You see them on TV almost every day, people saying they are making tons of money trading currencies online. Is this for real? It's all over the internet, advertisements for the holy grail that will help you turn a few hundred dollars into millions in less than a year. Let's come back down to earth for a moment. If all of these people were really making that much money do you really think they would tell you how to duplicate it for a few dollars? Would you if you if you were? Of course not, you would focus on making money.
Just like any profession, trading the forex takes skill, determination, knowledge and experience. Imagine if you were going in for surgery and the doctor walked in and said, "I saw this ad yesterday, paid $200 for this cool program on how to do surgery, and look at me now, I am going to make $3,000 taking out your appendix." How many surgeries will this doctor perform? Right! None. Granted, we are not talking about a life or death situation, but the concept is the same. One small mistake could have dramatic effects on your future financial life.
Trading the foreign currency market, or the forex, can be a daunting task to overcome at first. You need to learn a new language, understand how markets move, learn risk management and how to use leverage. Just like becoming a doctor you must first learn the basics. Understand what is a pip, and what are spreads. How much leverage do you want and do you want to trade standard lots, mini lots or micro lots. All of these are important for the beginner forex trader.
Here are a few tips to get you started: First, get a general understanding of what the forex is. How does it work and when can you trade?
Second, learn what currency pairs are and more importantly which ones are the majors. These are the most liquid or most commonly traded pairs.
Third, learn what pips are and how the pip spread can affect your ability to make a profit.
Fourth, learn about leverage. Like the forex trading infomercials claim, a small movement in the price of a currency pair can have a big affect on your bottom line, in either direction.
Once you get your feet wet with the basics you can open a demo trading account at many of the forex brokers on the internet. Take your time choosing a broker you are comfortable with. They all have different currency leverages available and different spreads. Many have their own trading platforms. Remember, this is a demo or practice account so try as many as you need before putting any real money at risk.
