Getting Started In Forex: What One Should Know

The lure of high returns for only a minimum investment may lead one to jump right away into the forex bandwagon. But it takes more than a bit of money, and the desire to rake in big bucks, to succeed at forex trading.

As with anything else, to be successful in forex trading is to have the necessary experience and training in forex trading. They are not just fundamental factors; they are CRITICAL factors in forex trading success.

Successful forex traders know and understand the direction that the forex market is heading. They also understand the factors that control the direction of the forex market.

Unlike other financial markets, the forex market is unique for (a) the sheer amount of money that is traded daily (estimated at $1,880 billion daily on the average), (b) the variety and number forex traders, and (c) the dispersion of the market across the globe.

The market is also very liquid, and buying and selling currencies is relatively easy. Most important, however, is that there is a myriad of factors that affect exchange rates. Feeling the pulse of those factors is what forex traders must be experienced or be trained on, but there is so much that needs to be learned.

Forex markets, whether they are spots, derivatives, outright forwards, swaps, or options, move quickly. It takes experience and training for forex traders to accurately forecast in which direction the markets would take.

Over at the Internet, there are many websites that offer would-be traders the chance to practice trading. Some websites offer demo accounts, or accounts that sound and feel like the real thing. Some websites, however, do not offer demo accounts but instead offer starter accounts for as low as $25.

There are advantages and disadvantages to both demo accounts and starter accounts. Demo accounts are typically risk-free and hence no losses can ever be accrued from them. Demo accounts, however, typically can set off emotional responses to movements in the market rather than calculated and rational responses.

With starter accounts, there is always the risk of losses, even if it is just $25. But traders can be trained in taking calculated risks rather than by going with emotional responses.

In any case, learning the basics of the forex market, knowing trading terminologies, advanced, learning advanced technical analysis, and developing trading strategies are some trainable skills that will help forex traders succeed.

Some tools in trading are books, charts, guided tours, and outlook reports.