Quick Forex Trading

Anyone interested in making a pile of money from forex should keep in mind the rule of thumb that you should learn how to do it yourself rather than relying exclusively on someone else’s direction. Maintaining your independence will allow you to pick the best and leave the worst of what you learn from others. On the other hand, becoming too dependent upon someone else’s advice will not allow you to do so.

While this rule applies to all forms of investment, it may be particularly important to follow when trading foreign currencies. Forex is the largest market in the world with the equivalent of over 4 trillion U.S. dollars being traded each day. This is far larger than the value of shares traded on the New York Stock Exchange. It is actually larger than the combined value of trades made from all the equity exchanges around the world each day.

So the question becomes, how does one get as large a piece of that 4 trillion dollars as possible? Obviously you need to build your own profitable trading system. There are many such systems for sale but ideally you will make your own out of the best that you can learn from others.

Your system should be as simple as you can possibly make it. Focus on long-term trends, a weekly basis is best, and then look at the daily charts in order to time your entry properly. Another important tip is to use a system which does not require too much of your time. Be realistic about the amount of time you’ll be able to devote on a regular basis to analyzing the Forex market.

If you are debating whether to get involved in currency speculating consider this, we are all already playing the game. If we don’t trade currency we are simply betting that the currency in which we hold our cash in hand, or the cash in our bank accounts, etc will appreciate, or at least not depreciate. Actively trading is just acknowledging that from time to time another nation’s money may be a wiser one to use than our own.

If you do decide to get actively involved, do your homework, things are not always as they may seem. For example, if some economic bad news about a country is widely anticipated, the market may take that into account long before the news is confirmed. By that time the news may have just the opposite effect as traders had already more than compensated for the bad news and the price of the currency may move up as people buy it expecting its economy to rebound.

Some people spend months learning everything they can about trading currencies before ever getting their hands dirty. Here are some tips we like for getting started before your retirement party.

First, start with a demo account. Yes, this is still learning mode but at least you can actually practice what you learn in real time with (pretend) real money. This will let you get used to the trading platform, maybe try out different platforms and start to get a feel for how the market fluctuates. If your broker doesn’t provide a demo account, try Metatrader.

Develop a specialty with a few currency pairs. This way you can focus on what you need to know to become effective at trading a few currencies rather than try to take too big a bite. Soon enough you will get a feel for how these two interact. An example would be the US dollar and British pound. Add another pair too, such as the Yen and the Euro in order to spread your risk, even while you are specializing.

Pay attention to the news and watch how your currency pairs react to it and to each other. There are certain kinds of news that affect currencies more than others. Some news generates volatility. Learn what they are and be careful. You can find schedules of regular announcements online so you can be prepared for these times.

Start small and grow your account. That way you can trade based on your best judgment and not out of a fear either of losing money or losing an opportunity. Save the big risks until you know what you are doing. Forex trading is not going away anytime soon so there’s no need to hurry. Also keep in mind that, unlike the equity market, forex trading is available around the clock.

Just as you should start with a small account, you should also limit the size of each trade. Again, it might be tempting to go all in on what seems like a sure thing but there’s really no such thing as a sure thing and that can be a hard lesson if it leaves you without any money left to trade with.

Keep your emotion in check. This is difficult for the novice, but the sooner you learn this skill the faster you can start trading for real. If you lose a couple, stay calm and focused, don’t get mad and feel you have to get back at the market. If you win, restrain yourself and keep from acting foolishly overconfident. It might be best to take a break after either a big win or a bad spell so you don’t risk making a move based on emotion instead of reason.

Take these tips to heart and you can quickly become a versatile forex trader.