How To Get Started
What is really nice about Forex is that it is possible to get started almost immediately without needing to trade with your own money and without really knowing much about it. To do that you can open what is referred to as a demo Forex account. You will trade using fake money with your demo account and have a lot of learning how to do real trades. Your goals is learning to develop a sustainable track record trading successfully with your fake money. Then once you have done that you can start to trade using real money.
It can be tricky transitioning from fake money over to real money. It’s kind of like learning how to fly using a flight simulator and then attempting to fly a real plane the very first time. Every time you get into the flight simulator you will be improving your skills and your confidence will increase, until you finally get to the point that you feel you are prepared for the real thing. Theoretically speaking, if you are able to really master a flight simulator, then you should have any problems with a real airplane.
Realistically speaking, as you are nearing a real airplane for the very first time, you will most likely be scared and your heart will really be pumping.
Trading Forex for real and flying an airplane for real are quite similar in several ways:
If you trade Forex recklessly you’ll end up losing all of your money. If you fly a plane recklessly you could end up killing yourself.
Forex trading involves entering into a trade, keeping your risk under control and exiting safely. Flying involves taking off, observing safe flying rules, and landing safely.
When it comes to Forex trading, you need to get all three things right to be successful (entry, risk and exit). When it comes to flying an airplane, you need to get all three things right to be successful (takeoff, safety and landing).
The best Forex traders put their safety first always. The best pilots also put safety first always.
There is one key way that trading Forex and flying a plant for real are different.
There are professional training and formal education requirements mandated by the government in order to become a pilot. Due to the professional training and formal education, very few pilots end up crashing and burning. On the other hand, in order to become a Forex trader who trades with real money, there are no professional training or formal education requirements that are mandated by the government. This results in a high number of Forex traders crashing and burning.
Professional Training And Formal Education
Whether you happen to be a weekend recreational pilot who owns a two-seater or aspire to be a jet fighter pilot, you need to have professional training and formal education to ensure your success and safety. If you’d like to be a full-time Forex trader, a part-time Forex trader or would just like to dabble in it every once in a while, you need to get some training and education at least to ensure your success and safety; particularly if you seriously would like to make money off of your Forex trading.
Education Choices – How To Get Started
I recommend that you being with BabyPips.com; it is a free and easy-to-understand guide that teaches beginners how to do trading on the Forex market. You will learn all about Forex trading, the Forex market, fundamental analysis and technical analysis. You will also receive practical advice on how to select a Forex broker to work with and how to open a broker account and get started with Forex trading. Forex For Dummies is a great place to start if you prefer to read a book. Brian Dolan, who is one of the book’s authors, is really brilliant and does a great job laying the basics of Forex out in language that is easy to understand.
As yo start studying the basics, you most likely will start to find the best technical tools that are suited for you. Doing more research on technical tools is a very good idea; three great free sources on more information on fundamentals and technicals are forexactory.com, fxstreet.com and Investopedia.com.
Your broker will provide you with free charting software. The one that I like is netdania.com chart. They offer a free demo version, that I have been using quite happily for the last 5 years. They are quite user friendly.
Technical Tools I Personally Use
I love to trade. For 20 years I worked as a professional Forex bank trader. In 2004 I retired and since then have been trading with my own account. I like trading everything from daily charts to one minute charts. My favorite technical tools are the following:
- Daily low and high
- Bar reversals
- Candlestick patterns
- Gartley patterns
- Fibonacci retracements
- Momentum breakouts
- Range breakouts
- Simple moving averages
You can find lots of free information on the internet regrading all of the available technical tools.
Fundamental Tools I Personally Use
Economic news- housing, retail sales and employment matters
Interest rates- the amount of interest your receive for holding a currency does matter
Central bank talk – what the key money people in different countries are saying and why
Market view- which currencies are being focused on by traders and why
A good free website for tracking all upcoming scheduled important economic news is at forexfactory.com. When it comes to fundamentals, Kathy Lien is great. You can find her daily comments at fx360.com.
Where Do You Start?
If Forex trading is new to you, it will take some time figuring out what your niche is. If you have a full time job, you are going to need to select a specific focus for your Forex trading. I believe it is helpful to have some exposure at least to all of the tools that are available, both fundamental and technical, that work the best for Forex trading before choosing the ones that you like the best. There is plenty of information that can be found for free on the internet.
Consider Training And Formal Education
After you have conducted your independent research, you might decided to try trading Forex by yourself. However, if you can afford it, getting some specialized training or mentoring is a good idea, and thee are great ones that are available to you.
The argument that any trader who is good wouldn’t be teaching does have some merit to it. However, consider this. Good traders effectively manage risk. Trading has both its ups and down. However, getting paid for teaching trading is always a winning trade. So why not do both of these to improve the volatility and slope of your earnings curve?
There are of course many disreputable Forex teachers out there. Some make sure to do your due diligence to find a great one.