A Step-by-Step Way to Trade FOREX
Forex is short for foreign exchange. It is the term given to the trading of currency, which is the largest market in the world. Investing in the currency market is very different from investing in stocks or bonds. The market runs 24 hours a day and 7 days a week, and there are several different pricing conventions that are used to communicate and publish quotes. The best way to get started in Forex is to open and begin trading a virtual account.
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Instructions
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Identify the currency you want to trade. Most professional traders concentrate on one specific currency like the euro or the Japanese yen. Other popular currencies are the Swiss franc, the British pound and the Australian dollar. Select a currency you have a natural interest in following.
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Demo at least three different Forex trading platforms. Any reputable Forex trading platform will allow you to demo their platform before funding the account. This will give you the opportunity to compare technical and fundamental analysis tools as well as the platform's graphing ability. No two trading platforms are the same and each one has its benefits.
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Track the currency for at least one month using virtual funds in the demo accounts. Use the tools available to you and read as much as you can about the direction of the currency.
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Obtain a calendar of economic events for the country that issues the currency you're interested in and for the U.S. dollar. Economic events tend to be the catalyst for large price fluctuations in the Forex market. It is important to monitor the market before and after these announcements.
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Establish stops. Most Forex platforms allow you to place parameters around your trade. After you make your virtual portfolio of currency, observe the natural support (bottom) and resistance (top) of the graph over time. You may want to place automatic buy or sell orders around these support and resistance areas to limit the risk of loss. These automatic buy or sell orders are referred to as stops.
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References
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