Thursday, September 4, 2008

How to Begin Forex Trading

Today, there is a whole bunch of noise surfacing, concerning the foreign exchange market, specifically because of the very high leverage that it allows all of the forex traders to trade and because of the fact that the forex market is always open. Even though the forex market has several advantages, it also has a couple of disadvantages as well. The main purpose of this article is to inform you on how you can arrange all of those disadvantages within your favor and really be successful within the forex market.

1) As a forex trader, you only should trade one single currency pair. Within the foreign exchange market, as a forex trader, you are going to have several different currency pairs that you can choose from. You may or may not already be aware of the “Majors” which are the currency pairs that have the lowest spread and the highest volume. The “Majors” are as follows: GBP/USD, USD/JPY, EUR/USD, and USD/CHF. By taking the time to choose one single currency pair, you are increasing your chances of really dominating it. As a forex trader, you should always try to gain all of the experience that you can from one single currency pair. In the event that you don’t know, most of the successful and professional forex traders only trade two currency pairs at the absolute most.

2) As a forex trader, you should trade within larger time frames. It doesn’t matter whether or not you re a beginner, an intermediate, or even an advanced forex trader, you more than likely have already began questioning yourself about the time frames that you should use. One thing you must understand in order to successful choose your time frames is that each and every trader has his or her own personality and his or her own time frame. In order to be success at this, all you need to do is adequate your own personality to the forex market, this is when you are going to be the most profitable.

3) Last, but not least, you need to use extremely good rules for money management. Whether you realize it or not, money management is a wonderful way for you to not only protect your forex trading account but for you to also allow your forex trading account to grow without taking too many different risks. In most cases, you shouldn’t ever risk more than two to five percent of your account within a single trade. When you think about it, you will see that in a situation where you are on a losing trading streak, this is going to protect your account. Whereas, if you are on a winning streak, this is going to allow your trading account to grow but it is going to minimize the risk.

Now that you know the basic of starting forex trading, you should be able to start successfully trading at anytime that you wish. Just make sure that you get some experience practicing with a demo account before you start risking any of your work capital.

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