By Cedric Welsch
It is tempting to jump right into the foreign exchange market as soon as you learn a couple things about it; but that is not a good idea. Even though it appears simple at the onset, trading currencies can be complex. It requires some skills to keep from losing your entire account.
The things you should learn about Forex include how to read charts, how to understand fundamentals, and how to place trades.
Learn How to Read Charts
The best thing you can do for yourself is find a broker that provides demo trading accounts. That way you can practice before you ever put your money into a live account. If you cannot successfully trade in the practice account, you are not ready to put your money at risk.
When you get your practice account, you will be able to download software that shows you all of the currency pairs on charts. You can see how they are performing in several time frames: minutes, five minutes, hourly, daily, weekly and monthly. You can also set up your own time frame in most Forex trading software.
These charts will come with tools to help you determine the potential direction of market: trend lines, support and resistance lines, Stochastics, MACD and many others of which you should be aware before you risk any money in real time.
Understand the Fundamentals
Fundamentals is a term used for what moves the market. Fundamentals are things like job reports, economic reports and inflation reports. The Forex markets respond to these reports, and if you do not have an idea of how the markets might act after a report comes out, you will probably lose money.
You do not have to be an economics professor to understand the fundamentals reports. Just read the news, particularly that found on trading sites, to get familiar with what they mean. The first rule of thumb is, if you do not understand the news, do not trade during that time.
How to Place Trades
By using the demo account, you will get accustomed to placing trades. It is important that you have this down because if you need to make a trade in a hurry and you are trying to figure out how to do it, you may lose money. Things you need to know include how to get in and out of the market, place stop losses and place profit stops. Learn Forex the easy way: before you trade; not while you are in it real time.
About the Author
What would a very effective forex trading tactic bring to your fx trading business instantly? Every type offorex trading strategy that is introduced must be scrutinized really well.
