Introduction
Foreign Exchange Trading is often referred to as FOREX or FX Trading, it is simply selling and buying of international currencies. Foreign Exchange Market or Global Forex Market is a generic term for worldwide institutions that exist to exchange or trade currencies. The FX market is an "over the counter" (OTC) market, this means that there is no central exchange and clearing house where orders are matched. Forex dealers around the world are linked to each other via telephone, computer and fax, creating one cohesive market. Spot currency trading as it is also called, is the most popular forex instrument around the world. It is estimated that spot forex trading generates about $1.6 trillion a day in volume, which makes it the biggest, fastest growing and the most liquid financial market in the world. Compare that to futures $437 billion and equities $191 billion. The participants are central and commercial banks, corporations, institutional investors, hedge funds, and individuals like you.
The FOREX market is unique for a number of reasons compare to stocks and future market. For instance, exclusively high trade turnover - It is the largest liquid financial market with trading reaching about 1.6 trillion US dollars daily, the market is open for 24 hours a day from Monday 00:00 GMT to Friday at 10:00 pm GMT (This equates to late Sunday afternoon through Friday afternoon in the U.S.), accessibility to all individual and corporative traders, you can participate with relatively low capital, high leverage, you can gain in both bullish and bearish direction of the market, exclusively high potential profitability; just like stocks and future trading, Forex is essentially risk - bearing one but with adequate risk management, risk to the bearest minimum is possible; entry and exit of the market is with no constraint and relatively no or low transaction costs depending on broker.
Forex traders can actually be successful and make it big in the market. Why new trader fails can be related to the six major obstacles namely: Poor Skills, Setting unrealistic targets and goals, Lack of Patience, Lack of discipline, Lack of adequate capital, High risk aversion. By the list, it shows that failure is as a result of trading without having in place a proper Trading System and a Trading Plan– One that includes mind training, quality Forex education and strategies and sound money management rules.Foreign Exchange Trading is often referred to as FOREX or FX Trading, it is simply selling and buying of international currencies. Foreign Exchange Market or Global Forex Market is a generic term for worldwide institutions that exist to exchange or trade currencies. The FX market is an "over the counter" (OTC) market, this means that there is no central exchange and clearing house where orders are matched. Forex dealers around the world are linked to each other via telephone, computer and fax, creating one cohesive market. Spot currency trading as it is also called, is the most popular forex instrument around the world. It is estimated that spot forex trading generates about $1.6 trillion a day in volume, which makes it the biggest, fastest growing and the most liquid financial market in the world. Compare that to futures $437 billion and equities $191 billion. The participants are central and commercial banks, corporations, institutional investors, hedge funds, and individuals like you.
The FOREX market is unique for a number of reasons compare to stocks and future market. For instance, exclusively high trade turnover - It is the largest liquid financial market with trading reaching about 1.6 trillion US dollars daily, the market is open for 24 hours a day from Monday 00:00 GMT to Friday at 10:00 pm GMT (This equates to late Sunday afternoon through Friday afternoon in the U.S.), accessibility to all individual and corporative traders, you can participate with relatively low capital, high leverage, you can gain in both bullish and bearish direction of the market, exclusively high potential profitability; just like stocks and future trading, Forex is essentially risk - bearing one but with adequate risk management, risk to the bearest minimum is possible; entry and exit of the market is with no constraint and relatively no or low transaction costs depending on broker.
So what are the Characteristics of a Successful Trader? Namely: adequate trading knowledge and understanding, seeking services of good quality mentors and a trading coach, adequate capitalisation – Don’t be fooled that you can earn thousands every week from a starting capital of $200, realistic Goals – don’t expect 100% profit each month, it simply is not possible, have patience – don’t trade if you don’t have to. You should wait for a set-up according to your trading plan and system, have Discipline to follow your rules, understanding and Managing Risk, and lastly the most important is having a Trading System and a Trading Plan. If you look at the advice from the world’s most successful traders today, you will notice that they follow the guidelines as identified above.
An important role in the process of the preparation for trading Forex belongs to the FX demo-trading (that is to trade using a demo-account with some virtual money), see www.fxcm.com, which allows to testify all the theoretical knowledge and to obtain a required minimum of the trade experience not being subjected to a material damage.
A good quality charting package, I use the eSignal and would highly recommend this package to any readers. In my long experience of Trading, I have read many books on trading and technical analysis. I have come across very few books, which focus on the importance of trading plans and trading systems and assisting their readers in creating such a system. This is precisely why I am trying to assist you in creating your own killer trading system, having a trading plan, and finally a follow-up service.
Most successful traders develop an investment system, and with repeated use, perfect it over time. Some people focus on one calculation or study; others may utilize a broad range of analysis tools to determine their investments. Most experts suggest using a combination of both Fundamental and Technical analysis. It is the individual investor, however, who must decide what fits and works best for him or her. This is usually accomplished through trial and error.
Here are several suggestions to consider as you get started in the FOREX market:
(1) Open a demo account and paper trade until you are comfortable and confident that you can make a consistent profit. In other words, isolate your learning mistakes to the time in which they won’t cost you.
(2) Trade without emotion. Don't keep mental stop-loss points. Always set your stop-loss and take-profit points to execute automatically and don't change them unless it’s absolutely necessary. Make your decisions and stick with them.
(3) Stay with the trend; if you go against it, make sure you have a very good reason. Movements in the FOREX market tend to be in trends more than anything else; you therefore have a higher chance of success in trading with the trend.
