Before recently, the forex market, also called the foreign exchange market, wasn't for the average trader or speculator. Due to the large minimum transaction sizes and often strict financial requirements, the main participants were banks, hedge funds, major currency dealers, and the occasional wealthy individual speculator. These big traders were able to take advantage of the forex market's many advantages over other markets, such as its great liquidity and the way the world's main currency exchange rates move in strong trends.
Thanks to new laws written in the late 1990s, forex brokerages are now open to anyone who wants to trade currencies for profit. In fact, many brokers let traders open accounts with as little as $250 in them and start trading currencies.
All of these new ways to trade currencies have, unfortunately, given the forex a lot of buzz. Some of this hype is about "magic" trading formulas, "easy" indicators, and experts who can tell you what the next trend will be. There are now a lot of currency brokerages that try to get people to sign up and start trading right away. People are starting to think that currency trading is more of a scam than anything else. We disagree strongly with this idea and are sure that the forex market has a lot to offer investors. But before you take your paycheck and head to the nearest brokerage to open a forex account, we'd like to give you a few important tips before you start trading currencies.
First, you can find information, terms, trading strategies, and more on thousands of websites. As you start to learn about what the forex is, we suggest that you look into a few of them. Brokers will often give you information about the forex, but keep in mind that they also want you to open an account with them. Aside from brokerage sites, there are several informational sites and a few forex education companies that offer good information without the pressure to sign up for a "live" trading account.
Second, you should read books. Most professional forex traders use a combination of Japanese candlestick charts and other complicated indicators to figure out where a currency pair is headed. Find books about trading based on technical analysis, candlestick charts, and other indicators of method. Remember that buying currency is like buying shares in a country or nation. Find out about the economic news, interest reports, and job indicators of different countries. These are very important factors that help show the direction of a currency.
Now might be a good time to open a demo account with the broker of your choice. This will help you learn how to use basic charts and trading platforms. "Demo trades" are a good way to get started. Even if you do some basic research, you'll still feel like you're "flying by the seat of your pants" when you make trades. At this disappointing point in your new career as a forex trader, you realise it's time to take a training course.
There are a lot of Forex training courses available now. They can be seminars, home study courses, interactive online courses, or education in the classroom. One forex training course, Fxcenter.com, has found that the best education courses use all of these ways to teach. They think that at least 20 hours of home study should be part of a programme to teach the basics of forex trading. The next step for a student would be to watch how the market works, but not necessarily make any trades. To do this, you need an interactive online class that will help you put all the information together and start to use it in the real market. Then, in-person classes go over the basics of forex trading again and help the student find a trading strategy that fits his or her personality, financial situation, and willingness to take risks. Lastly, the student needs to work with a highly skilled forex mentor during live market sessions to help them understand the mental side of trading. These mentors would also help students make an advanced trading system and analyse the market minute by minute.
Most successful traders have spent years building up good trading habits and learning the hard way how to use currency fluctuations to their advantage. We strongly suggest that you follow these steps as you start to look into the forex market as a place to invest.
