Wednesday, December 29, 2010

How to Trade Forex Online

Trading forex (foreign exchange) is highly risky. Due to the leverage available, with very little money down you can have big gains, but also big losses. In addition, there is financial friction, since you are paying fees in the form of the spread. Only highly sophisticated investors should trade forex -- and if you're not sure what you are, then you're probably not highly sophisticated. Whatever you do, don't trade more than you can lose -- because odds are, you will lose everything.

edit Steps

1

Research the best ways to invest. Forex is supposedly the biggest market in the world. It's bigger than the US stock market, because the daily turnover is in the trillions. First understand that you, the retail investor are not going to move the market, the banks trade in multimillions, most retail traders won't be doing so.


  1. 2
    Consult a trusted broker. You need to trade through a broker who will not deal against your trades with human dealers or electronically. Most retail FX brokers take the other side of your trade which causes them to gain from your losses. This is a huge incentive for them to run your stop losses and stall the execution of your trades.
  2. 3
    Understand world currency and its fluctuations. Currencies are traded in pairs. Choose a single pair to learn how to trade and stick to it until you get to know the personality of the pair. The most heavily traded pair is the Euro/USD and the pair that many traders like because of high volatility is the GBP/JPY.
  3. 4
    Get a charting package which allows you to see the current price as it happens and make technical analysis. Almost every broker will give you free charts like the popular Metatrader software.
  4. 5
    Your next Step is to decide which Forex Trading platform to use. For beginners let me say that by Forex Trading, means foreign currency exchange trading. This is nowadays on your home computer. Some people call it the Forex Factory. When I say a platform I mean how your computer screen looks when you will be trading - the current buy and sell prices of the various currency pairs, how the currency pair which you bought or sold is doing (is it gaining or losing), how to keep track of your funds, etc. You can find more details at www.acmforexonline.com [1]
  5. 6
    Learn a system which gives you an indication of when to enter and when to exit trades. Following the markets price action is a popular method that professional traders have been using for over a hundred years before charts, candlesticks, indicators inception. You can find examples of candle price action trading at www.euodootrading.com [2]
  6. 7
    Start using a demo account and not real money. When you are confident and consistently making good trades, and only then, go live. When you go live trade with money you can afford to lose and learn to manage the emotion of risking and losing or gaining money.You can find a small collection of Expert Advisor, and indicators at www.forex-2u.com [3] to use in the demo acount.
  7. 8
    Enroll in a financial education course. You can find free education from most brokers on trading basics and you can find free information on almost any trading style on the internet. Just beware of the source of the information you find. The old saying those who can't do teach is true so find real traders who are really trading. A good place to start is to use social networking apps such as twitter which has become a popular resource where traders share real time trade ideas. Good luck!
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