For all the enthusiastic Forex traders including those who are just at the beginning level and those who are a bit experienced in this trading field, there should be no looking back at year 2008-let us get over it, we need to move on to start afresh with our personal investment and trading for a better outcome. As we are going to stand in front of a new Forex trading platform this year, so before we all get started with trading in Forex this year, there are a couple of important aspects of Forex trading that I would like to share with you all. According to the experts from this industry, these instructions are very likely to be effective and useful for 2009 Forex trading… keeping them in mind while trading forex is going to increase your chances of success considerably even if only 2-3 of these ring a bell with you.
So let’s get started…
1. Open a demo account. You must learn to trade it first before getting into live transaction with real money. You will usually learn how to avoid some mistakes and also get familiar with and enhance your knowledge on the broker’s trading platform.
2. Normally, there are no commissions in trading in currencies. That is why it costs less than any other financial market. All you pay is the market maker’s spread (which all financial markets have too). The cheaper your costs, the quicker you can start generating profits for you.
3. Unlike commodities or all the stocks currencies trade in pairs. In stocks you should buy either: 1) GOOGLE (GOOG : 334.06 0.00 0.00%) or 2) IBM
4. Regularly study, keep in touch and gain enough knowledge. There are a lot of examples of unplanned, knowledge less traders in America, who just do not know how little they know about the latest trends, happenings and updates of this industry, and still they go on to dive into trading in this market . Show some zeal and do spend some cash to join a good forex trading tutorial with state-of-art faculty, or take a relevant forex trading course. Because any of these two may save you thousands in the end!!!
5. Start with a Mini account. Many traders want to start with a standard account. However, as far as my hard gained knowledge in forex trading goes, this is the quickest way for a new and novice trader to lose money in trading. The “trading size” is so large (in number of currency units controlled) that if anybody is wrong, he is gone!! A standard account will cause 10 times the losses that a mini account would cause on the same exact trade.
6. Before starting to trade in Forex one must be well aware of proper way or location to find out the data that comes out on each country; he or she must know the exact time when it’s coming out! Many related, quality online resources are there in internet to have all of this data in one handy place.
7. Under any circumstances, one should risk maximum 1-5% of your account balance. However, if you have to risk more of your account than that on a particular trade, then either you don’t have sufficient balance in your account or your stops are excessively wide. Most people, whose risk amount of account balance exceeds that stipulated range (1-5%), fall under the former category rather than the latter; they are very likely to lack enough money in account.
8. Begin with some small-range trading. By that, I mean to trade one mini lot per order at first. Start with only one order in the market at one time. If you get your estimated profit with that trading, you can increase your lot size. Oh, by the way, if you can’t make money with a 1 mini lot trade, there is no chance that you could have made money with 5 mini lots at risk. In fact, your loss would be 5 times bigger….or even worse!!!
9. Start off with an account which is very well capitalized. Even many experienced Forex traders face this confusion of not being able to determine exactly what amount of money is required to start an account with. But instead of asking this question to your broker, you should rather ask him how much is practical to keep to start your new account. You will come to know that most mini accounts should had been started with at least $3,000 to $5,000 dollars; yet, in the industry they will let you start with $200 to $300 dollars. Too little of capital = too high of percentage of the account risked on each trade. That’s the logic behind this point.
10. You should begin with trading the most liquid pairs in the market….it is indeed a good idea. These pairs will have the smallest spreads between the buy and sell quotes. Some examples of such pairs are: EUR/USD, USD/JPY, GBP/USD, USD/CHF, EUR/CHF, etc.