How To Get Started In Forex Trading
You may have been hearing about the foreign exchange market (FOREX) and the investment advantages it offers. You would like to try it out, but don't know where to start. This short guide will give you the basics in FOREX and tell you what you need to participate in this fast growing field.
Foreign exchange used to be limited to large players such as national banks and multi-national corporations. In the 1980's the rules were revised to allow smaller investors to participate using margin accounts. Margin accounts are the reason why FOREX trading has become so popular. With a 100:1 margin account, you can control $100,000 with a $1,000 investment.
FOREX is not simple, however, and education is needed to make wise investment decisions. Although it is relatively easy to start trading on the FOREX, there are risks involved, so finding out as much as possible about the market is a good move for any beginner.
FOREX traders usually require a broker to handle transactions. Most brokers are reputable and are associated with large financial institutions such as banks. A reputable broker will be registered as a Futures Commission Merchant (FCM) with the Commodity Futures Trading Commission (CFTC) as protection against fraud and abusive trade practices.
Opening a FOREX account is as simple as filling out a form and providing the necessary ID. The form will include a margin agreement that states that the broker can interfere with any trade it deems to be too risky. This is to protect the interests of the broker – most trades, after all, are done using the broker's money. Once your account has been established, you can fund it and begin trading.
Many brokers have different types of accounts to suit the needs of individual investors. Mini accounts allow you to get involved in FOREX trading for as little as $250, while standard accounts may have a minimum deposit of $1000 to $2500 depending on the broker. The amount of leverage – using borrowed money – varies with accounts. High leverage gives you more money to trade for a given investment.
HOWEVER – beginner traders are advised get accustomed to FOREX by doing paper trades for a period of time. Paper trades are practice transactions that don't involve real capital. They allow you to see how the system works while learning how to use the various software tools that are at provided by most FOREX brokers.
Most online brokers have demo accounts that allow you to make free paper trades for up to 30 days. Every new FOREX investor is strongly advised to use these demo accounts at least until they are showing consistently steady profits.
Each broker has their own set of software tools to aid in making transactions, but there are a few tools that are common to all FOREX brokers. Real time quotes, news feeds, technical analyses and charts, and profit and loss analyses are some of the features you should expect to see on most online brokers' web sites.
Almost every broker operates on the Internet. To access their online services you should have a reasonably modern computer, a fast Internet connection, and an up-to-date operating system such as Windows XP. Once your account is set up, you can access it from any computer – just enter your account name and password. If for some reason you are not able get access to a computer, most brokers will allow you to make trades over the phone.
Trades are commission free, meaning that you can make many trades in one day without worrying about incurring high brokerage fees. Brokers make their money on the 'spread' – the difference between bid and ask prices.
Author:
Hana Lee: This article provided courtesy of http://www.day-trader-futures.com
Terms:Articles may be reprinted provided content is not edited and links are kept live
Source: www.articledepot.co.uk
Showing posts with label Forex Trading. Show all posts
Showing posts with label Forex Trading. Show all posts
Wednesday, April 7, 2010
How to Trade FOREX Like a Professional?
Trade like a professional. Learn the rules, use the tools and techniques. Start small, use your head and not your heart. Learn the entry and exit points and go for medium term trades and not be glued to the screen.
Making money from trading “forex” trading requires skill, strategy, spare money and nerves of steel. Why? Because of the shear volatility in the market. Simply put, there are just too many unpredictable variables and any one of them could affect the position of a chosen trade. It is not all doom and gloom. Anyone can make money provided he/she uses his/her head and not their heart. In addition to that, they must follow and adhere to a some simple rules. An example of a simple rule which one particular trader followed was “ I come into the market to make $500 per day. And, as soon as I have made my $500 my work for the day is done ”. He goes home. Don’t be greedy. Always, have a clear head.
Here are the tools and techniques to help you trade:-
1)Learn to read the charts and understand the implications of currency movements. Charts give you an invaluable insight into any given trade, its history and some indication of its future movement. For example, if the charts show an upward trend of 2% per day for the past 5 days. That is a good signal. (Sharescope for a fee will give you access to a tool and data which you can analyse and play with)
2)At what point should you take a position? Normal rule of thumb is when the trade has moved higher than the previous high. Or lower than the previous low. Fifty two week high is also good indicator for a position. Conversely, 52 week low is good indicator. How can I learn about charts? That is very simply. Read a book by Martin Pringle. Martin explains charting to you using videos so nothing is left to chance.
3)Taking a position means betting on the trade movement either up or down. If you take the view that the trade is going to go up then buy a 50 pence per point movement. What if the trade goes against me? Yes that is likely and can happen to anyone in the market. To prevent incurring big losses put a stop loss point some 10 or 15 points below the price of your trade. Say $/Euro is your trade; price of your trade is 1234 for the sake of illustration. Then your stop loss point will be 1219 meaning at point 1219 you will be taken out of the market and you will have lost £7.50 in total as opposed to unlimited loss. If, on the other hand, market follows your prediction and moves up 300 points; you will have made £150. You can bank that money by moving the stop loss point 15 points below the new position.
I am still very confused? Trading requires an understanding of the market, the charts and tools. Some tools are internet based so being familiar with the internet is a must. In order to really understanding trading, ones needs to go on a training course for weekend.
The other option is to learn by trial and error. All the spread betting companies offer you a free trading trial run with an imaginary account. What happens in practice is a make believe account with say $100,000 for you to play with? You go and try your luck until you have either made a decision to open a real account or you have spent all the money but did not make any progress. The other advantage of opening a real account is that you have access to a big learning resource consisting of audio and video presentations by experts of courses etc.
Finally, trading like a professional is not being glued to the screen but enjoying the experience. Therefore, the tips and words of wisdom from professionals are trade medium term trades as opposed to day trades. Last but not least, Market Wizard is a great book to read because all the traders: rich and poor, are interviewed for you to refer to and learn from. Good luck.
Article Source:Articuli.com
Making money from trading “forex” trading requires skill, strategy, spare money and nerves of steel. Why? Because of the shear volatility in the market. Simply put, there are just too many unpredictable variables and any one of them could affect the position of a chosen trade. It is not all doom and gloom. Anyone can make money provided he/she uses his/her head and not their heart. In addition to that, they must follow and adhere to a some simple rules. An example of a simple rule which one particular trader followed was “ I come into the market to make $500 per day. And, as soon as I have made my $500 my work for the day is done ”. He goes home. Don’t be greedy. Always, have a clear head.
Here are the tools and techniques to help you trade:-
1)Learn to read the charts and understand the implications of currency movements. Charts give you an invaluable insight into any given trade, its history and some indication of its future movement. For example, if the charts show an upward trend of 2% per day for the past 5 days. That is a good signal. (Sharescope for a fee will give you access to a tool and data which you can analyse and play with)
2)At what point should you take a position? Normal rule of thumb is when the trade has moved higher than the previous high. Or lower than the previous low. Fifty two week high is also good indicator for a position. Conversely, 52 week low is good indicator. How can I learn about charts? That is very simply. Read a book by Martin Pringle. Martin explains charting to you using videos so nothing is left to chance.
3)Taking a position means betting on the trade movement either up or down. If you take the view that the trade is going to go up then buy a 50 pence per point movement. What if the trade goes against me? Yes that is likely and can happen to anyone in the market. To prevent incurring big losses put a stop loss point some 10 or 15 points below the price of your trade. Say $/Euro is your trade; price of your trade is 1234 for the sake of illustration. Then your stop loss point will be 1219 meaning at point 1219 you will be taken out of the market and you will have lost £7.50 in total as opposed to unlimited loss. If, on the other hand, market follows your prediction and moves up 300 points; you will have made £150. You can bank that money by moving the stop loss point 15 points below the new position.
I am still very confused? Trading requires an understanding of the market, the charts and tools. Some tools are internet based so being familiar with the internet is a must. In order to really understanding trading, ones needs to go on a training course for weekend.
The other option is to learn by trial and error. All the spread betting companies offer you a free trading trial run with an imaginary account. What happens in practice is a make believe account with say $100,000 for you to play with? You go and try your luck until you have either made a decision to open a real account or you have spent all the money but did not make any progress. The other advantage of opening a real account is that you have access to a big learning resource consisting of audio and video presentations by experts of courses etc.
Finally, trading like a professional is not being glued to the screen but enjoying the experience. Therefore, the tips and words of wisdom from professionals are trade medium term trades as opposed to day trades. Last but not least, Market Wizard is a great book to read because all the traders: rich and poor, are interviewed for you to refer to and learn from. Good luck.
Article Source:Articuli.com
Tips For Profitable Forex Trading
Written by Susan Jan
To be successful in FOREX trading you need experience, capital and a solid trading system. Keeping things simple can also help you better focus on your trading. Here are some tips that can help you during FOREX trading:
1. The first and last ticks are always the most expensive. Get in late and out early.
2. Never add money when you are losing.
3. When everyone else is in, then it is time for you to get out.
4. Always determine a stop and a profit objective before you enter a trade. Place stops that are based on market information, and not your account balance.
5. It is always easier to enter a losing trade.
6. News is only important when the market doesn't react in the direction of the news.
7. In a bull market, you never want to sell a dull market, in a bear market, you should certainly never buy a dull market.
8. There are times, due to a lack of liquidity, or excessive volatility, when you should not trade at all.
9. It helps to read yesterday's paper each day to learn from what the market did.
10. There are at least three types of markets such as up trending, range bound, and down trading, and you should have a different trading strategy for each.
11. Up market and down market patterns are always there, with one always been more dominant. Select trades that move along with the trend.
Article Source:Articuli.com
To be successful in FOREX trading you need experience, capital and a solid trading system. Keeping things simple can also help you better focus on your trading. Here are some tips that can help you during FOREX trading:
1. The first and last ticks are always the most expensive. Get in late and out early.
2. Never add money when you are losing.
3. When everyone else is in, then it is time for you to get out.
4. Always determine a stop and a profit objective before you enter a trade. Place stops that are based on market information, and not your account balance.
5. It is always easier to enter a losing trade.
6. News is only important when the market doesn't react in the direction of the news.
7. In a bull market, you never want to sell a dull market, in a bear market, you should certainly never buy a dull market.
8. There are times, due to a lack of liquidity, or excessive volatility, when you should not trade at all.
9. It helps to read yesterday's paper each day to learn from what the market did.
10. There are at least three types of markets such as up trending, range bound, and down trading, and you should have a different trading strategy for each.
11. Up market and down market patterns are always there, with one always been more dominant. Select trades that move along with the trend.
Article Source:Articuli.com
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