The foreign exchange (forex) markets are the largest financial markets on the planet. More than $3.5 trillion changes hands every day on these electronic exchanges. This dwarfs the U.S. stock and commodities exchanges combined. If you would like to try this type of trading, there are few things you should know first.
Things You'll Need
- Forex brokerage account
Find the way to start forex trading that best suits your needs. There are a few ways that you can participate in the forex markets. You can invest your money yourself, you can buy a software robot or EA (expert adviser) that will trade your account for you, you can buy automated trading signals and tie it into your account or you can buy manual signals and trade them yourself.
Learn to invest in forex on your won. This is the most challenging way to do it. Expect to take two to three years before you become proficient. This is a long and challenging journey, so be prepared to work hard. A good place to start is at BabyPips. This is a free course that will give you most of the basics for forex investing and will even delve into some of the more advanced methods. Another way to learn is to be mentored by professional forex traders. ForexMentor and FX500Club are both good places to start. These courses will teach you things such as which currency pairs to trade, the best times to trade, how to use support and resistance, money management and much more. These courses range in price from free to $1,800 as of 2010.
Buy automated trading signals. You can find services that will provide you with both automated forex signals. The advantage of the automated ones is that you never have to touch them. You simply sync your account with the signal provider and their trades are automatically executed in your account. A few places to find automated signals are at ZipSignals, ZuluTrade, and Tradency. These range in price from $50 to $400 per month as of 2010.
Buy manual signals. There are plenty of websites that will provide you trading signals via email or text message. You can find ratings for dozens of services along with reviews from subscribers at trading forums such as ForexPeaceArmy, EliteTrader and Trade2Win. The biggest drawback to going this route is that the forex markets are 24 hours, which means you will have to be ready to execute a trade at any time. This also means that you are likely to miss lots of trades if the market moves before you are able to get to your computer. However, if you are more of a hands-on type and don't trust automated signals, this might be a good alternative. These services range in price from $50 to $250 as of 2010.
Buy a forex expert adviser (EA). These are automated systems that run on the MetaTrader forex trading software platform. While marketers will tout these as having no losses and winning 90 percent of the time, they don't always give you the whole picture. What they often don't tell you is that they may be risking 100 pips to win 10 pips. That means that they can win nine times out of 10 and still end up losing money. Dozens of these trading robots are available. Many work in the short term but over the long term may lose money. A good place to find reviews on them are ForexPeaceArmy, EliteTrader and Trade2Win. If you do decide to purchase one of these, run it on a demo account for at least two months and purchase only one that offers a 60-day money-back guarantee. These robot traders range in price from $67 to $299 as of 2010.
- Photo Credit International Finance: currencies from around the world image by Vladimir Melnik from Fotolia.com
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