Forex Trading Guide
5 Steps to Profit
If you're looking for a Forex trading guide to get you from Point A (losing money) to Point B (making money) then you've come to the right place. Most people who are searching for this type of resource are relatively new to the market. If that description fits you, then Forex Trading Rookie is a good place to start. Here you'll find some great resources for those who are just finding out about the market or who want to learn more about what it has to offer. With that in mind, use these 5 steps as a guide to profitability in the Forex market.
1. Learn the Basics of the Market
The first thing you need to do as a rookie trader is learn about the basics of the Forex market. You wouldn't expect to first learn about the stock market today and then start buying stocks tomorrow, would you? Well, some people do it that way, but it usually leads to a lot of frustration and lost money.
Spend some time, learning about the Forex market. Read some books, like "Currency Trading for Dummies" featured on the side of the page. Check out the
section of our website to learn the basics of how it works in addition to reading the rest of this Forex trading guide.
You may even want to get involved with a
Forex trading school
to get a thorough education on how the market works. Forex trading is like a marathon. In the words of the illustrious Barney Stinson, "You don't train for a marathon, you just run the marathon." While many times, the guy knows what he's talking about, I would disagree when it comes to how this lesson applies to the foreign exchange market. You really need to get your legs under you before getting involved.
2. Find a Trading Strategy
After you learn the basics of the market and how it works, the next part of the Forex trading guide involves choosing a trading strategy to work with. In this market, you could potentially choose many different trading strategies to use. You could use a swing trading strategy, trade based on indicators or go with the old "pick and pray" strategy in which you just point at the screen and then buy or sell the currency pair you point at. That last one, probably isn't a good idea, by the way.
In this market, you will find a number of commercial strategies that people sell as a package deal. These strategies often include custom indicators and entry and exit rules. While some commercial trading systems are very beneficial, you could also just as easily learn some free methods to trade the market. In fact, there's a free trading strategy that works prety well right here on the site, if you're interested.
Another option is to try Forex trading software. With software, you simply plug it into your trading platform and it takes care of everything for you. Many of these programs do not work, so you have to be really careful when choosing a program.
Many traders also subscribe to Forex trading signals. This is a process in which you pay a subscription fee to a signal provider who sends you signals to trade the market. Then you do what the signal provider tells you when it comes to trading the market.
Remember, it doesn't matter how good of a Forex trading guide you have if you don't have a solid trading strategy.
3. Test Out Your Strategy
Once you come across a trading strategy that you would like to try out and study it, you need to get a little bit of practice and with it. However, you probably don't want to practice with real money. Most people don't go enter a $10,000 buy-in poker tournament when they are just learning how to play poker. They either play online or with friends for free first. Then when they get comfortable, they may start small and enter some cheaper tournaments and eventually work their way up to the big tourney. Forex trading is not really gambling, but it does work this way.
Forex brokers allow you to open demo accounts that you can use to trade in the market with fake money. This lets you see how your trading strategy will work in the real market once you start trading. If you try out your strategy and it works on a demo account, it may also work in the real market. If you try it out and it doesn't work on a demo account, you can feel pretty confident that it will not work with real money. Abandon that strategy and try something else until you find one that works.
4. Find a Broker
When you are ready to start trading live, you need to find a good broker to work with. This is one of the most importan parts of this particular Forex trading guide. A Forex trader without a good broker is like a Nascar driver without a race car. Sure, he might be able to get around town on a moped, but he's not going to reach his full potential until he finds a good car to drive.
You need to find a good broker before you can truly make as much money as you possibly can. Research the brokers on the market. Make sure to put your money in a broker that you feel comfortable with. Some brokers are nothing more than scams to take advantage of unsuspecting traders. When looking for a broker, do your research and read
Forex broker reviews
like the ones featured here on the site.
Look at the spreads that the broker offers. The spread is the difference between the bid price and ask price on a currency pair. If the spread is too high, you will not get as many trading opportunities or you will not be as profitable.
Also look at the deposit and withdrawal methods associated with your broker. Find a broker that offers a convenient method of deposit and withdrawal like credit card, debit card or PayPal.
5. Implement Your Strategy
The final stage of this Forex trading guide deals with getting started trading. When you finally have your brokerage account opened and funded, it is time to start trading. At this time, you need to implement your strategy and stick to the rules of your trading system. For example, if your trading system says that you get into a trade when certain conditions are present, you only need to trade when you actually find those conditions. Many traders get in the habit of trading just to have something to do. The Forex market can pay you really well to be patient. You only need to trade when you have a high probability of winning a trade.
Use money management rules to determine how big of a trade to take and where to place your stop losses. This can help you limit the amount of money that you lose and stay in the game. Never risk more than 1 to 3 percent of your account balance on a trade.
Making it Happen
Once you've completed these 5 steps, you simply keep on going. I know it sounds simple, but persistence is one of the most important factors in the success of Forex traders. You have to be willing to make sacrifices and willing to take risks on a regular basis. If you can handle that, this could be the market for you.
If you enjoyed this Forex trading guide, feel free to check out some of our other articles on the site and learn more. Please share the Forex trading guide with your friends by clicking on the social networking buttons at the bottom of the page also. Thanks for stopping by Forex Trading Rookie!
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