Forex trading today is well known as a lucrative way to make money online. It became an essential part of investors’ portfolio as you can simply make thousands of dollars in minutes trading forex at home. For those who are new to trading, Forex stands for Foreign Exchange Market where it is all about buying and selling the different currencies of the world. Profit is made through the difference between the sale price and the purchase price: you win when you buy low and sell high, while you lose when you buy high and sell low.
Forex is a true 24 hour market. Trading starts each day in Sydney and moves around the world to Tokyo, London and then New York. Unlike any other financial market, investors can respond to fluctuations in the value of money caused by economic, social, and political events as they occur, day or night. The major currencies currently traded are US dollars, Australian dollars, Japanese yen, British pounds, Swiss francs, Canadian dollars, and euros.
In the past, small speculators were not allowed to trade Forex freely like now. The required minimum trade sizes are large and the financial requirements for forex trading are strict. Only large multinational cooperation and banks can fit into the business. In fact, the big international banks are still the main players in the foreign exchange market. Deutsche Bank is one of the leading currency dealers; along with other major banks such as UBS, Citi Group, HSBC, Barclays, JP Morgan Chase, Coldman Sachs, ABN Amro, Morgan Stanley, and Merril Lynch; It is said that these banks are responsible for more than 70% of the transactions in the foreign exchange market. Forex trading is not open to the public until 1998, when large interbank units are cut into smaller pieces and offered to individual traders.
Starting to trade Forex is simple, a funded Forex account and a computer connected to the Internet are more than enough to get started. However, starting to trade and earning in trading is different. Trading Forex is a high risk game and traders should always follow certain principles, listed below are some of the things you should do when trading Forex.
1. Know Before You Trade Forex
As in any trading market, developing your trading skills and knowledge is the first step you need to take. The Forex website http://www.golearnforex.net might be a good place to start for Forex beginners. To further your learning in Forex trading, seminars, workshops, video tutorials, online learning or even books are useful to help us learn from the professional. Learn how to implement technical charts in your trading; learn to use indicators to determine the right time to enter/exit the market; refresh your trading experience with a demo account… all of this is effective in ensuring you get off to a smooth start and will definitely reduce your chances of losing money.
2. Have a business plan
A good trading plan is very necessary no matter if you are a beginner or an expert in Forex trading. Forex market itself is just a vehicle, to go to your desired destination which is to make profit and achieve financial freedom, in our case you have to drive your vehicle with maps and navigations. How much do you want to earn from trading? How much can you afford to lose if things go wrong? What is the amount of capital you are putting up? Answer the questions yourself when you are setting up your trading plan. If you fail to plan, you are in fact planning to fail.
3. Mature mindset and disciplined trading
Trading Forex with discipline is important. Success in forex trading cannot be achieved by simply drawing up the best trading plan. It also depends on the implementation of the business plan. Be disciplined, trade according to your plan and never trade on your emotion no matter if you are losing money or winning. Greed will prevent you from earning profit at a predetermined level; while fear will prevent you from making the good catch in the market.
Without a doubt, Forex is becoming more and more popular. There are no restrictions on the FOREX market. No limited market access, no liquidity issues: after market hours, no commissions, low capital requirements, and no restrictions on short selling. However, the risks in forex trading should not be taken for granted. Since you can always trade on margin, you could lose much more than you can afford if you don’t plan your investment wisely. Seminars, e-books, the Internet, documents and video courses are all you need first before getting involved in the market.