http://www.forexspirit.com/2006/11/09/keys-to-trading-success/ Colin McGinley's journey of forex trading by a thousand cuts Tue, 24 Jan 2012 06:42:32 +0000 hourly 1 http://wordpress.org/?v= http://www.forexspirit.com/2006/11/09/keys-to-trading-success/comment-page-1/#comment-7 Working on Wall Street anyone? - Personal Development for Smart People Forums Mon, 13 Nov 2006 17:28:29 +0000 http://www.forexspirit.com/2006/11/09/keys-to-trading-success/#comment-7 [...] Originally Posted by Stephen I often look at FX trading as similer to the Stcok Market. Only - I project a currency as a company and the CEO as the President/Premier/Prime Minister of that Country. Get the picture? A close analogy, but a rather false one. If you want to draw a parallel with the stock market then you are better off comparing it like this: Imagine comparing the stock of two companies (and for the sake of simplicity assume that two companies are in the same field, eg two tech companies, or two car manufacturers). Each company represents a country. Imagine buying the stock in company A, paying for it using stock you own in company B. The amount of your stock in company B that you're willing to pay for stock in company A depends on the relative health and prosperity of both companies at a given point in time. That relative difference or ratio between the stocks of the two companies will change over time as the companies do well or poorly. Both companies might be doing well at the same time, but one will be doing better than the other, thus the value of its stock should appreciate more than the value of the other company's stock. You are not concerned about the absolute price of a stock share in either company, but the price of one stock share relative to the price of a stock share in the other company. Finally, it is not the prime minister or president of a country that should be seen as the CEO of our phantom companies, but rather the head of that country's central bank. In the US this would be Ben Bernanke (head of the Federal Reserve Bank), while in Europe it is Jean-Claude Trichet (head of the European Central Bank). A very good website to learn the absolute basics of forex trading is Forex Education, Forex Training, Beginner's Guide to Forex Trading - BabyPips.com. I also recently wrote an article that beginner traders might find useful entitled Keys to Trading Success. __________________ ForexSpirit - consistent, profitable trading [...] [...] Originally Posted by Stephen I often look at FX trading as similer to the Stcok Market. Only – I project a currency as a company and the CEO as the President/Premier/Prime Minister of that Country. Get the picture? A close analogy, but a rather false one. If you want to draw a parallel with the stock market then you are better off comparing it like this: Imagine comparing the stock of two companies (and for the sake of simplicity assume that two companies are in the same field, eg two tech companies, or two car manufacturers). Each company represents a country. Imagine buying the stock in company A, paying for it using stock you own in company B. The amount of your stock in company B that you’re willing to pay for stock in company A depends on the relative health and prosperity of both companies at a given point in time. That relative difference or ratio between the stocks of the two companies will change over time as the companies do well or poorly. Both companies might be doing well at the same time, but one will be doing better than the other, thus the value of its stock should appreciate more than the value of the other company’s stock. You are not concerned about the absolute price of a stock share in either company, but the price of one stock share relative to the price of a stock share in the other company. Finally, it is not the prime minister or president of a country that should be seen as the CEO of our phantom companies, but rather the head of that country’s central bank. In the US this would be Ben Bernanke (head of the Federal Reserve Bank), while in Europe it is Jean-Claude Trichet (head of the European Central Bank). A very good website to learn the absolute basics of forex trading is Forex Education, Forex Training, Beginner’s Guide to Forex Trading – BabyPips.com. I also recently wrote an article that beginner traders might find useful entitled Keys to Trading Success. __________________ ForexSpirit – consistent, profitable trading [...]

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