FOREX Trading
• What Is
FOREX?
• FOREX
Or Futures?
• FOREX
Or Stocks?
•
FOREX Trading for
Beginners
• FOREX
Terms To Know
•
Preparing for FOREX
Trading
• Is
FOREX Trading Risky?
•
The Philosophy of FOREX
Trading
•
FOREX and Fundamental
Analysis
•
Tools for FOREX Trading
•
Trading Strategies for
FOREX
• Trading Systems
for FOREX
•
Reading and Understanding
FOREX Quotes
•
FOREX Profits and Losses
•
FOREX Technical Analysis
Part 1
•
FOREX Technical Analysis
Part 2
•
FOREX Trading Brokers
• The
FOREX Margin
•
What Are Currency Options?
•
What Are FOREX Signals?
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Online FOREX Trading
The Philosophy of FOREX Trading
Many beginner FOREX traders get into FOREX because they are told that it
is easy money and that FOREX is risk free. They are promised high returns
for low investments. They are told that FOREX trading is easy. While some
of this is true, some of it simply is not. In fact, FOREX can be very
complicated, and if you don't know what you are doing, you can lose your
money. FOREX is not, by any standards, risk free.
The first mistake that the beginning trader often makes is not having a trading
strategy. The second mistake is letting emotions affect their trade decisions.
Obviously, when you open a FOREX trading account with a broker, you want
to get started right away. But it is best to step back, and start reading
and learning first.
Don't feel like any money making opportunities are passing you by - the FOREX
constantly changes, and there are constantly opportunities to take advantage
of. If you dive right in, you may rush to buy, see the price fall, quickly
sell the currency off to prevent any further loss, and then find that the
price shot back up - after you've sold of course. This is a sure fire way
to lose money. So, after opening your account, don't do anything as far as
trading. Instead, start learning, and start putting together a strategy.
You need to have at the very least, a basic understanding of the FOREX market,
and how that market moves.You need to be able to read charts, and to use
those charts to determine your entry and exit points in a market. You must
also learn how to use the tools that are available to you to get the most
profit, while taking the least amount of risk.
Visit FOREX traders forums. Talk to friends and associates who play in the
FOREX market. Find out why they are in the market, if they are successful,
and what has made them successful. This will help you to build your own trading
strategy as well.
Understand the five different groups that play in the FOREX market: Banks,
Corporations, Investment Funds, Governments, and Traders (like you). Of these
five groups, there is only one group that doesn't have any external control
over the FOREX market - the trader. At the same time, however, those other
four groups are accountable for their trading practices and decisions. They
have rules and procedures that they must follow. You do not, as you are only
accountable to yourself.
But at the same time, those other four groups are successful in FOREX because
they have the discipline that is governed by rules and procedures. Your set
of rules and procedures is governed by the strategy that you develope. Without
that strategy, you are playing a losing game!
You have to learn how to manage your resources, just as banks, corporations,
and governments manage their money. Your money management plan has to be
incorporated into your trading strategy. Before entering a market, you need
to consider your recent profits and losses, the margin, the size of the position
you are going to take, and you need a 'plan B' as well.
Money used in open positions, subtracted from your starting balance, is your
core equity. For instance, if your starting balance is $20,000, and you have
$2000 in open position, the core equity would be $18,000. In the beginning,
you want low risk, so you should limit that risk to between 1% and 3%. You
can set loss limits with stop orders. You can also set profits with limit
orders. The stop order will sell the currency, automatically, if it falls
to a certain value, and the limit order will sell the order automatically
when the value rises to a certain amount.
As you profit, and your core equity increases, you may want to take more
risk, protecting your initial investment. If you made a $5000 profit, and
exited the market, your core equity is now $25,000. You could enter the market
again, this time investing $2000, but setting stop and limit orders at a
higher percentage of loss or gain, and even if you lost, you would still
be ahead of the game.
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