There are books and even stacks of books which collectively won't
be enough to serve as a forex manual for successful trading. That's
because what's needed is experience and a hands-on approach, and that
can't be found in any book. But the books and research material do help a
trader prepare for the rough and tumble of the forex market, so here's a
few tips on how to get started.
The first thing to know is that
the forex market isn't exactly a marketplace which can be found at a
specific location. It's just a name for the collective transactions of a
large group of international bankers and financial institutions that
drive and set the rates for currency pairs. Forex trading is when a
trader speculates on one specific currency pair and profits from
fluctuations in the relative values of the currency pair.
The next
step is to establish a margin account with a broker. Unlike stock
brokers, forex currency brokers don't need huge deposits to be made in
the margin accounts. It's possible to start trading in the forex market
with a $1000 or $2000 deposit. Even this minimum deposit gives the
trader a huge leverage, typically called one 'lot' which is $100,000.
But
there's no need to be scared by the big sums. Any good forex manual for
successful trading will explain that so long as a trader keeps a grip
on his emotions - and enters or exits trades based on solid information
and logic, it's a lot less risky than the stock market. It's usually a
good idea never to trade more than 20% of the margin account at any
given time. Restrict the value of each trade to no more than 5 or 10% of
the account.
The best way to get started is by using a demo
account and doing paper trades without real money. Many brokers offer
demo accounts so that new trades can get their feet wet without
drowning. Use it until all the basic concepts are clear, like pips and
spreads, including how and when to enter and exit trades with a broker.
Once
the basics are clear, it's time to read up on trading strategies, forex
contracts, futures and derivatives, signals, indicators and trading
systems. Another thing to remember is that it is crucial that a trader
restricts focus to at most 3 or 4 currency pairs. There are traders who
never look beyond a specific currency pair.
New traders unsure of
which currency pair to focus on should start with popular ones like
GBP/USD, EUR/USD, USD/JPY and USD/CHF. Please note that all this
information is not meant to be a comprehensive forex manual for
successful trading. Consider it as a starting point that provides a
sense of direction for new traders.
Do you want to know how you can really make more profits doing
forex business? Get the very first daily currency updates ahead of other
traders: Forex News Trading.
Cedric is an article marketing expert, freelance article writer, link building professional, and freelance seo specialist.
Cedric is an article marketing expert, freelance article writer, link building professional, and freelance seo specialist.
