Top 5 Most Asked Questions By New Forex Traders

August 21, 2010

By Mohamed Rabea Trading the forex market is very risky, the last thing you want to do is to jump in with your hard earned money without having enough knowledge about how the market really works and face the loss of your capital. Dont get too excited about it and risk your money without spending some time studying the whole business, reading as much as you can about it and once you feel ready I advice you to start trading with a demo account for at least 3 months so you can test your trading skills with virtual funds before going live. Here are some of the most asked questions by new traders.

1) How much money would I need to make it in the Forex business?

Invest only what you can afford to lose. Most trading platforms offer mini accounts where you can start trading with minimum of $50 to $250. Trade only with leverage of 1:1 (only invested money) and never go beyond 10:1

2) What is the best forex trading strategy?

Each and every individual is different. So out of so many methods select your own, which is profitable and suits your mind set, trading hours and budget. Seek assistance from any senior trader or stock guru and then stick to it and keep on modifying it till you get the hang of it and succeed.

3) How does an automated forex trading system work?

Automated forex trading systems (robots) are just a tool. Like any other tool their success ultimately depends on the person using it. Simply put, a Forex robot is a program that attempts to take the guess work out of trading currencies. Currently there is a lot of information floating around the internet about these products. Like any other tool, it needs to be used properly in order to be most effective.

4) Are Forex Managed Trading accounts worth the risk?

Unless you are an extremely disciplined trader, have an appetite for reading everything you can about the economies of other countries, understand how the economy of one country affects that of another, can deal with large amounts of risks and enjoy watching the computer screen for hours, stay away from Forex trading your self.

Whatever you do, stay far away from those highly promoted systems that promise to make you rich quick because forex was never a get rich quick business it takes time and effort to build a profitable trading account.

5) Who is the best forex broker in the market?

The word best is a relative term, to which you do not allude, best spreads, best trading platform, best executions? A lot of beginners consider lowest spreads to be best. Your trading platform is most important, with a good data feed. Executions are more important than the spread, because they can eat up your penny or two spread difference on just a few trades if theyre sneaky. The rules they apply are more important than any spread difference.

So the point is that you should forget about trying to get rich overnight from forex trading because this is almost impossible. You should instead focus on growing your account month after month because this is a much easier and more realistic way of achieving your forex profit goals.