Forex Trading Guide - Forex Learning Section

Main Forex Learning sponsors

 

 

Welcome to Forex Trading Guide

Article

Your FOREX Trading Philosophy
Ron King

"Easy money" is the allure that captivates many beginning FOREX traders. FOREX websites offer "risk-free" trading, "high returns", "low investment." These claims have a grain of truth in them, but the reality of FOREX is a bit more complex.

Mistakes Of The Beginning Trader

There are 2 common mistakes that many beginner traders make: trading without a strategy and letting emotions rule their decisions. After opening a FOREX account it may be tempting to dive right in and start trading. Watching the movements of EUR/USD for example, you may feel that you are letting an opportunity pass you by if you don't enter the market immediately. You buy and watch the market move against you. You panic and sell, only to see the market recover.

This kind of undisciplined approach to FOREX is guaranteed to lose money. FOREX traders must have a rational trading strategy and not make trading decisions in the heat of the moment.

Understanding Market Movements

To make rational trading decisions, the FOREX trader must be well educated in market movements. He must be able to apply technical studies to charts and plot out entry and exit points. He must take advantage of the various types of orders to minimize his risk and maximize his profit.

The first step in becoming a successful FOREX trader is to understand the market and the forces behind it. Who trades FOREX and why? This will allow you to identify successful trading strategies and use them.

Accountability

There are 5 major groups of investors who participate in FOREX: governments, banks, corporations, investment funds, and traders. Each group has its own objectives, but 1 thing all groups except traders have in common is external control. Every organization has rules and guidelines for trading currencies and can be held accountable for their trading decisions. Individual traders, on the other hand, are accountable only to themselves.

Large organizations and educated traders approach the FOREX with strategies, and if you hope to succeed as a FOREX trader you must follow suit.

Money Management

Money management is an integral part of any trading strategy. Besides knowing which currencies to trade and how to recognize entry and exit signals, the successful trader has to manage his resources and integrate money management into his trading plan. There are various strategies for money management. Many rely on the calculation of core equity -- your starting balance minus the money used in open positions.

Core Equity And Limited Risk

When entering a position try to limit your risk to 1% to 3% of each trade. This means that if you are trading a standard FOREX lot of $100,000 you should limit your risk to $1,000 to $3,000. You do this with a stop loss order 100 pips (1 pip = $10) above or below your entry position.

As your core equity rises or falls, adjust the dollar amount of your risk. With a starting balance of $10,000 and 1 open position, your core equity is $9000. If you wish to add a second open position, your core equity would fall to $8000 and you should limit your risk to $900. Risk in a third position should be limited to $800.

Greater Profit, Greater Risk

You should also raise your risk level as your core equity rises. After $5,000 profit, your core equity is now $15,000. You could raise your risk to $1,500 per transaction. Alternatively, you could risk more from the profit than from the original starting balance. Some traders may risk up to 5% against their realized profits ($5,000 on a $100,000 lot) for greater profit potential.

These are the kinds of strategic tactics that allow a beginner to get a foothold on profitable trading in FOREX.

About the Author

Visit FOREX Trading to learn more. Ron King is a full-time researcher, writer, and web developer. Copyright 2005 Ron King. This article may be reprinted if the resource box is left intact.

Forex Learning News

forex learning

... large number of benefits to using a forex trading system. As previously stated, this type of system is designed for anyone who will like to increase the profit they return without having a huge learning curve ...

A Closer Look At The Forex Trading System - Gather.com

Most traders do not become overnight successes and most of the Forex millionaires enjoying their profits today took some time of diligent trading and learning to get where they are today. You have to come to the ...

Are You Interested In The Forex Trading System? Here Are Tips For Great Success - Gather.com

Interested in learning how to make money with forex trading? If so, you are not the only one that is interested in accomplishing this feat. The Forex market is booming, and there are a lot of people that have been ...

The Secrets Of How To Make Money With Forex Trading Revealed - Zimbio

... target levels to your trades—learning the different characteristics of potential money management techniques for the Evening Star and Morning Star formation strategies. Applying it to Existing Forex Strategies ...

Forex Strategy Corner: Using Candlestick Formations in Trading - Yahoo Finance

The most important thing you can learn about the Forex market is learning to read the charts. Being able to spot high odds and knowing which simple system to employ to take the best advantage of a situation can net ...

Online Forex Currency Trading: The Basics You Need To Know - CountingPips.com

OUR COURSE(S), PRODUCTS AND SERVICES SHOULD BE USED AS LEARNING AIDS ONLY AND SHOULD NOT BE USED TO INVEST REAL MONEY. IF YOU DECIDE TO INVEST REAL MONEY, ALL TRADING DECISIONS SHOULD BE YOUR OWN.

Forex - Forex - Weissman Signals Morning of August 25th - ForexTV.com

... few good trading books from the book stores to learn the basics about forex trading. This guide is designed in a simple and easy way and intended to provide practical insights to learning forex trading. Hence,

DIY Forex Trading School - CountingPips.com

The possibility of a layman to trade currencies in the Forex Market is never far fetched today ... for they wont have a hard time in learning the system.

Top Reasons For Using Forex Robots - Salon

... experience that some people suffered in the business affected their perception about forex trading. The expert said, ”You need to acquire knowledge and ensure a continuous learning of the forex trading because ...

Why investors lost money to forex trading – IFX boss - Punch

learning about your trading system, learning how to trade it, learning how it holds up in various markets, and learning how much money are you expecting to make from this system. Calculating expectancy will go a long ...