FOREX Trading Navigation
Are you looking for information on FOREX trading? You've come to the right place, here we discuss: what is FOREX trading, steps to enter the world of FOREX trading, and reviews of online forex trading services and brokers. I created this site because I heard of some disheartening tales of people getting scammed by FOREX trading ebooks that didn't have any useful information or have brokers disappear after depositing money. I have been FOREX trading online since 2001, and it is a thrilling and rewarding experience. Read on to learn more about FOREX trading.
The FOREX in FOREX trading is short for FOReign EXchange, and it refers to the trillion dollars a day market of foreign currency, which includes the US Dollar, Euro, Japanese Yen, British Pound, etc. FOREX trading is the swapping of one currency for the other to make a profit. FOREX trading is similar to trading the stock market in some respects, except that unlike trading stocks, it is possible to make money in FOREX trading even if the rate is falling.* FOREX trading occurs 24 hours a day because at any one point the markets of some country are open, and it is possible to trade them.
In FOREX trading you can either go long ("bet" that the currency will go up) or go short ("bet" that the currency will go down) on any currency pair in FOREX trading. A currency pair is the exchange rate between any two currencies. The most common currency pair in FOREX trading is the US dollar - Euro pair. Its symbol is EUR/USD and is quoted in Euros per one Dollar. So, if you "go long on EUR/USD" that means you are saying that you expect the Euro (EUR) to rise compared to the Dollar (USD), likewise if you "go short on EUR/USD" you are expecting the US dollar (USD) to rise compared to the Euro (EUR). Everything in FOREX trading is relative. What confuses many FOREX trading beginners is this relative nature of FOREX trading. That is why, especially in the begining, it is recommended to stick with one pair for FOREX trading and learn everything about that exchange rate.
In FOREX trading, as in any other trading, the goal is to get into the market in the same direction the market is moving. There are two ways to determine where the market is going: fundamental FOREX trading and technical FOREX trading. Fundamental FOREX trading is an exercise in macro-economics, in other words, looking at the countries fundamentals - the GDP growth, inflation, interest rates - and from that determining where the currency is headed. Fundamental FOREX trading tends to have a longer time horizon. Technical FOREX trading is the usage of charts, moving averages, and other technical indicators to determine where the currency is going. Technical FOREX trading looks at the price movements whereas fundamental FOREX trading looks at the underlying aspects that make the currency move. For now, don't worry about how you will do your FOREX trading, you will make your decision to be a fundamental, technical, or hybrid trader in time and with experience in FOREX trading.
Some beginners have problems with the inexactness of FOREX trading. In the near future (if you haven't already) you will find that many self-proclaimed gurus give contratictory advice on FOREX trading. This is because FOREX trading, like the soft sciences, is not an exact science. FOREX trading is not like Newtonian physics in which you know that force will always be equal to the mass times the acceleration. FOREX trading has no immutable laws (the closest to an immutable law would be cut your losses short and let your profits run). Some people are also intimidated by FOREX trading because unlike stocks, in which you consider only one company or industy, FOREX trading is about the economies of countries. In FOREX trading it also becomes essential to pay attention to the politics of the region that you are trading. No doubt, it takes some practice to juggle all the various aspects, but with time everything becomes second nature in FOREX trading.
The reason that people, once they grasp FOREX trading, are wildly successful is because of the peculiar way that FOREX trading moves. The thing is that in FOREX trading, currencies tend to trend. In other words once they start moving in one direction, they keep moving in that same direction, building up momentum. A survey of professional FOREX traders was carried out last year that found that about 80% of FOREX traders are trend traders. In other words, while FOREX trading the traders look for when currency seems ready to break out into a trend and they jump on. They can discover the trend in one of the two ways mentioned above (fundamental and technical). Again, don't worry if you don't understand everything or it seems a bit overwhelming, it gets easier, I promise. Read the next section to see a step by step procedure of entering the world of FOREX trading.
* For the record, it is possible to make money on falling stocks by what is known as "shorting a stock" but in practice few retail traders do this and it tends to be riskier than normal buying of stock, whereas in FOREX trading it common practice to short a pair.
The first step to starting FOREX trading would be to gather all the information you can. However, I feel that if you have traded stocks before and read the previous section, What is FOREX Trading, I think you should be ready to jump in. If you still feel you want more information, then there are FOREX trading trainings and books reviewed in the next section you can take a look at. FOREX trading is a lot like riding a bicycle, you can read about it all day, but it won't bring you any closer to being able to do it, you have to get on, maybe fall off a couple times to really learn how to ride a bicycle or how to do FOREX trading.
The second step to begin FOREX trading is to find a broker. Even if you wish to first collect information on FOREX trading, it would be advisable to get a brokerage account so that you can understand what exactly is being talked about. To do effective FOREX trading it is very important to be comfortable with your FOREX trading broker's interface and software. FOREX trading at its best is complex and at its worst is confusing, you don't need a confusing FOREX trading software to make it harder.
The third step is of course to begin FOREX trading. Most traders advise beginners to start with game or demo FOREX trading accounts. However I have seen that most brokers do not give equal resources and systems to their real money customers and simulation customers. Its best to put in some minimum amount of real money for FOREX trading so that you take it seriously from the get go. Read on for reviews of FOREX trading trainings and brokers.
FOREX Trading Trainings
Peter Bain - Peter Bain is one of the better known FOREX Trading gurus. He has good material and is well known for his Pivot Point FOREX trading system which essentially calculates certain points at which a trader should enter the market. For people who have some trading experience (in stocks or whatever) Bain is a good choice for learning FOREX trading.
FOREX Trading Brokers
Easy-Forex - Easy Forex is a great FOREX trading broker for complete beginners. They have great support for people who are having trouble with using their system (which is simpler than most brokerage interfaces). You can call them and get hold of a live person. At Easy Forex you have a personal Account Service Manager that you can communcate with for any difficulties. All this makes Easy Forex a good place for unsure novices begining FOREX trading. They also have various live trainings, guided tours, seminars, etc that may be useful for learning FOREX trading.
Forex Yard - Forex Yard is a professional FOREX trading broker. Their interface is sophisticated and meant for someone who has at least some experience trading online (be it stocks, bonds, etc). Forex Yard provides some immensely useful FOREX trading reports that will not only help you trade but also help a newbie to understand how analysts and professionals view the market. Forex Yard should be your FOREX trading broker if you feel confident online and if you want to start off faster than you peers on a polished system. Forex Yard provides a free Forex Trading Course for quick start for newbies.
The Fear of Losing Money
One of the biggest problems I have seen that beginers have with FOREX trading is that they are afraid to lose money. This fear, will kill you in FOREX trading. The best players in FOREX trading lose money all the time. Don't worry about losing money in FOREX trading, just make sure to make back more than you lose. A book by a professional FOREX trader, Nassim Taleb, mentions that even the best lose money majority of the time in FOREX trading. It is just that their one or two super trades are so good that they wipe out all the losses.
The emotions are necessairy for making decisions, however in FOREX trading it is important to know when the decision is based on fear or on greed rather than on logic. FOREX trading is not for the emotionally weak, the ups and downs can wear out even seasoned FOREX trading veterans.
Trade & Account Management
A much overlooked, but important, area in FOREX trading is trade management. Trade management is an integral part of FOREX trading and can be divided into two parts: before trade management and open position management. Before trade management in FOREX trading is the management before the actual trade takes place. Deciding on how much to invest, the stop loss, and take profit settings are all a part of before trade management in FOREX trading. Open position management in FOREX trading is the management of the trade once in the market. When to exit the trade and when to add to a position are all a part of open position management in FOREX trading.
Account management in FOREX trading is the overall management of the balance, what percentage to risk per trade, and how much leverage to use. Both trade and account management are critical to success in FOREX trading. Unfortunately, most beginners don't focus on these rather mundane parts of FOREX trading.