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    Foreign currency trading for beginners : The Only Suggestion You Need to Now !

    When you are starting as a trader, the initial months are very important. But more than that is the preparation that goes into it. You have to study the market, understand how it is analyzed, plan a strategy and then choose the kind of forex account in which you wish to trade. Here you can know only the theoretical implications of the industry. You must put them into practice before you begin your real time trading.

    Start with a Demo Account

    Make use of the risk free demo account to familiarize yourself with all the nuances of forex market.

    Before creating a new account i.e. before beginning to trade with real money, you must first practice with a demo account. This kind of account uses virtual money. Spend all your waking hours in trading in this account. Learn the different tools and resources available to the trader and how you can use it so that you make good decisions.

    Graduate To A Real Forex Account

    Keep a comfortable margin in both  your real and demo accounts.

    After practicing with your demo account, you are ready to graduate to a real account. The kind of forex account that you wish to use depends upon the amount of money that you can deposit. There are two kinds of accounts – Regular account that lets you trade in mini pips and the min account that limits your trade to a fraction of pips. The difference between the two is that the former does not limit the amount while the latter does.

    Surviving your first month of Forex trading

    The first month is always difficult to get through. Use this month to get a good perspective. Staying afloat should be your goal. Though, you are trading to earn profits, be ready for losses too. Remember, that the losses are a part of the learning experience and don’t let them pull you down.


    Stick to your trading plan to achieve your goal.

    Your goals should be realistic. They should not be the amount of profits or pips you want to earn in a day. They should be not to repeat the same mistake again. Remember that you will have bad days and good days. If you lose money on a certain day, learn from the experience and start afresh the next day. Another scenario is when you earn more profits than you have planned. At such times, you will want to take a day off from trading as you have already earned enough profit for 2 days. This is also not a good plan. Stick to your trading strategy and whether you have earned profit or sustained losses, begin the next day afresh. That is your goal – to be able to trade the next day.


    You must have a strategy for trading. If you don’t, then plan it on paper now. It should be something that you should be comfortable with and should be able to adhere to. It should be achievable. Your strategy should consist of 3 elements.

    Creating a trading plan – 

    write down your plan and follow it. It is the route you must follow to realize your goals.

    Sticking to the plan – If you have spent time charting your plan of action, you must stick to it. Follow them on all days and do not change the plan, just because you are not earning profits on a particular day.

    Close a losing trade and don’t procrastinate in the hope that the market will change in your favor.

    Monitoring trade – 

    A lot of people set their monitoring on automatic mode but it is best if you monitor it yourself. You can take action when there are changes in the market. If the losses are more than expected then you can close trade and get out without incurring too much loss.


    You need to be disciplined if you wish to be a successful trader. One of the basic rules of trading is not to risk more than 2% of the trading account on a single trade. Use all the tools and resources at your disposal to monitor trade. Your trading plan should be to use stop loss and limit orders to protect yourself.

    Taking unnecessary risks can lead to bigger losses.

    Control your emotions and learn to trade intellectually. A loss should not send you into depression or a profit should not make you greedy. Stick to the strategy that you have planned. Another thing to remember is to exercise caution when using leverage. You will be tempted to open a trade that is 500 times the amount in your account. Don’t give in to the temptation and turn a good and profitable career into a gamble.

    Getting scared and changing your strategy can also lead to losses. Be disciplined in your trade and remember that there will be days when trading is not good. Discipline is essential to successful trading and earning profits.

    Choosing a broker

    When you start a demo account with a broker, you may or may not be satisfied with his services. If you are not happy with the services that a broker offers, change him and choose on who offers services that suit you.

    Forex trading is a serious career that can be profitable if you are disciplined and follow your strategy strictly. You will not learn from the experience of others. Make proper preparations and then work your way carefully by following a game plan. It is not a gamble at a casino, where you need luck to make it work for you. It is your business, and make it a profitable one by handling it properly.

    If you allow it, currency trading can be simple. A new trader complicates things more than is essential and in the end, he loses his confidence to trade and makes bad decisions. This leads, and rightly, to the feeling that he does not know anything. As a result, he is on the lookout for tips to trade. Though a beginner will find difficulty in trading, he must realize that the people from whom he is asking for tips learnt through their mistakes and converted their bad decisions to knowledge.

    Technical and Fundamental Analysis

    Learning Technical and fundamental analysis is the first step that you must take to learn currency trading. It is this mathematical prediction that draws the line between forex trading and gambling.

    Technical analysis follows the belief “The trend is your friend”. The followers of this school of thought believe that a trend does not change unless it is given a reason to do so. There has to be a reason like a news announcement or maybe an event that affects the financial world. The trader has to read charts and then determine the direction of the overall trend.

    Fundamental analysis on the other hand is based on news and major events. It is believed that no trend lasts forever. It comes to a stop sooner or later.

    To succeed, the Forex trader must keep an eye on the charts as well as the news.

    As a trader, you have to learn both these kinds of analysis if he wants to correctly predict the trend and earn profits. Though charts are essential part of predicting the trends, you can never predict the overall trend until you read them in combination with fundamental analysis.

    System Hopping

    All good trading decisions are a result of lessons learnt from experience.

    When the trader is not confident about his skills, he begins to switch from one system to another and keeps changing indicators without understanding how either works. All he knows is that he has to buy a currency when it crosses a mark. The calculation involved in this is beyond his comprehension. When he understands this theory, the calculation begins to make sense.

    Another thing that leads to system hopping is the trader’s fear of losing money. All traders are in the market to earn profits. They forget to enjoy the game and are always looking for wins.

    Beginners know that they cannot earn profits and there will be losses too. But though they know this intellectually, they are not equipped to accept it emotionally. As a result, this fear of loss leads to add one indicator after another to their system, so that they are on top of the market. They can now read the indicators and where they are pointing but are unable to see the price trend.

    When you pile indicators, you will be more confused because each indicator is telling you to do something different.

    This is because, while an M.A.C.D indicator may indicate that selling is the right thing to do, other indicators like ADX may indicate that it is a good time to buy. This becomes complicated and you will only become more confused and as a result, make bad decisions.

    Read the Charts

    This is where Technical Analysis comes in. Follow the charts and with the help of technical and fundamental analysis, see where the overall trend is heading. Is it going up or down? When the trend is moving from the upper hand left corner to the lower right side, then the trend is moving down and vice versa. Figure out the trend and focus on it. That is the only way to avoid a lot of complication and trouble.

    When you learn to read the charts and figure out the direction of prices, you will look back on your trading career one day and wish that you had sold the USD/EUR while you had time.

    Taking a look at the weekly chart will help you determine the direction of the trend.

    Some traders only check the overall trend and refuse to take any risks by going in any other direction. These are the safe players. They need patience but in the end their patience pays off and by simplifying their trade, they are able to rest easy.

    Remember that Forex trading is not gambling. Gambling is all about luck, whereas Forex trading is about being able to read charts and predict trends by using logic. Forex experts are rarely wrong when they make predictions. Rather than asking for tips and depending upon the experience of others, it is best to learn how the indicators and system work. Make trading simple by following the trends and move on when you find something that you do not understand.

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