Tuesday, 8 December 2015

How To Get Started Trading Currencies

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How To Get Started Trading Currencies

Learn to trade currencies (FX, Forex). How to get started trading currencies? This forex blog from forex friend loan outlined what to look for a beginner. The forex market is one of the most dynamic and liquid in the world. Millions of people participate in it every day, some without even knowing about it.

Who’s trading currencies?
A lot of people. currency trading (Foreign exchange) is most commonly known as Forex and Forex is the world’s most traded market. According to CityIndex, there’s an average turnover in excess of US$5.3 trillion every single day. That’s 4.24 trillion pounds at the time of writing, although as will be seen that can change.

A lot of different people are trading, from large companies to part-time traders operating out of their bedrooms, something that only became possible with the proliferation of the internet.

How does it work?
When trading Forex, currencies come in pairs, for example, sterling/US dollar. The trader predicts how the exchange rate between the two currencies will change. So, if the trader believes that US dollars will strengthen against the pound then they buy dollars, which means they are also ditching their pounds.

If they are right then the value of their currency rises and they can sell for a profit. If their hunch was wrong then they lose.

For example, the GBP/USD rate shows the number of dollars one pound can buy. If a trader believes the pound will increase in value against the dollar then they use dollars to buy pounds. If the exchange rate rises then they can sell the pounds back for a profit.

One of the reasons Forex trading is so popular with hobbyist investors is that the markets are open pretty much 24 hours a day, following the different countries’ time zones.

What drives currency movements?
Most people already know that the values of currencies shift, that’s why exchange rates change. And the changes in those rates are determined by a multitude of traders buying currencies with other currencies and making judgments on what each is worth in relation to each other.

Prices can change at incredible speed in response to news and global events. Traders look at key factors, including political and economic stability, currency intervention, monetary policy and major events such as natural disasters.

Will I make any money?
Forex, trading in the currency market is highly risky. It’s so risky that many commentators have likened home traders to professional gamblers, arguing that the idea an individual can reliably predict the movements of currencies is nonsense.

There is an abundance of platforms and guides and books and investment tutorials that suggest it’s possible to make a small fortune trading currencies. However, spend any time reading forums and there are hoards of bedroom Forex traders losing money day after day.

It can be very expensive to make currency transactions and individual traders usually don’t have a large enough pot to make anything other than small gains.

It’s essential that would-be traders don’t invest money they can’t afford to lose.

Why Having A Trading Mentor Is A Good Idea

To get started, you need to have a lot and lot of interest in the financial industry. By this, you need to be ready to spend your times reading financial news and learn to trade currency market. If you don’t have such interest, it will be impossible to succeed as a forex trader.

Many futures and stock traders are aware of the excitement surrounding the currency market. However, because foreign exchange trading was until only recently limited to multinational corporations, money-center banks, and the largest investment firms, forex remains a new and unfamiliar market to many self-directed, retail traders.

As a consequence, despite the undeniable advantages that the forex market offers, some online traders are no doubt apprehensive and reluctant to participate. With the passage of time, the benefits will undoubtedly become more widely known and better understood, and more traders will almost certainly migrate from the equity and futures markets. In the meantime, interested traders can take steps to bring themselves up to speed and learn more about this exciting market.

Having A Trading Mentor 
You’ve heard this advice before. Almost all successful traders have had some kind of role model to show them how it’s done. I’ve had a mentor too, I wouldn’t be here today writing forex blog and forex trading tips without my mentor. Here are some of the best reasons why I believe having a trading mentor is a good idea.

Trading is not about immediate gains or immediate trades. It’s all about the process, which is why trading mentors can be so valuable. They have had the experience and the ups and downs you have yet to experience. Chances are they’ve blown a few accounts and understand how to avoid it. The difference is what they decided to do once that account was blown. This little tidbit and many more are why the experience has and will always be respected.

Save Yourself Time
Learning from their experience can save you a lot of time. A forex mentor may have spent years learning trading and the different phases of the market. He can share what he learned and cut your learning curve in half. The time spent to figure the little things out can be better spent on understanding your trading style, psychology, and the market.

Save Yourself Money
There are some real dangers out there in trading. You hear trading horror stories all the time. First thing I learned when I got a mentor is to never hold through earnings. But you see people still breaking this rule left and right. This and other valuable advice can save you thousands of dollars that will keep you from making that one fatal mistake.

Trading is hard. Seeing someone who has gone through it and come out of the other side shows you it’s possible. Talk to them, spend time with them, and ask them questions. Then you’ll realize that the potential is real and not a distant dream. Feed off of their passion and internalize it as your own. This way, when the going gets tough you have someone to turn to and know they also went through the same pain.

Take A Currency Trading Course
Almost all forex trading courses available today fall into the webinar, self-study, forex blog or seminar categories. They have important strengths and weaknesses. The self-study camp is generally comprised of web-based courses, CD-ROMs, workbooks, or any combination thereof.

While self-motivated and highly disciplined traders might find self-study courses to be perfectly satisfactory, many traders require the structure of a more formal learning environment and would benefit greatly from individual instruction. Webinar, hosted by various brokers and financial market mentor around the country, typically run 3 months to years in length. Most beginner traders learned to trade forex 3 to 8 months on the webinar.

Most walk traders through at least a fair range of important topics in a more or less methodical way. The drawback, of course, is that in addition to the cost of the seminar, traders must absorb travel and accommodation expenses. And at many seminars, the number of attendees makes personal instruction impossible.

Happily, the latest trading courses make use of webinar technologies to offer a complete curriculum, a perfect mix of convenience and structure, and all the benefits of a classroom environment and one-on-one instruction at an economical price.

A complete trading course can be put online and broken down into daily lessons (for example, one lesson per day for a full month). Though the trader must log into the website to view each day's lesson, he may do so at any time that's convenient. After each lesson, students have the opportunity to post questions for course instructors and to discuss ideas with fellow students in a virtual classroom.

Brief daily assignments and quizzes and even individualized feedback from instructors based on the assignments. all play an important role in reinforcing the material and help traders learn each day's lessons. And when a complete online course is combined with a practice trading account, the trader has a risk-free opportunity to apply the lessons and strategies learned, and mentor can offer trading tips, and suggestions to help refine and improve trades. This new type, of course, represents a quantum leap forward in forex trading education.

Find A Forex Broker
Next, you need to find a good broker. A broker, will provide you with tools to learn about trading, deposit money, and start trading. You need a broker that is regulated by the leading regulators like FCA and CySEC. Using an unregulated one will only expose you to huge risks. In the past, many traders have lost millions of dollars in those schemes.

Practice Trading Currency In A Demo Account
Many online forex brokers today offer demo trading accounts, and there's simply no better way to familiarize oneself with the currency market and the broker's trading platform. Generally, FX paper trading accounts are identical to live, "real" trading accounts, in that the demo trader enjoys all the same tools and features that are available on the broker's actual system. The trader will get a feel for real-time, continuously-updating bid/ask prices.

He can experience order placement and execution. Account balances, margin requirements, and P&L are usually updated in real-time, as well. The only difference, of course, is that demo trading accounts are "funded" with anywhere from $1,000 to $1,000,000 in hypothetical money, which means that trading methodologies can be tested and evaluated under actual market conditions without having real capital at risk. You'll likely find that most demo accounts have limited lives and expire in anywhere from two weeks to one month. But for most traders, that's perfectly acceptable. after getting the feel of forex trading in a demo account, most traders are enthusiastic about taking the next step and opening a real account.

Consider Trading Mini Currency For Starters
Several forex brokers now offer mini currency accounts, which are designed for those new to online currency trading and those with limited trading capital. Such accounts can be immensely helpful to traders who wish to learn currency trading while minimizing their risk.

Instead of trading full-size currency lots (100,000 units), downsized lots (for example, 10,000 currency units) may be traded. Though the leverage in a mini FX account can still be substantial, the smaller lot sizes with correspondingly smaller tick values mean that the trader will be assuming a less total risk.

For example, while a 20-pip loss on a 100,000 EUR/USD position would be $200, the same loss on a 10,000 EUR/USD position in a mini account would amount to only $20.

The Mini FX account can be useful in helping traders develop a disciplined, rational forex trading strategy without excessively focusing on profits and losses. When trading 100,000 currency unit lots in a regular, full-size account, traders with relatively small balances tend to fixate on their equity fluctuations and sometimes base trading decisions on emotional reactions to these fluctuations.

Many traders, for example, resist closing-out unsuccessful trades at a loss, because they hope that the market will turn in their favor. Conversely, many tend to immediately take profits when the market moves in the desired direction, rather than maximizing their gains by allowing profits to run. With less capital at stake in a Mini FX account, however, the trader can develop a disciplined trading methodology as well as the confidence needed to be a successful currency trader without the anxiety and distractions that come with large P&L swings.

What next?
This whistle-stop tour of currency trading is not enough to equip a would-be investor with everything they need to know to stand a chance of making an actual return. It’s a complex area and one that, even with extensive reading and knowledge, is full of risk.

There are stockbrokers and financial advisers available to discuss standard investments and degrees of risk, but for individuals trading currency, it’s largely self-taught and fraught with risk.

Before undertaking any kind of online trading, it’s a good idea to spend time reading more and talking to other investors. Just be aware that any book, tutorial or guide that promises large returns is not being entirely honest about the level of risk involved

How To Get Started Trading Currencies