If you have a looked into trading Forex online, and you see all the opportunity to make money, you are probably wondering what the best way to learn the Forex trading.
First of all, You should spend some time for reading up on how Forex trading works, making Forex trades, current Forex trading times, etc.
The second thing, if you want to learn Forex trading, it’s the best way. When you first start out, you should open the Forex demo account and try out some demo trading. It gives you a good technical foundation on the mechanics of making Forex trades and get used to the trading platform.
A fundamental thing learned through the experience, and no amount of books or talking to other traders could teach you this, is the value of getting out of the market when the reason for getting into a trade is invalidated. It is easy for traders to think the market will come back around in their favors. You would be surprised how many traders fall prey to the trap and are amazed and heartbroken when the market only presses further against the place of the original trade.
It does little good to say the market is acting irrational and that it will come around because it extreme moves defines capital markets in the first place.
The downfall of learning Forex trading by demo account alone is that you don’t get to experience what it’s like to have hard to earn money on the line.
Trading small allows you to put your money on the line, but be at little risk if you make mistakes or lose money. It will teach you far more than anything that you can read on the site, books or forex trading forum and provides an entirely new angle to anything that you have learned while trading on a demo account.
Along with that of course, comes the need to understand what you are trading. New traders tend to jump in and start trading anything the looks as it moves. They usually use high leverage and trade randomly in both places, usually leading to loss of money.
Understanding the currencies that you will buy and sell makes a big difference. For Example, A currency may be bouncing upward after a large fall and encourage inexperienced traders to try to catch the bottom. The currency itself has falling due to bad employment reports for the multiple months. Would you buy something like that? Probably not, this is why you need to know and understand what you buy and sell.
Currency trading is the best way because you can use leverage, and there are so many different currency pairs to trade. It doesn’t mean, however, that you need to trade them all. It is better to pick the few that have no relation and focus on those.
Having only the few will make it easy to keep up with economic news for the countries involved, and you be able to get a sense of the rhythm of the currencies involved.
After you, we have been trading with a small live account for awhile, and you have a sense for what you are doing, it’s ok to deposit more money and make your account bigger. Knowing what you are doing boils down to getting rid of bad habits and gaining some control over the emotions. If you can do that, you can be successful in trading Forex.
Managing risk and managing the emotions goes hand in hand. When we feel emotional, or fearful, that is when we make mistakes with risk, and it’s what causes failure. When you look at the trading chart, you should only see potential, or see nothing; it should not be a matter of excitement.
If pulling the trigger on the trade feels emotional in any way, you should re-evaluate what you are doing to trade.