Learn Forex Trading – How to Start, What to Know

April 2, 2013 by  
Filed under Automated Forex Trading

forex trading

The forex market is the world’s largest financial market. Every day, almost four trillion dollars are traded around the world. One of the reasons for the rapid growth of this dynamic market is the development of online trading. Online trading caused a massive dissemination of forex trading around the world. Now forex trading is available everywhere. This availability has only increased the chances of profit because of the massive amount of currency that has been inserted into the market. In order to start online trading forex, there are four basic steps one must take.

Step One – Research

The first step before opening an actual account is to research the websites that offer them. Here is a list of the major elements you should investigate before going ahead and opening an account:

• What type of trader do you plan on being? Once you know the answer to that question, you know what to look for in an appropriate online trading site.• Commissions and fees – Commissions and fees are unavoidable, however, based on the type of trading you plan on doing you should look for the type of broker that will be cost effective.• Minimum account size – As mentioned before, based on the type of trading you plan on doing, make sure you’re not going to be below the minimum account size of the given firm.• Free goodies – If the site offers free stuff, take advantage of it. Some of the free things offered by websites are quite helpful in actual trading.• Security – This is probably the most important thing to look for. Make sure the website is legitimate, encoded, and secure.

Step Two – Learn Forex

The second step is learning about forex. Many website offer tutorials and literature that will help you acclimate to the world of forex and become familiar with its systems and terminology. There are at least three basic things you should familiarize yourself with before you actually start trading:• Forex fundaments – You’ll need to learn about currency pairs, spot trading, forward trading, macroeconomic factors that affect forex, and market psychology.• Analyzing charts – A large part of forex trading is knowing how to read the charts. You’ll learn about Candlestick formations, relative strength index, stochastic oscillator, rate of change indicator, directional movement indicator, parabolic “Stop and Reverse” indicator, and moving averages.• Starting market – You’ll probably want to start trading in a specific market, and it behooves you to become familiar with the relevant factors influencing that market (financial institutions, commodities, exports, etc…).

Step Three – Download

The third step is to download online trading software. Online trading software is essentially a program that will enable you to track and trade via your computer. The three main features you should expect to use are:• Charting – The program will automatically chart the currency pairs via live feed from the internet. Additionally, many programs also include functions that automatically track market trends using the chart analysis calculations mentioned above.• Trading – You can actively trade real-time, or you give the computer orders to trade if a currency pair reaches a certain value.• Accounting – The program will provide you with an up-to-date break down of your account’s status, balance, available equity, and open positions. Additionally, the program will provide you with a detailed account history with which you can review prior trades and learn to improve.

Step Four – Open a Trial/Mini Forex Account

The fourth step is to open a trial account or a mini forex account. Each one has their advantages and disadvantages. The advantage of a trial account is that you don’t have to worry about loosing any money, which is especially good if you’re new and inexperienced. The disadvantage is that since you’re not actually making or loosing any money, the chance that you will really care about what happens to the account are slim. A mini forex account is a reduced-risk account in which you trade real money, but the minimum lot size is significantly lower. The advantage is that you get the feel for the real trading experience. The disadvantage is that you can actually loose real money if you don’t know what you’re doing.

The next step is to apply the previous four in a real trading environment by opening a real account. Remember everything you learned from the best forex brokers, watch the market, analyze the charts, and start trading..

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