Here are some tips to help you make money when you start trading Forex:
There is so much information about Forex trading online that it's easy to see why a new trader might feel confused. Here are some tips for getting started with the Forex market.
First, you need to study. Read everything you can about the basics of the Forex market, starting with these articles and going on to whatever else you can find. Since there is a lot of free information about the Forex market online, you shouldn't need to buy anything right now.
When you understand the information, choose a broker. This choice should be made based on how you want to trade. If you don't have a lot of money, find a broker with a micro account so you don't spend all of your trading budget in the first week.
Make sure there are no hidden costs as well. If you are trading on a small account, it would be, at the very least, inconvenient if a maintenance charge took all of your monthly profit.
When you've found the right broker, sign up for a practise account with them. This gives you access to their live feed, which has up-to-the-second price quotes, charts, and your choice of indicators, as well as his economic calendar and knowledge base.
You'll want to read it, too, since it's all new information. Learn how to use the brokerage's online trading platform while you study. You should be able to open the chart for the currency pair that interests you, add and remove indicators, change the time frame of the chart and the parameters of the indicators, and use the graphic interface to draw trend lines. You should also be able to open market and entry orders, add and change stops and limits, manage a trailing stop, and close a trade quickly if the market moves against you.
Then use any method you want to trade on paper. Choose one currency pair to study in depth. Many people choose the EUR/USD or GBP/USD because their volatility makes them good for trading. But keep in mind that the best times to trade are when the market is open. For the European markets, this is five to seven hours before the U.S., depending on your time zone. Getting up at 3 a.m. to look at charts can get old quickly, especially if you have a job or a family. If so, you might want to work with the USD/JPY, or Japanese yen, since Tokyo's trading hours start when ours do.
Watch the chart of the currency pair you've chosen for the parameters that tell you it's time to trade using your method. Remember to look at the long-term charts first, then the short-term ones. When you think it's right, make the trade.
Know right away that paper trading doesn't give you that "Oh, no!" feeling that you get when real money is at stake. In this way, it isn't realistic, but it will teach you how the Forex market works.
Most of the time, don't stop paper trading until you've reached the number of pips you've set as your goal. This is a very important step. If you stop paper trading too soon, you won't know enough to trade successfully in the "real world" of the Forex market.
When you do put money into your brokerage account and start trading with real money, start small to give yourself time to get used to the extra stress. Don't raise the stakes by adding more lots or moving up to a bigger account until you've figured out how to deal with your emotions and are once again a good trader.
When you feel comfortable with these simpler methods, you can move on to learning about Fibonacci retracements, Bollinger bands, candlestick chart patterns, and the Elliott wave theory.
Congratulations! You've made it!
