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Forex
Trading Tips for the Newbie
For those of you who are new to the forex
market, or even for those of you who are considering becoming
a forex market trader, this article is for you. Welcome
to forex 101, where you will learn exactly who forex is and what
it does. Also for the forex newbie’s, you will find a list
of six trading tips that will help you in your transactions.
For those of you who are new to the forex trading market,
first you will need to know the meaning of the term “forex”
which stands for FOReign EXchange market. This pertains to
the international foreign currency exchange market where currencies
of all kinds are bought and sold. The forex market got its
start back in the early 1970's when floating currencies and
free exchange rates were first introduced. At this time, the
forex market traders were the only players on the market to
decide upon the value of one type of currency against another,
all solely based upon a particular currency’s supply and demand.
The forex market is very unique for a number of reasons. First
of all, this is one of the few markets that require very little
trading qualifications and is free from any external control
and can not be manipulated in any way. As the largest financial
market, with trades reaching up to 1.5 trillion U.S. dollars,
or USD, the money moves so fast, it’s impossible for a single
investor to substantially affect the price of any major foreign
currency. In addition, unlike any stock that is rarely traded,
forex traders are able to open and close any positions within
seconds, because there are always a number of willing buyers
and sellers.
1.
To open a forex account, all you have to do is simply fill
out an application and provide all the necessary identification.
The application will include a margin agreement will state
if the broker will be allowed to intervene with any trade when
it appears too risky. This agreement is made to protect the
interests of the broker because most trades are done by using
the broker’s money. However, once you have established an account,
you can fund it and begin trading in the forex market.
2.
In order to become a successful trader, you will need to
adapt your own trading strategy. There is no one strategy that
will work for all the traders, each individual trader will
need to develop their own approach to the market. While some
traders may relay solely on technical analysis, others may
prefer a more fundamental approach, while the more successful
traders use a combination of both. Each individual trader will
need to learn the best approach for them selves in order to
gain a more comprehensive overview of the forex market in order
to prepare for any entry and exit points.
3.
Understand that prices move by trends. Forex has a popular
saying, “The trend is your friend.” there are certain movements
that have been studied over many years in order to identify
a pattern in the trend. These trends need to be understood
in order to understand a good trading strategy. For small accounts
that are $25,000 and under, trading with a trend may help improving
your odds when compared to bi-directional trading. Most newbie’s
will look to trade in any direction, when they should be trading
with a trend.
4.
Before you take any position, look over the top five currencies
to make sure you’re not missing something. The top five foreign
in forex are: USD/Yen, Swiss franc/USD, Euro/Yen, Euro/USD
and Pound/USD.
5.
For newbie’s, it would be safest to have two accounts because
you learn as you play the trading game. Keep one real account,
one that you will actually use to trade real money; and the
second account should be a demo, one that you can use to test
alternative moves in the trading game. You can easily use your
demo account to shadow the trades in your real account so you
can widen your stops to see if you are being too conservative
or not.
6.
Always examine the one hour, four hour and daily charts
that concern your trades. Although you can trade at 15 and
30 minute time intervals, doing so requires a handful of dexterity.
# # # # # SolveYourProblem.com : 2007
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