The Forex (Foreign Exchange) markets attract many would-be-traders to
the markets each day looking for an easy profit. Before a new trader
begins trading, they would be wise to familiarise themselves with how
the markets operate and the terminology that is involved even if the
intention is to use a Forex robot or software this will give you an
immediate advantage.
In
order to educate and adopt the correct frame of mind that is required
to make a success of the $3 trillion daily trades, one must accept that a
certain level of basic Forex trading understanding is required.
First
of all, understand that even though many professionals make either
themselves or their employer's massive profits, Forex trading is not
easy, even though the countless advertisements on websites claim the
opposite. Forex products found on the Internet often involve
set-and-forget software that trades on the users behalf. The fact of the
matter is that they do offer buy and sell signals but learning the
basics of Forex trading before using these pieces of software will help
you understand how and why they are telling you to buy or sell at a
particular price.
A good place to start learning the basics is in
the terminology used to trade. What does liquidity mean? How about pips,
cable or volatility? There are hundreds of terms that are used in
currency markets around the world. Some have the same meaning; others
are only used in local markets. A simple search engine query will be
enough to familiarize a potential trader with the most common Forex
terms so that they do not get lost as soon as trading starts for real.
If trading Forex for any length of time is intended to yield long term
results, then it is worth investing in some of the many excellent
paperback books available in stores worldwide. In general the quality of
the content is higher than that found on the Internet and the authors
are usually well respected Forex traders themselves rather than
part-time bedroom traders that have copied other information. As the
well known phrase goes "Do not be afraid to invest in yourself". This
advice when related to Forex trading will likely pay off dividends.
Once
a trader is confident enough with the linguistics, their system,
trading style and their skills in reading news items then the next step
is to trade in real time using a broker. A practice account is
recommended to use to trade with first even if using a Forex robot or
software. Remember there is no rush and trading must not be rushed. If
one tries to cut corners, the likelihood is that they will be worse off
financially than before. Any broker worth their salt will offer a
practice account with pretend money to practice trading. If this is not
the case then move to another broker.
A practice account will give
real time trading experience without the need to risk real capital and
is a good indication of whether a particular trading strategy works or
not. Did the news item result in a predicted rise or drop in price of a
currency pair? If it did then that is a good start, the road to
profitable Forex trading beckons. Did the price move in the other
direction? That's not a problem; it was only virtual capital in a
practice account and only time, no money, has been lost. Time can now be
spent tweaking or the Forex robot settings until they become
profitable.
The Forex markets are very complicated and fast moving
markets with the largest liquidity of any market in the world. Novices
with little experience need to be careful initially until they become
more familiar with what they are doing to build confidence in their
strategies or software. However, currency trading can also be a very
lucrative opportunity and if mastered rewards well.
