Forex Basics
Forex trading has become very popular of
late. There are plenty of disgruntled stock traders who have had enough of the
ups and downs of the stock markets and who are looking to invest their money
elsewhere.
You see Forex advertised everywhere. Just
open any page on your computer and Forex is in your face. Promises of making
tons of money with the click of a tab entice even the most conservative
investor to open an account and start trading. And indeed, trading Forex does
sound easy.
However, it isn’t.
So don’t fall for all
that hype about making Forex your new career or turning your $1000 into
$100,000. It just isn’t going to happen.
So let’s be honest. There are
certainly people out there that are making money in Fx markets. These are not
investors who have just gotten off the boat and have a bit of cash to burn.
Those that make money in Forex are the ones who invest time and effort in
knowing what Forex is all about and who then move forward.
Start with the basics
Like all things in life, you have to start
with the basics. Learning about Forex markets, how currencies are traded and
what affects their price movement is the first step in trading Forex. And there
really is quite a lot to learn.
There are many online tutorials offered by
brokers that teach the basics of Forex trading. There are also more extensive
Forex courses provided free of charge by independent firms such FX Academy. Without a clear understanding of Forex, you
have no chance of coming out successful.
When you feel you have mastered the basics,
the next step is open a demo account with a recommended broker. Choosing a
broker that meets your goals and personality may take some time. There are
hundreds of online brokers that claim to be the best of the bunch. Speak with a
few experienced Forex traders and do your own research. Compare the features of
several brokers and see which one offers you what you need.
There are online Forex broker
review sites which do the comparison for you and these are worth reading.
Once you have settled on a broker, I
recommend you open a demo account for several months. Demo accounts provide you
virtual money to use for trading. You trade live but without the risk of losing
your money. These accounts give you the time you need to experience Forex
trading upfront without the stress associated with real trading.
Another option offered by some brokers is
the mini account where smaller amounts of deposit are required. Instead of
depositing $1000 or $5000, with a mini account you can start trading with as
little as $500. Although the risk of
losing too much money has been eliminated, I believe the experience gained by
trading in a demo account is much more valuable than moving straight into a
real account, albeit a mini one.
While trading in your demo account, you
should be developing your own personal trading system. Make it as simple as you
can and then test it out and see if it works. If not, move on to another one.
Keep in mind that you will probably lose much more than you will win. About 80%
of beginner traders lose all their money during the first few weeks of trading.
"Black belt is white that don't give up" |
With some experience under your belt, you
can move onto more advanced Forex tools which will help you be more successful.
So be patient and don’t get emotionally involved. Forex trading can be
profitable but it isn’t as easy as it looks.
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