By Cedric Welsh – It’s hard to walk past the finance section in a library without tripping over a book that claims to be a forex manual for successful trading. Fact is that the only real manual required is a few days in the trenches entering and exiting trades. To be fair, the books do provide some valuable background and clear up the basic concepts. So read this carefully, and it just might do some good.
As a start, there is no forex market housed in some large building packed with gazillions of traders. The forex market is simply a name for a global body of the largest financial entities in the world that trade currency pairs and set currency rates. When someone speculates on currency pairs with the intention of pocketing the difference caused by fluctuations, that’s forex trading.
The first order of business is to set up a margin account with a currency broker. This account doesn’t need large deposits, and can be opened with a minimum deposit in between $1000-$2000. This gives the trader one ‘lot’ to play with, which is $100,000. The leverage available in the forex market is a lot bigger than stock markets.
This may seem astronomical, but in the forex market, the risk is lower. Even so, it’s important not to get carried away in the heat of the moment. Every good forex manual for successful trading says that trades should be placed based solely on analytical data and logic. Just to be safe, make it a rule never to place trades totaling in excess of 20% of the margin account, and make sure each individual trade doesn’t exceed 5 to 10% of the account.
Start with a demo account and paper trades where real money is not at stake. Traders usually offer demo accounts to help new traders get a feel for how the market works. It comes in handy for clarifying basic fundamentals like pips and spreads and how much brokers take, and what’s left for the trader.
Start reading about forex futures contracts, signals, indicators, trading strategies and systems. A very important tip for new traders is to focus relentlessly on one or at 3-4 currency pairs. Even big traders and financial institutions spend all their time and resources on a few chosen currency pairs.
Stay away from low trade volume currency pairs and stick to the popular ones like USD/CHF, USD/JPY, GBP/USD and EUR/USD. All this is basic stuff that isn’t classified as a full-fledged forex manual for successful trading. But it should be enough to start with, so long as our intrepid trader keeps going in the right direction.
About the Author
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Cedric is an article marketing expert, freelance article writer, link building professional, and freelance seo specialist.
