How to Trade on FOREX for Beginners
Trading in forex has become increasingly popular ever since it was made available to the public in 2000. Since then literally thousands of marketers have sprung up touting the latest trading software, e-book, software or robot that will make you rich over night with little effort. The reality is that trading forex is hard and most people will fail.
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Instructions
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Find a solid trading system that suits your temperament and risk tolerance. This is a difficult piece of the puzzle to figure out. You can have the best system in the world, but if it doesn't fit your personality it won't work for you. A good place to begin is at BabyPips.com. This free site offers an overview of how forex trading works, from the very basics to more advanced ideas. It even has a section for helping you design your own trading system.
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Find a mentor. Once you have a basic idea of what forex is and how it is traded, you might wish to find a mentor to will help cut your learning curve. There are a few websites offering daily webinars and coaching that you might wish to consider. Some of these include ForexMentor and TraderOutlook (see Resources section).
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Practice in a simulator. Before you begin using real money you should practice for at least three or four months to see that you are consistent and that your system works. You can find a free forex simulator at Investopedia. This will allow you to get used to placing orders and stop losses in the fast-paced world of forex trading without risking any real money.
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Find a forex broker. When you are ready to begin trading with real money you will need a broker. There are a lot of fly-by-night operations that are here today and gone tomorrow. A good way to find a broker is by reading the reviews at ForexPeaceArmy and EliteTrader (see Resources section).
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Determine the trend of the forex pair. Before you decide to trade a pair you will want to look to the higher frames to determine the trend. Using the daily charts, look at the data for at least the last three weeks. Draw one trend line across the lows and another line across the highs. This will create a channel. Look at whether the channel is trending up or sloping down. If it is going up you, will want to be a buyer near the bottom of the channel. If it is sloping down you will want to be a short seller near the top of the channel.
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References
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