It is oftensaid that there is a beginning to all things, and then an ending, and then you start all over again. Being a “Beginner” at something is the nature of life, but when the activity involves money, common sense tells us to be wary and cautious or we may soon lose what money we have. This common sense axiom is especially true in the world of forex trading. Trading currencies has gained tremendous popularity in the past five years, but this popularity has done nothing to reduce the risks that accompany this highly complex investment vehicle. Inexperience and impatience have quickly destroyed many a newcomer to this popular activity.
The allure of forex trading is its apparent flexibility. You can trade almost anytime and from anywhere as long as you can access the Internet. The sophistication of trading software is astounding and masks to some extent the real risks of retail forex trading. Beginners must accept their amateur status and seek out professionals to mentor their progress. A trading regimen is no place to learn by “hit and miss” or “trial and error”.
At the start, immerse yourself in research about the craft. The objective is to gain enough knowledge so that later training lessons will seem familiar, and your mind will be more receptive to understanding and retaining the information. Knowledge is key before moving onto the next step in the process. Your mentor will guide you through fundamental and technical analysis, trading platforms, risk management, fraud prevention, forex broker selection, trading strategy and psychology, and basic money management techniques for prudently handling your own account and investments.
Use these to assist in choosing a domestic forex broker. Many overseas brokers may tempt you with their offers, but local regulators do not favor trading from offshore, nor do you want the potential problems of attempting to exercise legal rights overseas, a nightmare waiting to happen. Your chosen broker will most likely supply you with his preferred trading software or allow you to interface with your own. Be sure to read your agreement closely, as there may be exceptions or obligations that you will want to be aware of when you actually begin trading. There will also be Help screens and more tutorials to enhance your effort.
Is it now time to start trading? NO, with emphasis on both letters! Experience is your next objective, and the only way to gain it without losing your capital is with a forex trading demo account. Your broker will also provide this system for you with an account of “virtual” cash that you can trade at will using real time quotes and his trading platform. Experts in forex trading have claimed to have spent months refining their trading strategy and gaining the confidence and consistency necessary for real-time trading. Invest the time if you want to succeed, but be aware that there are no actual guarantees that past performance or historical data indicates future events or results.
Having a detailed trading plan is paramount to blocking emotional intervention during your trading experience. Knowledge and experience are key factors for success, but controlling one’s emotions is, perhaps, more important in the long run. Your mind can play tricks with you if allowed, undermining even the most secure decision-making process. The stress of having real money on the line and having to respond decisively to a rapidly changing marketplace can easily overwhelm the unprepared. Practice your trading plan until it can be repeated as if it were an ingrained habit.
Forex trading is high risk. Knowledge, experience and emotional control can create a platform for ultimate success.
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I tested momentum on the GBPUSD. Basically, I wanted to know if entering in the direction of a big movement signalled by a close x number of pips above or below the previous day’s high or low produced a statistical edge. On the cable it certainly seems to, but not so on some of the other pairs or on stock market indices.
Nice site by the way.