Learning to Trade the Forex Market
The beauty of forex is you can get started right away without any money and without having any idea what you are doing. To do this you open what is called a demo forex account. In your demo account you trade with fake money and you have fun learning how to trade for real. Your goal is to build a sustainable track record of successfully trading with fake money. Once you have done this you will be ready to try trading with real money.
The transition from fake money to real money can be tricky. Sort of like learning to fly in a flight simulator and then flying a real airplane for the first time. Each time you enter the flight simulator your skills will be improving and your confidence increasing, until you get to the point you feel you are ready for the real thing. In theory, if you master the flight simulator, the real airplane will not be a problem.
In reality, as you’re walking toward that real airplane for the first time, your heart will be pumping and you will be scared. Likewise when you are about to pull the trigger on your first real money trade your heart will be pumping and you will be scared.
Flying a plane for real and trading forex for real are similar in many ways:
- If you are reckless flying the plane you will get yourself killed. If you are reckless trading forex you will lose all your money
- Flying entails taking off, obeying the rules of safe flying, and landing safely. Forex trading entails entering a trade, controlling your risk, and exiting safely.
- When flying an airplane your success requires you get all three (takeoff, safety, and landing) right. In forex trading your success requires that you get all three (entry, risk, and exit) right
- The best pilots always put safety first. The best forex traders always put safety first.
Flying a plane and trading forex for real are different in one key way
- To become a pilot there is government mandated formal education and professional training requirements; as a result of this formal education and professional training, few pilots crash and burn. To become a real money forex trader there is no government mandated formal education and no professional training requirements; as a result, almost all forex traders crash and burn
Formal education and professional training
Whether you want to be a jet fighter pilot or a weekend recreational pilot of a two-seater, you need formal education and professional training to insure your safety and success. If you want to become a full-time forex trader, a part-time forex trader, or just dabble from time to time you need at least some education and training to insure your safety and success; especially if you’re serious about making money from forex trading.
Education choices – getting started
I suggest you start withBabyPips.com; it’s described as “a free, funny, and easy-to-understand guide for teaching beginners how to trade the forex market”. Here you will learn about the forex market, forex trading, technical analysis, and fundamental analysis. There is also practical advice on choosing a forex broker and how to go about opening your broker account and getting started with your forex trading. If you prefer reading a book, “Forex for Dummies” is a good place to start. Brian Dolan, one of the authors, is a brilliant guy and he has done an excellent job in laying out the forex basics in easy to understand language. I wrote an article “Forty five ways not to lose money trading forex”, which can easily be located with a Google search; many traders have told me it helped them a lot. You may want to read that one; knowing the common mistakes new forex traders make may be helpful.
As you study the basics, you will likely find the technical tools that you think will suit you. It’s a good idea to do further research on those technical tools; three excellent free sources of further information on technicals (and fundamentals) are Investopedia.com, fxstreet.com, and forexfactory.com
Your broker will supply free charting software for you. Personally, I like netdania.com charts; they are very user friendly and there is a free demo version, which I have been happily using for the past 5 years.http://shoowf.net/2014/05/18/learning-to-trade-the-forex-market/forex articlesForex,Learning,Market,Trade