Until recently, the forex market or foregn currency exchange market wasn’t for the average trader or individual speculator. With the large minimum transaction sizes and often-stringent financial requirements, banks, hedge funds,
major currency dealers and the occasional high net-worth individual speculator were the principal participants. These large traders were able to take advantage of the many benefits offered by the forex market vs. other markets, including the fantastic liquidity and strong trending nature of the world’s primary currency exchange rates.
Fortunately, thanks to new legislation written in the late 1990’s, forex brokerages have opened up to the general public and offer trading opportunities for anyone who has an interest in trading currencies for profit. In fact, many brokers allow traders to open and trade currency with as little as $250 dollars in an account.
Regrettably, all of these new currency trading opportunities have created a lot of hype around the forex. Some of this hype includes magic trading formulas, “easy” indicators and expert trend predictors.
There are now countless currency brokerages enticing potential traders to open accounts and start trading today. Many people have started to get the feeling that trading currency is more of a scam then anything else.
We strongly disagree with this notion and are certain that the forex market has much to offer investors. However, before your take you paycheck and head down to the nearest brokerage to open your forex account, may we make some important suggestions before you enter the currency market?
First, there are thousands of websites with information, terminology, trading strategies and more. We recommend researching several of them as you begin to explore the basics of what the forex is.
Brokers often will offer information about the forex, but realize that they are also trying to get you to open an account. Aside from brokerage sites, there are several informational sites and a few forex education companies on the market that offer good information without the pressure of signing up for a “live” trading account.
Second, read some books. Most of the professional operate using a combination of Japanese candlestick charts and other complex indicators to determine the direction of a particular currency pair.
Find books about technical analysis trading, candlestick charts and other methodological indicators. Remember that when you are buying currency it is like buying a stock in a nation or country.
Learn about different countries economic announcements, interest reports, and job indicators. These are highly relevant factors that help indicate a currencies direction.
At this point, it may be time for you to open a demo account with the broker of your choice. This will help you get familiar with trading platforms and basic charts.
Practice making some “demo trades”. Even after doing some basic homework you will find that you fell like you areflying by the seat of your pants” during your trades. At this humbling point in your new forex trading career you realize its time to take a forex training course.
There are many forex training courses on the market today. They come in many forms including seminars, home study courses, interactive online courses, and class room education.
Fxcenter.com, one such forex training course has found that the best education courses use all of these methods in their training regime. They feel that a program should include a minimum of 20 hours of home study to teach the basic principles of forex trading.
Next a student would need to observe the market in action, without necessarily making trades. To do this, an interactive online class is necessary to help you tie in all the information and begin to apply it to live market conditions.
Onsite classes then further reiterate the fundamentals of trading forex and help the student discover a trading strategy that fits his or her personality, financial status and risk tolerance.
Finally, working with a highly skilled forex mentor, again during live market sessions, is critical to help the student understand the psychological part of trading.
These mentors would also help students create an advanced trading system and analyze the market minute by minute.
Most successful traders have spent years developing good trading habits and learning the hard way how to take advantage of currency volatility. We strongly recommend you follow these steps as you begin to investigate investment opportunities in the forex market.