How to get started trading the global currency market
Whenever investors enter a new market, the most difficult decision they must make is how to enter. Securities investors, those who invest in stocks, bonds, and mutual funds, have many options when they begin investing. Many beginners prefer to use traditional brokers, while others gravitate towards online firms. Forex beginners also have a multitude of options at their disposal. There are a handful of online trading firms, some of which offer demo accounts which allow beginners to trade with fictional money in order to feel out the marketplace. There are also online classes – such as the FX PowerCourse – that teach novices the basics of trading currencies.
Learning
Before traders begin to trade, they must learn the ins-and-outs of the forex market. There are two type of forex analysis:
- Fundamental Analysis, which uses economics to analyze FX rates, and
- Technical Analysis, which uses statistical patterns to analyze graphs to predict movement (see graph below – the green, yellow, and black lines are examples of tools used in technical analysis).
Each trader uses his own balance of fundamental and technical analysis to define his style.
Practice
The best way to learn how the market works is practice. Signing up for a demo account and then researching trades, watching for trends, and placing trades will certainly aide a beginner before real money is involved. It is also important not only to document what trades you make, but also why you make them. Successful traders learn from their mistakes so that they do not make them again, and they learn from their successes so that they can duplicate them.
The Real Thing Only when a trader feels that he has grasped the general workings of the market should he place his first trade. If a trader is skeptical about investing but still wants to try it, companies such as FXCM (http://www.fxcm.com) offer mini accounts for traders that have very low margin requirements. However a trader decides enters that market, whether through a regular or mini account, his goals remain to make money and manage risk.
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