Forex, Foreign Exchange, is the term used to describe the buying and selling of foreign currencies. This market is by far the busiest but also one of the fastest changing and volatile. For this reason, you can win big in a short amount of time but if your luck is on the other side, you can also lose big amounts of money in a matter of seconds. Forex markets are also changing and moving which is why it is so attractive to traders and many try to spot different trends over an amount of days, weeks and even sometimes months and years.
Things To Know Before Trading
Of course, experience will be a key factor when looking at pricing trends and anticipating a change but if you are just getting started, there are some key points to look out for.
- You should read up on major economic reports as this will allow you to know every major economy inside out and will save you from a potentially poor decision
- You should also control your expectations as the actual outcome may be completely different. If you are in to gain some money, do not hold on because ‘it is going to go up some more’ as the market doesn’t work like this
- Be aware of regulation changes in different areas including a change in the rate of interest as well as structural developments
Create A Trading Plan
Making a plan and then sticking to the said plan is vital in the bustling forex market. The biggest thing to remember is discipline; know where you want to enter and exit before even starting a trade. You also want to decide on a stop-loss order, a point at which you remove yourself, as this will help to prevent too many damaging losses and also protect profits. Finally, be patient as currencies change often and too many rash decisions will lead to damaging results; wait until the market is ready for your strategy to work.
How Do I Trade?
If you are seriously interested in entering the forex market and have done some research, you are aware of how many brokerage firms are available. You need to ask some key questions before choosing a broker:
Is the broker regulated? – Every good broker should be regulated by an agency; for example, the National Futures Association (NFA) regulates firms in the US.
Do they offer sufficient customer support? – Foreign exchange doesn’t stop for anybody so you need to be able to potentially contact someone at any point if a problem arises.
How are orders filled? – Will your broker realise your stop loss order and sell at that point? Will they only sell at the given price or do they have leeway in the interest of the client (you)?
What do they charge? – Many companies vary in the commission which is called the spread that they take for each deal and so this is something that needs to be considered when choosing a broker as you need to factor in all costs.
What resources are offered? – Some companies may offer live commentary of the market in addition to mobile trading and other useful tools whereas others may not. I personally stay in tune with Bloomberg, DailyFX and Forex Factory to keep up with news.
The foreign exchange market can be a dangerous one but with a sensible head and some good help, it can be a highly lucrative one so it pays to do as much research as possible before beginning!
If you’re seriously contemplating becoming a trader you should find a good course before you do. I’ve tried about a half a dozen or so. But one course really helped me advance my thought process and approach which I wish I learned years ago. I could have saved myself a lot of investment funds.
The name of the course is Asia Forex Mentor. The creator of this course is Ezekiel Chew. He’s been a full time forex trader since 1998. He offers an online course that you will appreciate if you decide to go through. Even if you’re an experienced trader you will still come out with something from this course.
I recently used his strategies for a 34.86% increase in less than 7 days. Started with $350 in the account. As you can see in the screen shot now I’m at $465.46. Not bad at all.