Posted by forex at 12:31 AM
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1. Understand the FOREX marketplace. Like any advanced field of endeavor, FOREX trading has its share of arcane vocabulary and practices. A would-be trader must master how foreign currencies are priced, how trades are placed and how to know when to enter and exit a trading position.
2. Open an online FOREX brokerage account at a good broker. What makes a broker 'good?' You will want one that offers reliable information through tutorials and personal contact. You can compare the pricing schemes of various brokers; some charge a fixed amount or percentage fee per transaction. Also check a broker's reputation by looking for any online complaints against the broker. Finally, the broker should offer a powerful, intuitive trading platform that permits you to easily enter and monitor the types of trades you plan to make.
3. Perfect your trading strategy. FOREX traders use fundamental and/or technical analysis to guide their trades. Fundamental analysis interprets the economic, social and political factors that influence the demand for different currencies. Technical analysis uses past prices and trading volumes to predict future prices. Fundamental analysis is most often used for establishing long-term positions whereas technical analysis is favored by day traders.
4. Investigate FOREX signaling software. Because of the rapid-fire pace of FOREX trading, many traders rely on real-time software to signal trading entry and exit points. Almost all of these software packages rely on technical analysis to generate signals. The better programs offer a wide range of strategies that use price trends and moving averages to suggest buy and sell transactions. In some cases, brokers may offer trading platforms that are integrated with signaling programs -- these are often a good choice because they require you to only learn one system.
5. Practice with simulated trading. Most broker platforms offer a simulation mode, in which practice trades are made without monetary risk. By extensively testing your trading strategy in simulation mode, you can make important improvements before you 'go live.' The testing period will also allow you to establish the trading discipline -- knowing when to cut your losses and take your profits -- employed by successful FOREX traders.