|
Dec 20
|
As I have been talking about No Loss Robot, many people have asked me what I thought was the
best way to prepare to trade the market. Though I am a proponent of automated forex trading,
I feel it is important to really learn the science of the market.
So here are some things a new trader should know before they decide to take the plunge.
There are many things that are attractive about trading in the Forex market. There is the
ability to trade around the world, and the stories of fortunes that have been made, but
before you risk your nest egg you must be certain to know all the nuances involved in
trading Forex.
Many brokers offer various platforms in which to simulate online trading, these can be very
useful and educational and sometimes even entertaining. These platforms can serve as an
excellent training ground for the new investor.
The Forex market is comprised of the world economy, each country using their own currencies
and traded in pairs on against the other. The Forex market is a vehicle in which wealth can
be amassed by nations, financial institutions, and brokers alike.
The majority of online brokers will offer a software-based platform in which one can trade
in a demonstration account, for the sole purpose of learning to trade. As a new investor the
wise thing to do is seek a system that you feel comfortable with, as you learn the
terminology and strategies involved. Once you’ve picked out a broker in which to open a demo
account you will be asked to provide your personal information. Normally this includes your
name address and sometimes some financial information. Once your account is set up you can
proceed to download the software from which you will make your simulated trades. It is quite
common for these accounts to have various budgets and different lot sizes in which to trade
so you can practice different styles of trading. Most accounts offer live data so you can
get the look and feel of actual trades, these accounts also keep track of your wins and
losses just as if it were a real account
You will now have a good feeling for trading on a consistent basis. You’ll now how it feels
to win and how feels to lose. You will know the characteristics of the markets from open to
close.
In many of these accounts you will be offered news feeds as well as statistical data and
indicators in which you can use to make educated decisions. You’ll find that once you have
spent a few weeks making trades you will have a good feeling for the characteristics of the
market. As you begin to grow in confidence, you will feel the urge to begin to trade with
your own money. Though this is a good thing and shows signs of progression you must be
extremely careful when you reach this point. A new trader tends to be psychological and
emotional and this is never more evident than when he begins to trade with his own money.
It is at this point that you should examine your trading plan or strategy, be extremely
conservative, and be sure to stick to that plan no matter what.
One option at this point could be to start off with a broker managed account, but with your
education you will be much more involved in the decision-making process. This will also
further your knowledge and confidence in trading the Forex market.
Choosing a broker is also a very critical step in which you must take when you begin
trading. Be sure to do your research compare things like brokers fees, and what is known as
the spread. The spread in a nutshell is the difference between the buying and selling price
of a currency pair, this is the way the broker makes his commission. Another thing to look
at when choosing a broker is how long they have been in business many brokers have been
known to disappear and this can put your account at risk since there isn’t the stringent
regulation that there is in banking.
Forex trading can be very lucrative, and a way to supplement or replace your income. It can
also be used as a long-term investment or a way to bolster your 401(k). The rewards can be
great as well as the risks. So be sure to take as much time as you need to be prepared and
confident. Know that you can make profitable trades on a consistent basis before it you
begin to invest your hard-earned money.
Though No Loss Robot has been invaluable to me, I feel knowing how the market works is
equally important. This “School of Pipsology” is probably the best free resource for the
absolute beginner.
Alex here,
