, banks and multinational corporations. Trading can be conducted any where- in the office, at home, on an aeroplane, bus, or ship. It is, paperless and offers no set hours, no billing, no collections, no selling of any kind or high costs to contend with. Trading can be done anytime and anywhere in the entire world on the computer or telephone.

HOW CAN I START TRADING THIS EXCITING MARKET?

As a beginner you will need to establish a demo account and place practice trades until you are familiar with Forex trading. The software for demo trading and all other Forex tools like charting software can be download free of any charge at the OFT web site www.forexplatform.com. While DEMO trading, you will place these trades without worrying about profit /loss or making mistakes. By placing these practice trades each day you will begin to experience both winning and losing trades and develop a "feel" for the market and trading itself.

WHERE CAN I GET TRAINING?

Yes! Currency trading may be answer but Learning is the key. Understanding the currency markets takes some time, there is additional Forex Education offered at the OFT web site with

- Live Courses·
- Online Courses·
- Real-time Coaching·
- Virtual Classroom with direct tutorials and ongoing support.

It is important to practice with dummy money (demo trading) in the real market until you are confident enough to trade "real money". But most importantly you need to undertake some training offered above.

IS THERE ANY RISK IN TRADING CURRENCIES?

Yes! Trading currencies is a risky business. But the risk is that which the trader is well prepared for. The use of Forex trading tools, for example charting software takes the guessing out of trading. There are also Forex signals (trades and trading patterns of experts) which a trader can follow to reduce risk and maximize profits.

But the bottom line is this; to become a successful Forex trader it is crucial to receive as much training as possible and to use the Forex trading tools. If you sticks to the rules (all which you will receive in the tutorials) you will make money, but if you are not disciplined you could lose an entire investment in a very short period.

IS FOREX AFFORDABLE?

Yes. Judge by yourself!

1- Demo software is free at this site www.forexplatform.com
2- Demo trading is unlimited and completely free.
3- Real trading software is also free
4- The Forex tools are free, e.g. Forex signal, and charting software
5- Plus a free Forex trading electronic monthly magazine - ezine.
6- The minimum opening balance for a (mini-Forex) real account is only $300


IS FOREX TRADING LEGAL?

Yes! Perfectly legal. Although exchange control regulations will vary from country to country. However this is what your local bureau de change and commercial bank does for business every day- in physical-walk-in-contact style of business. In fact, many commercial banks overseas and other business houses are already making as much as 70% of their net earnings trading the currency markets on the Inter Bank Foreign Exchange Market (IBFXM).

COMPARISON TO OTHER INVESTMENT OPPORTUNITIES

How is the Forex trading opportunity compared to the stock market, features, bonds, commodities and other investment opportunities?

No matter what business opportunity you may consider this is the ultimate business. At 150 times larger than the US stock, this industry is one of the fastest growing today. The Forex market is huge; in September 1992 The Wall Street Journal estimated the trading volume at $1 trillion per day. Today, it is believed to have grown in excess of $1.5 trillion per day

- Liquidity This market can absorb trading volumes and per trade sizes that dwarf the capacity of any other market. On the simplest level, liquidity is a powerful attraction to any investor as it suggests the freedom to open or close a position at will

- Access A substantial attraction for participants in the Forex market is the 24-hour nature of the market. In Forex, a participant need not wait to react to a news event, as is the case in most markets. Global Interbank Foreign Exchange Market (Forex) is open 24 HOURS A DAY.

- Flexible Settlement Many professional investment managers have a particular time horizon in mind when they establish a position. In the Forex market, a position can be established for a specific period of time, which the investor desires.

- Global Interbank Foreign Exchange Market (Forex) is opened 24 HOURS A DAY, Sunday 7:00pm EST to Friday 3:00pm EST (for USA) Trading can be done any time day or night. In Forex there is no need to worry about tomorrow's market opening 200 points against you - the brokerage Dealing Desk accepts market, entry, limit and stop orders AROUND THE CLOCK via the Internet or by phone.

WHO WILL LOOK AFTER MY FUNDS ON MY REAL ACCOUNT?

A "segregated account" is the best available protection against the potential bankruptcy of a brokerage company. OFT and its partners are only brokerage offering such accounts for clients with an account balance of $10,000 and over.

Under a segregated account, the funds of a client are completely separate from the company's operational accounts. OFT will open an individual account in your personal name with the JP Morgan Chase Bank (formerly known as the Chase Manhattan Bank), where all your funds are safely held while you are trading.

You may receive banking statements by request. The JP Morgan Chase Bank sends all statements to the company's main office; a copy of a client's statement is faxed or mailed to him/her on an individual basis, with a small charge per statement.

The segregated account is not a money-bearing account. Your account balance will be updated monthly in accordance with your trading results. All transactions will be reflected in your monthly statements.

To withdraw funds from your segregated account you must close all trading open positions, fill out a withdraw request form and fax, mail or scan and email it .

In next issue I will discuss the history of Forex Trading, the primary factors influencing exchange rates and also I will compare Forex with other instruments.
Contact forexplatform.com

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