subject: The Ultimate Guide You Need When Trading In The Forex Market [print this page] There are books and even stacks of books which collectively won't be enough to serve as a forex manual for successful trading. That's because what's needed is experience and a hands-on approach, and that can't be found in any book. But the books and research material do help a trader prepare for the rough and tumble of the forex market, so here's a few tips on how to get started.
Let's start with the fact that the forex marketplace can't be found located in the block around the corner, or around any corner. That's because it is just a distributed global collection of large financial institutions who trade and set currency rates. Forex traders earn money by speculating on the relative values of specific currency pairs.
To be a forex trader, one has to open an account with a broker. This margin account usually needs a minimum opening deposit of $1000 or $2000. But unlike the stock market, forex traders have a massive leverage to play with. The amount available for trades on a new margin account with minimum deposit is usually one lot, which is $100,000.
But there's no need to be scared by the big sums. Any good forex manual for successful trading will explain that so long as a trader keeps a grip on his emotions - and enters or exits trades based on solid information and logic, it's a lot less risky than the stock market. It's usually a good idea never to trade more than 20% of the margin account at any given time. Restrict the value of each trade to no more than 5 or 10% of the account.
The best way to get started is by using a demo account and doing paper trades without real money. Many brokers offer demo accounts so that new trades can get their feet wet without drowning. Use it until all the basic concepts are clear, like pips and spreads, including how and when to enter and exit trades with a broker.
Once the basics are clear, it's time to read up on trading strategies, forex contracts, futures and derivatives, signals, indicators and trading systems. Another thing to remember is that it is crucial that a trader restricts focus to at most 3 or 4 currency pairs. There are traders who never look beyond a specific currency pair.
Stay away from low trade volume currency pairs and stick to the popular ones like USD/CHF, USD/JPY, GBP/USD and EUR/USD. All this is basic stuff that isn't classified as a full-fledged forex manual for successful trading. But it should be enough to start with, so long as our intrepid trader keeps going in the right direction.
