How to Begin Trading Forex

Example Platform

I really want to get into some trading ideas, I don't plan on getting to the advanced levels often as there are many advanced level training tools, I can provide examples upon request. This is for beginning traders of Forex (The foreign exchange market). I must admit I haven't traded currency in awhile it takes much due diligence on the part of the trader and you will not get rich quick but you can make profits if you do the proper research. Also note outside of educating yourself more about trading I recommend everyone try a free account for at least a month before jumping in.

With the decrease in the U.S Dollar investing in currency is a way to capitalize on the rise and fall of different currencies. The Forex market is a 24 hour 7 day a week market where foreign currency can be traded. This article will review how a beginner can start trading foreign currency.

Step 1 Look for a platform to trade Forex I prefer http://www.forex.com I do not recommend going into trading with real money immediately, many have a great 30 day practice account. Everything is real time, and based on real trading including profit and loss except it’s not real money. 

Step 2 Once you are signed up research a few currencies you are interested in. I was drawn to XAU/USD (XAU is Gold and I’m sure you know the 2^nd is the US Dollar). XAU/USD is the rise or fall of gold in relation to the dollar. 

Step 3 Compare the spread ( the difference between buy and sell). The cost to buy is always higher than the cost to sell because when you first order a contract the pips (pip is 1/100^th of 1%) have already been added. When a contract starts you are in the negative, don’t panic that is normal. 

Step 4 Start doing contracts; whether you prefer stop orders (buys once currency RISES to level you set), limit orders (Buys once currency FALLS below market price to the level you set), or market order (buys at current market price) you have the choice. 

 Step 5 : Make sure to manage risk by setting stops and limits. Limits sell when you hit a profit point you set. Stops sell when you hit the maximum loss you are willing to take. Set goals before the trade, and don't be greedy. 

*Just as with Stocks you can gain revenue from increase in value or the decrease in value with shorting. 

* You can trade on your schedule by watching the opening of your favored currencies 

* Remember you don’t have to trade every currency someone whom masters just one can become very successful 

*You have much more leverage in many cases it’s 200:1 (but as low as 50:1) depending on amount you have invested so imagine you have a $10,000 account you can have contracts of up to $2,000,000, now that’s what I call leverage. 

*No matter how knowledgeable you are there is always a chance of a loss in fact everyone will lose money but the key is to manage losses and never invest more than you are willing to lose. Set up a stop loss to manage Risk and start small. Happy trading.


Photo courtesy of www.forex.com trading platform.