Simplicity - Always keep your trading systems simple. Too many information at one time on your trading screen could confuse and delay your decision to trade
Broker - A lot of FOREX brokers are in business only to make money from yours. Read forums, blogs and chats around the net to get an unbiased opinion before you choose your broker.
Sample the Environment - It is important to remember that many registered and online trading agents have fictitious platforms which mirror the real-time, live platform clients register and trade on. It is not only advisable, but it is also actively encouraged to initially open a ‘dummy’ account where fictitious forex trades can be undertaken that closely reflect what real trades may be like when they are eventually undertaken. Such platforms are designed to give those that are new to forex a feel and an idea what real trades on live markets will be like when the decision is made to begin trading.
Buy low, Sell high - Forex trading does not involve the physical purchase of the currencies, but rather involves contracts for amount and exchange rate of currency pairs. The potential for profit comes from the fluctuations in the currency exchange market. Regular daily fluctuations in the value of one currency against another give a clear advantage over conventional stock market equities and instruments. See Trading Illustration Only
Manage Losing Positions - Trades will sometimes inevitably on occasion go against you. It is important to accept them as an inherent part of trading. Cut your losses and move on having learnt from any mistakes made. Always remember however that you will not be able to trade without losing some positions. It is important to manage these well.
Patience - Do not over-trade your account. Good money management practice is important and will help with profitability. This will go a long way in helping you develop a strategy which fits with your personal trading capital. Operate a trailing stop loss policy say 15 to 20 pips behind the trade. Minimise your good trades as long as you are confident.
Flexible Mindset - Don’t set yourself false targets and expectations. Experts will tell you trading is not an exact science and setting oneself unattainable targets will only lead to frustration and feeling of failure when these targets are not met. Always maintain an open mind. The market is a constantly changing environment tunes your mindset to understand this.
And lastly but definitely not least, it is most important for all market participants to remember that unique experiences and past performances do not guarantee future results. Trading results can vary in any combination of circumstances. If you do not have extra capital that you can afford to lose, you should not trade in the foreign exchange market.
Invest wisely and take advantage of the resources and technology available to you in the market Join in and take your share!
Foreign Exchange Market (FOREX) is the arena where a nation’s currency is exchanged for that of another at a mutually agreed rate. All currencies are traded in pairs, and each is assigned with an abbreviation. (E.g: USD = United States Dollar, GBP = Great British Pound). Exchange rate fluctuations are usually caused by actual monetary flows as well as anticipations on global economic situations. Profits and losses are dependent on the fluctuations in the exchange rate between the two currencies.
In today’s volatile money market environment the traditional forms of investing are rightfully inviting more scrutiny and caution. The New Year has brought with it an impending sense of tough times to come. The FTSE 100 dropped below 6000 points for the first time in almost two years, a performance that was mirrored by Dow Jones, Hang Seng and other major indices around the world. Now more than ever investors are focusing on alternative avenues to channel those hard earned funds.
It may be difficult to imagine that there is market that is not only growing, but is also renowned for its flexibility and liquidity. Forex is flexible in the sense that it has no central trading location or exchange with traders, sellers and buyers in the traditional sense; most of the trading is conducted via a global ETS (electronic trading system) that operate 24hrs a day. Concurrently, liquidity is a powerful attraction to any investor as it suggests the freedom to enter or exit the market at anytime. These advantages subsequently enable investors to respond to any new adverse or positive information immediately. A luxury not afforded by the more traditional forms of risk.
Also, in forex trading, a small margin deposit can control a much larger total forex contract value. This obviously gives investors the ability to make extraordinary profits with relatively minimal risk. Unlike with other forms of risk where numerous factors affect the unit prices, (a good example of course is the recent sub-prime crisis in the US) the chief aim and focus of any good forex investor is to manage as best as possible the varying risks associated with fluctuations in worldwide currencies. With the current trepidation that characterises traditional forms of investments, it is no surprise that there has been a big growth in regulated firms that offer forex investment contracts to cunning individual investors.
It must be said however that a good understanding of the relationship between freely transferable currencies is required in order to dabble into this exciting arena. The concept really is quite simple. Currency exchange rates fluctuate, investors who trade in the forex market hope to profit from those fluctuations. Investors should always be aware though that as with any other form of investment, investors who consult with a financial adviser limit their exposure to excessive fluctuations. A general rule of all investment tools that carry a degree of risk is that investors should input funds that they can generally afford to lose without affecting their finances adversely. Risk capital should be seen as disposable income for any discerning investor.
