How to get started: Forex Trading

Posted by forex on August 21st, 2010

Forex trading holds very promising profit making potential, provided you have your strategies straight. It is labeled as one of the most complex market, especially if you have no prior experience in trading.

You will need to take the following steps to start Forex trading:

Finding the right broker: First and foremost, you need to open a trading account with a broker and hence you will need to find a broker. The brokers vary vastly in terms of the brokerage they charge, the minimum allowable amount to get started and also the services provided by them. If you are a complete newbie in Forex market, then you should select a reputed broker with ties with banks or financial institution. Check if the broker in question is providing research reports, real time quotes, charts etc and most importantly if the broker is registered with the Commodity Futures Trading Commission. Also, the broker should be able to offer you tight spread, ?commission? or fees in common parlance.

Opening account: The next step after you?ve finalizing a broker is to open a demo account. A demo account can be called as a practice account. You will have the feel of the market, and you?ll be able to get your trading concepts clarified, without risking a single penny. Also you will get a hang of how the trades are placed, how the software works, etc.

It is strongly advised that the new comers in the market use demo account at least for a month, before plunging in to the market with real money.

Getting started with trading: Once you have had experience with the demo account, you can now start with the real money. But, start small and then slowly go on building your capital. One of the biggest mistakes that most traders make is to have too many open trades. Manage your emotions, as these can be your worst enemy. Don?t hold on with greed, nor do you have to sell due to fear.

Accept Failures: Forex trading is as risky as any other business, and like two sides of the coin, losses are almost inevitable. You are bound to make some losses. However, you can keep your losses in control by maintaining low leverage. Trade only as much as is permissible by the cash balance in your account.

Using Trading Strategies: A successful Forex trader normally uses more than one trading strategies to make profits. Some of the popular trading strategies include Candlestick principles, Fibonacci Series, Kagi Charts. Try to understand these strategies and use them for profitable trading.

The currency rates are affected by macro factors, and therefore it is advisable that you equip yourself with international economic issues. Take one step at a time, if you want a long term successful Forex career.