For those of you who are new to the forex trading market, first you will need to know the meaning of the term “Forex” which stands for Foreign Exchange market. This pertains to the international foreign currency exchange market where the currencies of all countriess are bought and sold. The forex market got started back in the early 70's when floating currencies and free exchange rates were first introduced. At this time, the Forex market traders were the only players on the market to decide upon the value of one type of currency against another, all solely based upon a particular currency’s supply and demand.
The Forex market is very unique for a number of reasons. First of all, this is one of the few markets that require very little trading qualifications and is free from any external control and can not be manipulated in any way. As the largest financial market, with trades reaching up to 1.5 trillion U.S. dollars, or USD, the money moves so fast, it’s impossible for a single investor to substantially affect the price of any major foreign currency. In addition, unlike any stock that is rarely traded, forex traders are able to open and close any positions within seconds, because there are always a number of willing buyers and sellers.
Open a Forex trading account, all you have to do is simply fill out an application and provide all the necessary identification. The application will include a margin agreement will state if the broker will be allowed to intervene with any trade when it appears too risky. This agreement is made to protect the interests of the broker because most trades are done by using the broker’s money. However, once you have established an account, you can fund it and begin trading in the forex market.
Adapt your own Forex trading strategy. There is no one strategy that will work for all the traders, each individual trader will need to develop their own trading strategy to the market. While some traders may relay solely on technical analysis, others may prefer a more fundamental approach, while the more successful traders use a combination of both. Each individual trader will need to learn the best approach for them selves in order to gain a more comprehensive overview of the forex market in order to prepare for any entry and exit points.
Understand that prices move by trends. Forex trading has a popular saying, “The trend is your friend.” there are certain movements that have been studied over many years in order to identify a pattern in the trend. These trends need to be understood in order to understand a good trading strategy. For small accounts that are $25,000 and under, trading with a trend may help improving your odds when compared to bi-directional trading. Most newbie’s will look to trade in any direction, when they should be trading with a trend.
Prior to taking any position, look over the top five Currencies to make sure you’re not missing something. The top five foreign in forex are: USD/Yen, Swiss franc/USD, Euro/Yen, Euro/USD and Pound/USD.
For Forex Trader beginners, it would be safest to have two trading accounts because you learn as you trade. Keep one real account, the one that you will actually use to trade money in realtime; and the second account should be a demo account, one that you can use to test alternative moves in your daily trading. You can easily use your demo account to shadow the trades in your real account so you can widen your stops to see if you are being too conservative or not.
Always examine the daily, four hour and one hour Forex charts that concern your specific trades. Although you can trade at 30 and 15 minute time intervals should you have the experience, but short term trading are reserved for the Forex traders that has been tradong for quite a while.