Six Forex Trading Tips for Newbies
By: Gerald Njuguna
You have decided to be a trader in the forex market, and you have no idea on how to start. Let us first start by defining what the forex market is and what it does.
The expression forex, also referred to as the foreign market is a market for the sale and purchase of all kinds of currencies. It grew out of the early 1970's when floating currencies and free exchange rates were introduced. At this time, the forex market traders would be the people who place the value of one type of currency against another.
Now, the market forces determine the value of a currency against another. One unique facet of the Forex market is that hardly any trading qualifiions are required of anyone intending to exchange there.
Independence from external control ensures that only the market forces influence the currency prices. As the largest financial market, with transactions reaching up to 1.5 trillion U.S. dollars, or USD, the currency moves so quickly, it's impossible for one investor to substantially impact the price of any major foreign currency.
Additionally, unlike any stock that is rarely traded, forex traders are able to open and shut any positions within minutes, because there are invariably a number of willing buyers and sellers.
1. The very first thing you have to do is open a forex account. You will have to fill an appliion form which includes a margin agreement saying if the broker is going to be permitted to intervene at any trade the moment it appears too risky. Because most transactions are done using the broker's money, it is only logical that he protect his interests. However, once you have established an account, you can finance it and start trading in the forex market.
2. Adopt a trading egy, that has turned out to be effective for you. Bear in mind that egies will work differently for different traders, and thus don't try to embrace a egy that works nicely for a different trader. It may backfire. Both accessible egies are either technical analysis or fundamental analysis. A combination of both is a more favored choice for experienced traders.
3. Understand that prices move by trends. Forex has a popular saying, ”The trend is your friend” There are particular movements that have been studied over several years in order to identify a pattern in the fashion. These trends will need to be understood in order to understand a fantastic trading egy. For smaller accounts that are $25,000 and under, trading using a tendency may help improving your odds when compared to bi-directional trading. Many newbie's will look to trade in any direction, when they should be trading with a fad.
4. Make sure you know which are the top five currencies pairs from the forex market. These are USD/Yen, Swiss franc/USD, Euro/Yen, Euro/USD and Pound/USD.
5. For newbies, it is a good idea to maintain two accounts to ensure you learn how to play the trading game. Maintain one genuine account, one that you will actually use to exchange real money; and the next account should be a demonion, one that you can use to test alternative moves from the trading game. It is simple to use your demo account to shadow the transactions on your actual account so that you can widen your stops to see if you are being overly conservative or not.
6. Always examine the one hour four hour and daily charts that concern your own transactions. Although you can exchange at 15 and 30 minute time intervals, doing so takes a couple of dexterity.
Source:http://newbies4rex.blogspot.com/