Forex Education

Learn How to trade forex in 5 steps

Forex currency trading has become popular because it is backed by the global leading financial institution. There are myths and misconception on forex trading. Some assume it is to be gamble, some think it is too difficult or technical for them to master. Here are the 5 easy steps that you can follow in order to learn and start in the trading the forex market.

Learning the basics will be the step 1 to master the technique of forex trading. For a new trader or investor, it is a must to know what the forex market is and how it works along with the key economical terms.

Next step will be to learn the difference between fundamental analysis and technical analysis. Side by side, open a demo account and get familiar with the process of placing a trade.

It is like going back to the kindergarten – the lesson you learn, you practice before you reach the next level. Get familiar with the most common currency pairs. After all these when you enter the actual forex market, you are prepared with right expectations and knowledge.

Step 2 will be to learn the process of technical analysis as it is probably the most important tool for a forex trader. You need to learn how to read a chart before you can call yourself a trader. There are different internet sites to learn about all technical indicator. Choose one or two particular method of analysis or indicators on which you are most comfortable.

Step 3 is obviously the planning. Plan how you’ll trade. Would you go for day trading or swing trade? The decision will be based on your personality and the time you have to trade.

Step 4 is developing the strategy. As by now you know your method of trading, decide on a strategy and test in thoroughly covering all aspects and situations. Visit different trading systems, courses, ebooks, software to decide on the strategy that is going to work for you in the best possible way.

The ultimate step will be to test your skills with virtual money. You have your plan, your strategy at place, so check if it works in the virtual environment. Maintain a journal and do paper trading for few days. Or if you have opted for online trading, practice demo trading with virtual money. Once you are fully satisfied with your performance, it is now time to tread in to the real world of forex trading.

To end, there is difference between virtual and actual world. Be always prepared with a plan “B”. Keep learning, learn from the mistakes of yours as well as from others. Never ignore the importance of risk measurements and do not let the emotion play a role in your trading decisions. Happy trading!!




Forex Tips: 4 Steps To Forex Hedging


1. Risk Analysis

Most currency exchange traders would not hedge every trade, but only those that involved some kind of unusual risk, or where risk has changed since you opened the position. In this step you need to calculate the current risk.

2. Subtract Risk Tolerance

While there are a few traders who try to hedge every trade to a position of complete safety, most of us accept some risk in order to maximize profit. Risk tolerance is not about how you feel, but what is your normal level of risk on a trade or the loss that you are prepared to accept for this trade under your system. Subtract this from the total risk and you have the excess risk that you need to remove by hedging.

3. Select Your Strategy

Consider the cost and effectiveness of the various possibilities, including a trade in derivatives.

4. Act and Monitor

Then go ahead and implement your strategy, but do not stop there. Keep monitoring the markets. As the situation changes you may be able to close out part of either your original or your hedge position to give you a better overall result.

Hedging is not for every trader or for every trade but it has its uses and can be a very effective tool to add to your skill set. You may want to paper trade or back test to see how these forex tips on hedging can increase your profitability.

Many of these advanced tips can be found in a good forex ebook or traditionally printed book. There are many places to find such foreign exchange education tips on the Internet and there is no better way than searching for a good Forex blog and then using the search facility on the blog to find exactly what you want.



Gaining a forex education


The Forex or Foreign Exchange market is the largest financial market in the world, with a volume of nearly $3 trillion daily dealing in currencies.

Unlike other financial markets, it has no physical location, no central exchange, and operates through an electronic network of banks, corporations, and individuals trading one currency for another.

The process of forex trading is complex but if you have the knowledge it opens up great profit opportunities for you.

By gaining some education in forex you can do your trading better and smarter. All you need to do is to spend a little time getting some training and education in forex trading. The first option will be to seek information through brokerage firms that trade in foreign exchange.

They offer guidance and free demos of their software or the trading platform. You can gain proficiency in its usage before you trade with real cash by opening a demo account. Your aim will be to understand the terminologies and strategies to apply before you start real trading.

Many expert traders or investors offer their service through online courses, which are supplemented with reading material, online tutorials, and seminars. These courses are tried and tested, place and time independent, presented in a lucid manner and therefore easy to understand.

They include access to streaming video library, questions answered via video, personal coaching facilities, member forum, daily online video training sessions, calculator, historical data samples, special alert or news services, and many more.

An e-book will be also a good resource for learning the tricks of the trade. By following an e-book you learn everything in an organized manner with a step-by-step approach. You can revisit the tutorial whenever you need them and at your own time schedule.

There are online forex seminars where you can participate in audio or video chat to get your queries answered. With these types of self-education in forex trading you must go through simulated training to help you understand the process and minimize mistakes.

If you are comfortable in a classroom atmosphere, you can enroll yourself for the short-term courses offered by different educational institutes and universities. One advantage of such a seminar or part-time course is you get to interact with the experts personally and get all your queries answered.

This module will only be feasible if you have the time to attend such course. As it is said…if there is a will there is way…if you are determined on learning the forex trading techniques you will find the mode of education best suited for you.


Succeed in trading forex


In order to succeed successfully in forex trading you need to know what the purpose of trading forex is. Forex trading as you know is the trading of online currency and the key to success is to buy low and sell high just as with any other market. You task as a forex trader is to try to determine the trend of the particular currency you are looking to either buy or sell and to utilise the forex trading strategies to ensure that a profit is made.

Now that you know the purpose of forex trading the next step in knowing all about forex is to understand the codes, definitions and numbers used when trading. All currencies used in forex trading are assigned a three letter code. An example of this is the US dollar which is USD or the Euro EUR. Online currency trading is done in combinations that are known as a cross and these are represented by 6 letter words with the more expensive currency coming first. An example of this is GBPUSD which will show you how many US Dollar you will need to pay for one British pound. These rates are shown as five digit numbers for example GPBUSD = 1.6262 which means that 1 British pound is worth 1.6262 US dollars. When the rate changes the change will be displayed in bold, eg GPBUSD = 1.6264 which will mean that the rate has moved by 2 points. Knowing this is the key to successful forex trading and your key to profit.

When you enter the forex trading market you will enter as a buyer or a seller of a particular currency. If you are a seller you price is known as the ASK price and the buyers price is known as the BID. You can only buy currency from a seller with an asking price the same as the BID price.

These are the main beginner’s points to note when it comes to forex trading and knowing what the purpose of trading forex is and knowing all about forex before you enter into the market can make a big difference when it comes to your profits.


Forex trading terms


These are the forex trading terms which every trader needs to know before he or she even starts the first trade. Quite simply, if you do not know them, then the forex trading game may not be suitable for you. Why? Because they are the essentials!

1. Currency Pairs

Every transaction involves a pair of currencies since a trade is basically the selling of one currency and buying of the other.

2. Major and Minor Currencies

There are 7 major currencies traded online. They are USD, EUR, JPY, GBP, CHF, CAD and AUD. The rest are all minor currencies. Amongst these, some of the more frequently traded ones are the South African Rand (ZAR), the Singapore Dollar (SGD) and New Zealand Dollar (NZD).

3. Base Currency

The base currency is the first currency in the pair as a measure of its value against the second currency. For example, a GBP/USD = 1.7100 means that 1 GBP is worth 1.7100 USD.

4. Quote Currency

The quote currency is the second currency in the pair. Any profit or loss is a measure of this currency.

5. Cross Currency

A cross currency is a pair which neither of them is the USD. These pairs often experience intricate price movements because each trade actually involves the buying and selling of 2 different currency pairs. For instance, when buying a EUR/GBP, you are actually buying a EUR/USD pair and at the same time selling a GBP/USD pair. The transaction costs are often higher for such trades.

6. Pips

What is a pip? 1 pip is the smallest unit of price for any foreign currency. Most currency pairs consist of 5 digits and the pip represents the smallest change in the fourth decimal place, ie 0.0001.

These are the core forex trading terms that all professional forex traders should get familiar with. Since each trade cannot depart from them, it does make sense to find out more.

Learn everything about forex trading from Davion’s wildly popular Forex Trading Made Easy blog – from mastering the basics of foreign exchange trading to discovery of new trading tips, strategies, tools and more.



Useful tools in trading forex


For forex trading, like any other profession, you need to have the skill set and tools to master the technique. Forex trading is complex and needs the tools for a substantial return on your investment.

In today’s trading, the prerequisite will be a reasonably fast computer, with high speed access to the internet, a good graphic cards support that will be a must for the graphical analysis involved in today’s trading.

The first important tool will be a simple, reliable, and accurate automated forex trading platform. With a trading platform and a managed account, even a new investor can trade forex with high profit opportunities.

The platform should be simple to operate, and should be authorized by some regulatory agencies. You should be able to open a demo account to check the functioning of the platform. The rules, regulations, and transactions should be transparent.

The second most powerful tool for forex trading will be different technical indicators. They can come as an added service of a trading platform or can be bought from the third party. A charting software, a program that can generate instant bar charts, or candle stick patters will be of great help. The technical indicators or analysis should not be too complex to understand.

Forex signals based on trend-lines can work as a useful tool for forex trading. Trend-lines are lines drawn across significant lows in an uptrend and significant highs in a downtrend.

There are three trend-line strategies: short term, medium term, and long term. They are for different time frames like 15-30 minutes, 60 minutes, or 4 hours, respectively. By drawing a trend-line on a daily chart, you can very well judge the momentum of the market and the signals generated by them are reliable too.

Forex News Service can act as a very powerful trading tool. As we all know the forex market gets influenced with global economic news and announcement, a subscription service which analyzes and issues alerts for its clients the tips based on some economic news will be of great help to a trader.

The service can come as a squawk box, which may issue 24-hour headlines with all the latest forex news and commentary. The service can also offer a comprehensive global calendar of economic numbers that are released around the world.

CDs/DVDs containing forex tutorial is another powerful tool for a forex trader. This one the trader can consult anytime during the trading. The tutorials would cover all basic information on forex trading, the terms, working principles, introduce the trader to detailed discussion on technical indicators and many more.

As the trader graduates in the trading, he or she can opt for the next level. The CDs/DVDs are powered with three-dimensional charts and other interactive graphical representations; the learning becomes interesting and easy to comprehend.