If you find the foreign currency exchange markets a tempting venue for your investments, you’re in good company. More and more people are discovering how lucrative Forex trading can be every day.
Of course, there are also some who are finding out how easy it is to lose money in the Forex markets! If you’d like to be one of the former instead of one of the later, here are some great suggestions to keep in mind.
In order to give yourself a solid grounding in universal Forex principles, the place you want to start is with a single pair of currencies. There are dozens of currency pairs in common circulation on the Forex markets that offer plenty of trading volume. Resist the urge to dabble! Pick one pair and stick with it while you learn the basics.
The best pair to pick is probably one of the most heavily traded. Don’t be scared of high trade volume; you actually want to work with a pair that experiences a lot of activity. This will give you a good grasp of the pace of active trading and also allow you to watch the market change rapidly.
Pairs that consistently feature lots of trading include US Dollar / Euro, US Dollar / Japanese Yen, and US Dollar / Great Britain Pound. (The last of these is so old and reliable that it even has a special name – The Cable – derived from the 19th-century currency trading enabled by the Transatlantic Cable.)
While observation and test-trading is essential to cultivating your trading skills and instincts, don’t neglect the value of study and research. Forex is a topic that generates copious interest in the press and on the Internet. Start reading up on the subject in general and on your chosen currency pair in particular. Learn how your pair reacts to financial developments and other events.
The best way to start trading is by using a demo account. This is a free trading account that works just like a real one, but it doesn’t require you to risk any money. (You can’t make any either, of course!) Get the most out of your demo account experience by taking it seriously. Don’t trade on a whim; have a rational justification for each position that you open.
As you learn the ropes of trading, don’t neglect your broker as a source of advice and education. Because there’s been such an explosion of interest in Forex trading in the past few years, brokers are used to dealing with novice traders. They often make useful general advice available free of charge. Your particular brokerage may also offer tutorial programs for a fee. If you pay close attention, these instructional courses can often be well worth your money.
Finally, view the goal of your initial Forex trading adventures as the development of your trading intuition. Although your trades should always be rational, justified, and logical, you also need to place them with speed and confidence.
Don’t expect to acquire this skill overnight, but work towards it gradually. Keep an eye on your trading results and honestly assess how your intuition is coming along. Eventually, making smart trading decisions can become second nature.
The Forex markets are immensely complex institutions. If you want to get involved with them and come away with a profit, you’ll need to learn a great deal. Don’t worry; it’s quite possible to cultivate a strong set of trading skills no matter how much (or how little) Forex know-how you start off with. The tips you’ve just reviewed should get you off to an excellent start!