Posted by forex at 4:32 AM
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1. Open a free practice account. This is a necessary step toward becoming a successful FOREX trader. Every major broker offers a practice account, which you can use to refine your trading skills.
2. Pick one currency pair to focus on in the beginning. FOREX is always traded in two-currency pairs (e.g., EUR/USD or USD/JPY). Choosing one pair to focus on lets you get comfortable with the nuances of that pair, and over time you will begin to notice patterns from having focused on this one pair. You make or lose money based on changes between these two currencies.
3. Manage your money. This is probably the most crucial element in FOREX trading. Money management is what separates the successful traders from the unsuccessful. A solid money management plan will give you the opportunity to make mistakes and still have enough money left for some winning trades. While $10,000 is a good level to start a FOREX account, $1,000 should be the absolute minimum.
4. Learn how to use the 'stop loss.' A stop loss is a useful tool that lets you set the system to close your trade when you have lost a predetermined amount of money. Use stop losses to help minimize your losses. No one likes to admit to mistakes, but when you trade in FOREX you will make mistakes.
5. Develop your own style of trading. Some people prefer to be more aggressive while others have a conservative nature to trading. Find out what your style is and stick with it.
6. Learn to read 'candles.' Candles are real-time price indicators that give you in-depth analysis of the psychology of the current price. All other technical indicators are lagging, thus making your real-time decisions at least 20 minutes behind. A useful resource in learning to read candles is Babypips (see Resources).