Learn as much as you can about forex before you start
Don't become another victim by joining the possibly 90% of forex traders who consistently lose money by thinking that it is just a game. It is NOT a game, and even less a 'get rich quick scheme' but a serious business. With nearly two trillion dollars worth of currencies being traded by major banks and governments each day, what else could it be? It requires knowledge, perseverance, understanding, training, research and personal experience. This all takes time. There is no short cut, and no guarantees of success. Those that have become successful traders know this, and many will admit they realised it only after losing money or buying useless products and information – for a few hundred or sometimes several thousand dollars!
Get good information from reliable sources
By being in possession of the right information, developing the correct mental approach which involves considerable self-discipline and a pre-planned trading strategy, and by dealing with a recommended broker, it is certainly possible to make money as a foreign currency trader. Successful traders, both professional and amateur, rarely brag about their gains. Fortunately, however, some of them are prepared to share their knowledge with others, such as in Forums where information is shared for free. But a system or method of trading that works for one trader may be quite unsuitable for another and he or she will lose money by trying to use it exclusively. Provided the source is genuine, and there are some brokers that do have an interest in their clients' success and financial well-being, it may be better to pay for comprehensive knowledge that is of use to all current or prospective traders. It need not be expensive, and it may well save you from losing your money quickly. Try Rapid Forex for some good and free advice. Although the site is a bit 'hard sell', they really do have excellent, freely downloadable eBooks and other resources. You can also learn to trade like the professionals with Peter Bain's Video Forex Training Course. Click on the link and see a free demo of this excellent course.
We have scoured the web for good reliable information, read the brokers' and market(ing) wizards' hype. There are probably some pretty outrageous lies contained in some of the random adverts below. Others may be from reliable brokers. You need to see how easy it is to believe them. Just click on some of these sample ads.
We have also joined forums, tried systems and strategies, and paid money for both useful and useless information that can be found for free. However we have no hesitation in recommending an eBook which can be downloaded and studied at leisure, preferably before you start trading. It could have saved us a lot of money already if we'd known about it before! The few dollars it costs are paltry in terms of what it might save a new or even not-so-new trader. It is written by a professional trader and fund manager (not a broker) with years of experience in stock and currency trading. Someone who has excellent references from clients he has and continues to help. The book is called Bird Watching in Lion Country and if you are interested in genuine first-hand knowledge, do yourself a favour and read about it here, and then decide if you think it's worth purchasing.
Open free broker demo accounts
Even before you open a Demo Account with a broker, take advantage of free training and information at the same time. If you're at all serious about learning how to trade successfully, get this FREE 'eCourse' at Rapid Forex . Don't be put off by the typical forex 'hard sell'. Their resources are valuable.
There are many different trading platforms (software programs) in use. You can try out several different brokers' offerings to get an idea. They should be completely free to download and try out, and will show you different views of how forex trading works, as well as the use of charts and indicators. You are quite likely to be lucky with your 'demo' trades, and even show a paper profit of several thousand dollars within a few weeks or months.
Don't be in a rush to start 'live trading'
The temptation will soon be to open a "mini live account" offered by most brokers. This can be opened for less than $500 in many cases. Trades are made at one tenth of the value of regular ones, and pips are valued at $1 instead of $10. Don't be in too much of a hurry to do this. If you are prepared to lose that few hundred dollars just to get live experience, all well and good, because you probably will! Then you might lose confidence and stop trading. Or you might start learning the truth and search for the right information. Why not save yourself the loss by spending more time and maybe a small amount of money on getting genuine knowledge first?
Be wary of subscribing to 'signals or 'indicator' services
Before buying training or special proprietary 'trading systems' which give 'guarantees' of consistently winning trades. Try to establish their worth from others using them. Forums are good for this. Performance can be compared and problems or unscrupulous tactics exposed.
Remember that every trade you enter, whether profitable or losing, the broker takes a cut up front. It is called the 'spread'. Although this differs between brokers and currency pairs, a typical spread would be 3 to 5 pips and is the difference in price between buying and selling the currency pairs on offer. On a regular trading account that equates to about $30 to $50 dollars, meaning that the price needs to change in your favour by more pips than that before you can break even and start to make a profit on that trade. If you are in a losing situation and decide to close the trade and limit your losses, you have lost that starting amount too. This is why brokers do not need to charge traders commission on trades.
Why demo and live accounts are not the same
Although the real time data and prices may be the same in both types of account, don't make the mistake (like so many new traders do) of expecting similar results when you open a real account with your own money. Your mental attitude changes – probably when you make your first losing trade and see your account start going down by even a small amount. After all, you have come to believe you will earn regular extra income from this "honey pot". But both fear and greed enter the equation, and it is more likely that you will lose your investment. If you need proof, read the messages in the many forums used by both professionals and first time 'dabblers' – intoxicated (as it is so easy to become) by the marketing hype and promises, even money back guarantees, of brokers and self-professed "gurus" who make it all sound so easy – if you buy their overpriced products and trading systems. They are the real winners.
The internet is full of opportunities for making or losing money. People buy, people sell, some people steal - it's what makes the world (wide web) go round! But be selective in what you choose, and you can become a winner.
For a good 'head start' in forex - click here.
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04 Dec 05