Forex?
What is it, anyway?
The marketThe currency trading (FOREX) market is the biggest and the fastest growing market on earth. Its daily turnover is more than 2.5 trillion dollars, which is 100 times greater than the NASDAQ daily turnover. (click here to read full market background by Easy-Forex?).
Markets are places to trade goods. The same goes with FOREX. The Forex goods (or merchandise) are the currencies of various countries. You buy Euro, paying with US dollars, or you sell Japanese Yens for Canadian dollars. That's all.
How does one profit in Forex?
Very simple and obvious: buy cheap and sell for more! The profit is generated from the fluctuations (changes) in the currency exchange market.
The nice thing about the FOREX market, is that regular daily fluctuations, say - around 1%, are multiplied by 100! (in general, Easy-Forex? offers trading ratios from 1:50 to 1:200). If, for example, the exchange rate of "your" pair of currencies increased by 0.6% in the last 4 hours, your profit will be 60% on your investment! Such can happen in one business day, or in a few hours, even minutes.
Moreover, you cannot lose more than your "margin"! You may profit unlimited amounts, but you never lose more than what you initially risked and invested.
You can implement your choice (the pair of currencies, the volume amount) under any direction to which the market is moving, and yet make profit. It does not matter whether the exchange rate is going up or down: you can always decide to buy Euro and sell dollar, or vice versa - buy dollar and sell Euro. You don't have to physically possess certain currencies in order to perform "buy" or "sell" with them.
How do I start?
Register (Easy-Forex? offers the simplest and quickest registration process, no obligation); deposit your first trading "margin" amount (credit cards are welcome, only by Easy-Forex?); start trading.
It can't be simpler or easier than that. Need help? We'll provide you with 1-on-1 training and service, as much as necessary (Easy-Forex? offers real people service, live, in your own language).
How do I trade Forex?
You select the pair of currencies with which you wish to make a Forex deal. You determine the volume (the amount of the deal). You deposit the "margin" (collateral needed to facilitate the deal. Usually - only a very small portion of the whole deal, say: 1% or 1:100).
Before you finally activate the deal, you can still "freeze" it for a few seconds. That enables you to either change the terms, or accept it as is, or altogether regret the whole idea. The "freeze" feature is a unique service by Easy-Forex?.
When your Forex deal is running (you hold an "open position"), you can monitor its status and check scenarios online, whenever you wish. You may change some terms in the deal, or close it (and cash the profit, if any, or minimize the loss, if any). Moreover, Easy-Forex? lets you determine a "take-profit" rate, with which the deal will close automatically for you, when and if such rate occurs in the market. Meaning: you do not have to stay near your computer when you hold open positions.
Want to know more? Want to get on-line training? Register here (simple, quick, no obligation), we'll be glad to guide you, every step of the way.
Good luck!
Forex trading involves substantial risk of loss, and may not be suitable for everyone.
About the Author
Yogyakarta
Tuesday, February 5, 2008
Wednesday, January 30, 2008
Trading Forex. Strategies for the Beginners - 3 Important Points by Cas Jones
Most Internet visitors have heard about Forex also known as Foreign Exchange market at least once. There's truly a whole lot of information about it that came out last years. Forex is really huge - nearly 3 trillions of dollars are exchanged daily on the planet! This sum is often used in ads, that often sound like "3 000 000 000 000 dollars - take your piece of cake, that's very easy!"
Well, unfortunately that's not true, that's just a marketing trick and nothing more. Without the proper knowledge and trading skills you won't get any profits as a forex trader at all, you'll just lose your money. It all comes down to your knowledge, skills and trading experience. But how to get those skills and experience? Where to start? In this article I want to give you the basic steps every beginner should make.
As a forex trader you surely should know the basic terminology. That's where that "forex novice tutorials" really come into play! There are literally hundreds of them all over the Internet and some of them are free. Just pick one or two and read them carefully. Many forex starters don't begin their trading for too long. They keep consuming and absorbing information while their trading experience is almost zero. I recommend to study your first tutorial for some time but then begin to do your exact steps in your trading practice.
Many tutorials and guides recommend to start from mini-forex accounts to feel the real money on the one hand, but not to risk too much capital on the other hand. I agree - it's the best choice available for my opinion. A lot of forex brokers offer mini accounts, and I'll recommend one of them at the end of this article (see the resourse box for the details). You need to learn the basics of technical and fundamental analysis. Then begin to study trading indicators, pick yourself a currency pair and make some trial deals. Just buy, sell and see what happens. Try to experiment with different currencies, charts, indicators etc.
After you feel yourself comfortable with your trading platform, you need to pick yourself a trading system. There are a lot of them offered to the public today. My advice is: don't make things too complex and complicated, just pick some free simple forex trading strategy and try it on your mini-forex account. Remember: only result matters, not the complexity of the system. If it's too difficult, you'll fail in mastering it and won't make any profit. So my advice for your first trading system is: as simple as possible.
Ok, so what now? Testing. You need to test your strategy and, if it doesn't prove itself, pick another one. A lot of traders recommend to test on paper or on demo accounts, while other say mini-forex is best for this purposes. I think that if you can put several hundred dollars for testing your system, just do it. A lot of forex starters did well on demo but failed after opening a real account so it's better for you just to get used to real money. But please don't make your initial deposit too high, it'll make no difference for your trading, remember that your first purpose in just to gain the basic experience. My advice for the first mini-deposit is two hundred - one thousand dollars, that will be quite enough.
About the Author
I am a freelance writer and write in many areas including finance, advertising, investments and trading.I recommend you to try out this Forex Trading Platform. No Download. Open Account in 5 Minutes. Trade USD vs. All Major Currencies. Start for As Little As $100. Leverage Up to 200:1. Use Your Credit Card to deposit funds. See you later!
Well, unfortunately that's not true, that's just a marketing trick and nothing more. Without the proper knowledge and trading skills you won't get any profits as a forex trader at all, you'll just lose your money. It all comes down to your knowledge, skills and trading experience. But how to get those skills and experience? Where to start? In this article I want to give you the basic steps every beginner should make.
As a forex trader you surely should know the basic terminology. That's where that "forex novice tutorials" really come into play! There are literally hundreds of them all over the Internet and some of them are free. Just pick one or two and read them carefully. Many forex starters don't begin their trading for too long. They keep consuming and absorbing information while their trading experience is almost zero. I recommend to study your first tutorial for some time but then begin to do your exact steps in your trading practice.
Many tutorials and guides recommend to start from mini-forex accounts to feel the real money on the one hand, but not to risk too much capital on the other hand. I agree - it's the best choice available for my opinion. A lot of forex brokers offer mini accounts, and I'll recommend one of them at the end of this article (see the resourse box for the details). You need to learn the basics of technical and fundamental analysis. Then begin to study trading indicators, pick yourself a currency pair and make some trial deals. Just buy, sell and see what happens. Try to experiment with different currencies, charts, indicators etc.
After you feel yourself comfortable with your trading platform, you need to pick yourself a trading system. There are a lot of them offered to the public today. My advice is: don't make things too complex and complicated, just pick some free simple forex trading strategy and try it on your mini-forex account. Remember: only result matters, not the complexity of the system. If it's too difficult, you'll fail in mastering it and won't make any profit. So my advice for your first trading system is: as simple as possible.
Ok, so what now? Testing. You need to test your strategy and, if it doesn't prove itself, pick another one. A lot of traders recommend to test on paper or on demo accounts, while other say mini-forex is best for this purposes. I think that if you can put several hundred dollars for testing your system, just do it. A lot of forex starters did well on demo but failed after opening a real account so it's better for you just to get used to real money. But please don't make your initial deposit too high, it'll make no difference for your trading, remember that your first purpose in just to gain the basic experience. My advice for the first mini-deposit is two hundred - one thousand dollars, that will be quite enough.
About the Author
I am a freelance writer and write in many areas including finance, advertising, investments and trading.I recommend you to try out this Forex Trading Platform. No Download. Open Account in 5 Minutes. Trade USD vs. All Major Currencies. Start for As Little As $100. Leverage Up to 200:1. Use Your Credit Card to deposit funds. See you later!
Forex Charts - Avoid This Common Deadly Mistake or Lose by Monica Hendrix
If there is one basic mistake traders make and continue to make it's the one in this article and if you make it you will simply lose all your money and do it quickly, so here is the forex chart mistake to avoid.
The mistake is the forex prices can be predicted on forex charts.
No they can't...
Of course if you are predicting you are hoping and guessing and that won't get you far in any venture in life, let alone forex trading.
Of course there are many vendors who will tell you prices can be predicted with scientific accuracy and the naïve trader swallows it.
The most popular scientific theories are based around the works of - Gann, Elliot wave and Fibonacci.
These guys never made money with their theories and neither will you - because the fact that markets move at all, proves there is no scientific theory... If there were a scientific theory, we would all know the price in advance and there would be no market - common sense really.
Other forex traders predict but they don't believe in scientific theories - their just trying to buy low and sell high and this doesn't work either.
For example - a trader sees the price dip to just above support, assumes it will hold and executes his trading signal. Of course sometimes it works, most of the time it does not.
Rather than hoping guessing or predicting - you need to get the odds in your favour. Forex trading is a game of odds not certainties but get them on your side and you can make a ton of money.
The Way To Win With Forex Charts
Lets say you see prices dip to support you don't buy you wait for momentum to turn up (you can read about momentum oscillators in our other articles) this gives you advance warning of a shift in price velocity and shows the level is likely to hold.
You can also use momentum to follow a break of support and trading breakouts is very profitable.
It's a fact that most big bullish or bearish moves start from new market lows or new highs and by following the breaks with momentum on your side you can catch the biggest trends.
So remember:
The next time you see someone say they can predict market tops or bottoms with 90% market accuracy - you know their lying and that if you try and predict with your forex charts, you simply lose all your money and do it quickly.
Use your forex charts correctly. Trade the odds, confirm each move with momentum and enjoy long term currency trading success.
About the Author
NEW! 2 X FREE ESSENTIAL TRADER PDFS
For free 2 x trading Pdf's with 90 of pages of essential info and an exclusive forex trading system for beginners visit our website at: http://www.learncurrencytradingonline.com
The mistake is the forex prices can be predicted on forex charts.
No they can't...
Of course if you are predicting you are hoping and guessing and that won't get you far in any venture in life, let alone forex trading.
Of course there are many vendors who will tell you prices can be predicted with scientific accuracy and the naïve trader swallows it.
The most popular scientific theories are based around the works of - Gann, Elliot wave and Fibonacci.
These guys never made money with their theories and neither will you - because the fact that markets move at all, proves there is no scientific theory... If there were a scientific theory, we would all know the price in advance and there would be no market - common sense really.
Other forex traders predict but they don't believe in scientific theories - their just trying to buy low and sell high and this doesn't work either.
For example - a trader sees the price dip to just above support, assumes it will hold and executes his trading signal. Of course sometimes it works, most of the time it does not.
Rather than hoping guessing or predicting - you need to get the odds in your favour. Forex trading is a game of odds not certainties but get them on your side and you can make a ton of money.
The Way To Win With Forex Charts
Lets say you see prices dip to support you don't buy you wait for momentum to turn up (you can read about momentum oscillators in our other articles) this gives you advance warning of a shift in price velocity and shows the level is likely to hold.
You can also use momentum to follow a break of support and trading breakouts is very profitable.
It's a fact that most big bullish or bearish moves start from new market lows or new highs and by following the breaks with momentum on your side you can catch the biggest trends.
So remember:
The next time you see someone say they can predict market tops or bottoms with 90% market accuracy - you know their lying and that if you try and predict with your forex charts, you simply lose all your money and do it quickly.
Use your forex charts correctly. Trade the odds, confirm each move with momentum and enjoy long term currency trading success.
About the Author
NEW! 2 X FREE ESSENTIAL TRADER PDFS
For free 2 x trading Pdf's with 90 of pages of essential info and an exclusive forex trading system for beginners visit our website at: http://www.learncurrencytradingonline.com
Saturday, January 26, 2008
Where To Find The Best Forex Trading Forums
If you are an individual that likes to invest in the foreign exchange market, then spending some time on forums dedicated to Forex trading may be helpful for you. Of course, some of these online forums are a better use of your time than others. Here are a few tips to help you find forums that will help you interact with other investors and benefit from the association.
One of the easiest methods of getting a lead on helpful forums is to talk with your dealer. There is a good chance that he or she will know of at least a couple of forums that would be right for you. Spend some time looking into these forums and see if they seem to do the trick. If not, you may pick up some good leads on other forums that might be of interest.
Another approach to finding the right Forex trading forums is to conduct an Internet search using your preferred currencies as part of the search criteria. By focusing your search more on forums that tend to deal more with the types of currency that you are interested in trading, you eliminate spending time checking out various boards that do not include the type of information you want. There are a number of forums online that focus more on the intricacies of working with specific currencies, so chances are you will find at least a few that will be just what you had in mind.
Keep in mind that as you search through the Internet, you will come across quite a few forums that will catch your eye. Make sure that as you go, you bookmark the ones that seem to be likely prospects for long term participation. Don't feel that you have to limit the number of forums you bookmark. If there is something that makes you feel a particular forum might be helpful, then include it in your favorites.
As you become more familiar with the forums you chose, several will begin to stand out from the rest of the pack. When this begins to occur, start trimming back your list of Forex trading forums a little at a time. Don't be in a big hurry to do this; as long as you feel there is some value to checking on a given forum from time to time, then keep the link handy. Over time, you will probably develop an affinity for a handful of forums and can delete the rest at that point.
Finding the right Forex trading forums is not a task you will complete in a day or two. That means patience will be very important in finding and evaluating different forums over a period of time. Just relax and take your time as you go through the steps necessary to decide if a forum is right for you. In the end, the results will be well worth your time and effort.
For more information on how to trade Forex like a pro, visit Forex Advisory Services now! Here you'll find tons of informative articles, as well as full reviews on the top Forex products and programs available today!
Article Source: http://EzineArticles.com/?expert=John_Q_Locke
One of the easiest methods of getting a lead on helpful forums is to talk with your dealer. There is a good chance that he or she will know of at least a couple of forums that would be right for you. Spend some time looking into these forums and see if they seem to do the trick. If not, you may pick up some good leads on other forums that might be of interest.
Another approach to finding the right Forex trading forums is to conduct an Internet search using your preferred currencies as part of the search criteria. By focusing your search more on forums that tend to deal more with the types of currency that you are interested in trading, you eliminate spending time checking out various boards that do not include the type of information you want. There are a number of forums online that focus more on the intricacies of working with specific currencies, so chances are you will find at least a few that will be just what you had in mind.
Keep in mind that as you search through the Internet, you will come across quite a few forums that will catch your eye. Make sure that as you go, you bookmark the ones that seem to be likely prospects for long term participation. Don't feel that you have to limit the number of forums you bookmark. If there is something that makes you feel a particular forum might be helpful, then include it in your favorites.
As you become more familiar with the forums you chose, several will begin to stand out from the rest of the pack. When this begins to occur, start trimming back your list of Forex trading forums a little at a time. Don't be in a big hurry to do this; as long as you feel there is some value to checking on a given forum from time to time, then keep the link handy. Over time, you will probably develop an affinity for a handful of forums and can delete the rest at that point.
Finding the right Forex trading forums is not a task you will complete in a day or two. That means patience will be very important in finding and evaluating different forums over a period of time. Just relax and take your time as you go through the steps necessary to decide if a forum is right for you. In the end, the results will be well worth your time and effort.
For more information on how to trade Forex like a pro, visit Forex Advisory Services now! Here you'll find tons of informative articles, as well as full reviews on the top Forex products and programs available today!
Article Source: http://EzineArticles.com/?expert=John_Q_Locke
Forex Trading System Strategies: How to Create a Simple But Accurate Forex Trading System by Gregory DeVictor
The foreign exchange market, or Forex market, is an around-the-clock cash market where the currencies of nations are bought and sold. The value of your Forex investment increases or decreases because of changes in the currency exchange rate or Forex rate. These changes can occur at any time, and often result from economic and political events. The purpose of this article is to present Forex trading system wisdom and strategies from some of the world's trading greats.
Do Not Play With Your Trading Losses: According to William Eckhardt, These evidently instinctive human tendencies spell doom for the trader - take your profits, but play with your losses.
Good Money Management Alone Is Not Enough: According to Monroe Trout, Good Money Management alone isn't going to increase your edge at all. If your system isn't any good, you're still going to lose money, no matter how effective your money management rules are. But if you have an approach that makes money, then money management can make the difference between success and failure.
Don't Optimize Trading Size: According to William Eckhardt, Trading Size is one aspect you don't want to optimize. The optimum comes just before the precipice. Do Not Play Catch Up: According to Richard Dennis, I learned to avoid trying to catch up or double up to recoup losses. I also learned that a certain amount of loss will affect your judgment, so you have to put some time between that loss and the next trade.
Trade Small: According to Mark Ritchie, I think it's generally a good idea that when you put on a trade, it should be so small that it seems almost a waste of your time. Always trade at a level that seems too small.
Do Not Override Your System Too Often: According to William Eckhardt, You should try to express your enthusiasm and ingenuity by doing research at night, not by overriding your system during the day. Overriding is something you should do only in unexpected circumstances - and then only with great forethought. If you find yourself overriding routinely, it's a sure sign that there's something that you want in the system that hasn't been included.
It Is A Skill You Can Learn: According to Michael Marcus, I think to be in the upper echelon of successful traders requires an innate skill, a gift. It's just like being a great violinist. But to be a competent trader and make money is a skill you can learn.
Be Greedy When Others Are Fearful: According to Warren Buffett, Be greedy when others are fearful.
Courage: According to Bill Lipschutz, It is not enough to simply have the insight to see something apart from the rest of the crowd, you also need to have the courage to act on it and to stay with it. It's very difficult to be different from the rest of the crowd the majority of the time, which by definition is what you are doing if you are a successful trader.
Not Losing Money: According to Linda Bradford Raschke, The good traders are the ones who can hold their ground the majority of the month and participate in that small handful of trades that are windfalls. The real skill is in not LOSING money!
Trading Forex on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to invest in foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite.
About the Author
Gregory DeVictor is a consultant who has been developing and marketing web sites since 1999. You can avoid the mistakes that 90% of Forex traders make and become part of the select 10% group of successful Forex traders. Learn more at: http://www.forex-trading-system.name
Do Not Play With Your Trading Losses: According to William Eckhardt, These evidently instinctive human tendencies spell doom for the trader - take your profits, but play with your losses.
Good Money Management Alone Is Not Enough: According to Monroe Trout, Good Money Management alone isn't going to increase your edge at all. If your system isn't any good, you're still going to lose money, no matter how effective your money management rules are. But if you have an approach that makes money, then money management can make the difference between success and failure.
Don't Optimize Trading Size: According to William Eckhardt, Trading Size is one aspect you don't want to optimize. The optimum comes just before the precipice. Do Not Play Catch Up: According to Richard Dennis, I learned to avoid trying to catch up or double up to recoup losses. I also learned that a certain amount of loss will affect your judgment, so you have to put some time between that loss and the next trade.
Trade Small: According to Mark Ritchie, I think it's generally a good idea that when you put on a trade, it should be so small that it seems almost a waste of your time. Always trade at a level that seems too small.
Do Not Override Your System Too Often: According to William Eckhardt, You should try to express your enthusiasm and ingenuity by doing research at night, not by overriding your system during the day. Overriding is something you should do only in unexpected circumstances - and then only with great forethought. If you find yourself overriding routinely, it's a sure sign that there's something that you want in the system that hasn't been included.
It Is A Skill You Can Learn: According to Michael Marcus, I think to be in the upper echelon of successful traders requires an innate skill, a gift. It's just like being a great violinist. But to be a competent trader and make money is a skill you can learn.
Be Greedy When Others Are Fearful: According to Warren Buffett, Be greedy when others are fearful.
Courage: According to Bill Lipschutz, It is not enough to simply have the insight to see something apart from the rest of the crowd, you also need to have the courage to act on it and to stay with it. It's very difficult to be different from the rest of the crowd the majority of the time, which by definition is what you are doing if you are a successful trader.
Not Losing Money: According to Linda Bradford Raschke, The good traders are the ones who can hold their ground the majority of the month and participate in that small handful of trades that are windfalls. The real skill is in not LOSING money!
Trading Forex on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to invest in foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite.
About the Author
Gregory DeVictor is a consultant who has been developing and marketing web sites since 1999. You can avoid the mistakes that 90% of Forex traders make and become part of the select 10% group of successful Forex traders. Learn more at: http://www.forex-trading-system.name
Friday, January 25, 2008
Forex - How to choose the best Broker for YOUR needs by Nick Moseley
Choosing a good FX currency broker can be as complex as Forex trading itself. For this reason you need to do your background work as tightly as you would (if not more so in fact) for a really big trade. Here are some tips to keep in mind to make your research and choice easier.
In the U.S., any worthwhile Forex broker will be registered as a Futures Commercial Merchant (FCM) with the CFTC (Commodities Futures Trading Commission). Finding one doesn't end the need for research, it's just the bare minimum you should require.
Since Forex trades are highly leveraged (in effect, the broker 'lends' an investor up to 99% of the money required to make a trade), the broker you select should be associated with a firm with deep pockets.
Forex accounts are not FDIC (Federal Deposit Insurance Corporation) insured, so you can not expect the U.S. government, or any other authority to bail out the broker firm or repay you if the market turns critically downward. Large institutions, with ample capital to withstand downturns in the market, and rapid drains on their deposits if clients withdraw en masse, are crucial to your financial peace of mind.
Beyond those rock bottom basics there are many options.
Since the Forex markets trade 24 hours per day all around the world, you may want to trade after normal business hours in your home country. Whether your broker resides in the same country (usually, for language and legal reasons) or not, you want one who will pick up the phone when you call.
Forex trading has moved into the Internet age, but it is still very much a phone-based business. Getting a broker on the phone at any time of the day or night can mean the difference between profit and loss. Sometimes, big profit or loss.
Since Forex brokers don't work off standard commissions the way stock or bond brokers do, you need to research the firm's spreads. Forex trading is always done in currency pairs. A spread is the difference between the bid and ask price - what the broker pays to buy versus the amount they sell a currency for.
Some brokers offer fixed spreads on some or all trades. This has the advantage of predictability. It's a kind of fixed 'commission'. But that may or may not suit your trading style or your budget, since they tend to be larger than variable spreads.
All brokers will offer a "standard" account to a qualified budget proven client. Typically you have to fill out an application form that states you have adequate capital and understand the risks involved in Forex trading. Standard accounts trade currency in standard lots of 100,000 units. You can't buy 100 euros for $150, you have to buy 100,000 euros.
Since that's a very large investment for the average trader, brokers offer leverage. Professional traders use leverage as well, of course. So basically you put in, say 1% of the total, the broker covers the 99%. That has huge profit (or loss) potential, but it entails significant risk. So be aware of a broker's margin call policy.
Many brokers today will offer some form of 'mini' account. Instead of trading in standard lots, they trade in smaller units, such as 10,000. This lowers the investment required from, say $2,500 to only $250. Most clients can easily meet that minimum.
But that lower leverage requirement limits the potential for profits. That may or may not suit your investment needs. Only you can decide.
You'll want a broker with software that provides you with the research and other trading tools you will need to be effective in Forex trading. Forex investing is much more complex and volatile than even stock or bond trading, which is already not simple when done well.
Be sure to use the trial accounts offered and make several 'fake' trades in order to test out the software and research available. You need real-time prices - Forex moves very fast - and lots of technical and fundamental analysis information at your fingertips.
There are websites and forums where specific brokers are discussed, but take what's said there with a grain of salt. Just as with complaints about vendors on eBay or Amazon and other large Internet trading arenas, a few bad remarks shouldn't ruin the reputation of honorable brokers.
Beyond all that, the factors become a little more difficult to judge. Above everything, you want to feel you trust the person on the other end of the line. They are not there to be your friend or listen to personal complaints or trade tips. But you should get the sense that they are competent, professional and ethical.
Take your time to research. After all, your decision will affect ALL your trades.
About the Author
From London, Nick now lives in Stockholm with wife Lena and Gunnar a Border Terrier. He likes long forest and lakes walks, is learning Swedish and loves making money from investments that are as cunning as a fox and go up even when the markets go down! He runs http://www.forex-master-trader.info which promotes a system called Forex Trend Trader and offers a free Forex for Beginners email course.
In the U.S., any worthwhile Forex broker will be registered as a Futures Commercial Merchant (FCM) with the CFTC (Commodities Futures Trading Commission). Finding one doesn't end the need for research, it's just the bare minimum you should require.
Since Forex trades are highly leveraged (in effect, the broker 'lends' an investor up to 99% of the money required to make a trade), the broker you select should be associated with a firm with deep pockets.
Forex accounts are not FDIC (Federal Deposit Insurance Corporation) insured, so you can not expect the U.S. government, or any other authority to bail out the broker firm or repay you if the market turns critically downward. Large institutions, with ample capital to withstand downturns in the market, and rapid drains on their deposits if clients withdraw en masse, are crucial to your financial peace of mind.
Beyond those rock bottom basics there are many options.
Since the Forex markets trade 24 hours per day all around the world, you may want to trade after normal business hours in your home country. Whether your broker resides in the same country (usually, for language and legal reasons) or not, you want one who will pick up the phone when you call.
Forex trading has moved into the Internet age, but it is still very much a phone-based business. Getting a broker on the phone at any time of the day or night can mean the difference between profit and loss. Sometimes, big profit or loss.
Since Forex brokers don't work off standard commissions the way stock or bond brokers do, you need to research the firm's spreads. Forex trading is always done in currency pairs. A spread is the difference between the bid and ask price - what the broker pays to buy versus the amount they sell a currency for.
Some brokers offer fixed spreads on some or all trades. This has the advantage of predictability. It's a kind of fixed 'commission'. But that may or may not suit your trading style or your budget, since they tend to be larger than variable spreads.
All brokers will offer a "standard" account to a qualified budget proven client. Typically you have to fill out an application form that states you have adequate capital and understand the risks involved in Forex trading. Standard accounts trade currency in standard lots of 100,000 units. You can't buy 100 euros for $150, you have to buy 100,000 euros.
Since that's a very large investment for the average trader, brokers offer leverage. Professional traders use leverage as well, of course. So basically you put in, say 1% of the total, the broker covers the 99%. That has huge profit (or loss) potential, but it entails significant risk. So be aware of a broker's margin call policy.
Many brokers today will offer some form of 'mini' account. Instead of trading in standard lots, they trade in smaller units, such as 10,000. This lowers the investment required from, say $2,500 to only $250. Most clients can easily meet that minimum.
But that lower leverage requirement limits the potential for profits. That may or may not suit your investment needs. Only you can decide.
You'll want a broker with software that provides you with the research and other trading tools you will need to be effective in Forex trading. Forex investing is much more complex and volatile than even stock or bond trading, which is already not simple when done well.
Be sure to use the trial accounts offered and make several 'fake' trades in order to test out the software and research available. You need real-time prices - Forex moves very fast - and lots of technical and fundamental analysis information at your fingertips.
There are websites and forums where specific brokers are discussed, but take what's said there with a grain of salt. Just as with complaints about vendors on eBay or Amazon and other large Internet trading arenas, a few bad remarks shouldn't ruin the reputation of honorable brokers.
Beyond all that, the factors become a little more difficult to judge. Above everything, you want to feel you trust the person on the other end of the line. They are not there to be your friend or listen to personal complaints or trade tips. But you should get the sense that they are competent, professional and ethical.
Take your time to research. After all, your decision will affect ALL your trades.
About the Author
From London, Nick now lives in Stockholm with wife Lena and Gunnar a Border Terrier. He likes long forest and lakes walks, is learning Swedish and loves making money from investments that are as cunning as a fox and go up even when the markets go down! He runs http://www.forex-master-trader.info which promotes a system called Forex Trend Trader and offers a free Forex for Beginners email course.
Profitable Forex Trading: Stop Asking Questions! by Harold Hsu
I heard this saying a few years ago: "If you have to ask you shouldn't be trading" And I thought to myself, wow, that's such a simple, yet powerful statement!
Think about it. If you had a reliable, trading system that consistently got you trading profits, would you EVER have to ask anyone else's opinion? Would you have to ask anyone questions about trading?
You see, too many traders today are asking question after question without bothering to find out the answers for themselves. These people scour online forums and websites, asking questions about trading and waiting for someone to provide a quick reply. And in the end, these people don't really learn anything except how to confuse themselves.
I think you'll agree with me that good traders are action-orientated. They look for news reports to read, plan out their trading systems, and execute their orders based on their research and knowledge. But what good traders Don't do however, is to ask other traders' opinions. One good reason for this is because more than 90% of the traders in the World today are losing traders anyway! Why get advice from people who can't trade for themselves?
Also, if you keep posing questions to different people, you'll eventually get very confused yourself. This is because many people trade in different ways. If you're a long-term trend trader, why ask advice from a day trader? If you're a value investor, then why seek an opinion from a momentum trader? This is a complete waste of time and effort.
Asking too many questions takes away your ability to feel responsible for your own actions. If a trade fails, it's not your fault right? After all, you took this trading advice from someone else... let's just blame that guy! He gave you bad trading advice and it's his fault that you lost money!
But guess what, that guy doesn't care. He's not the one losing money... you are! So take full ownership of your trading career, and find out the answers to your own questions if you have to. Don't rely on anyone else but yourself.
About the Author
To learn more, download my free 26-page guide here: "Forex Trading Traps!"
Harold Hsu is the owner of http://ForexSystemProfits.com where he provides premium Forex trading information and resources.
Think about it. If you had a reliable, trading system that consistently got you trading profits, would you EVER have to ask anyone else's opinion? Would you have to ask anyone questions about trading?
You see, too many traders today are asking question after question without bothering to find out the answers for themselves. These people scour online forums and websites, asking questions about trading and waiting for someone to provide a quick reply. And in the end, these people don't really learn anything except how to confuse themselves.
I think you'll agree with me that good traders are action-orientated. They look for news reports to read, plan out their trading systems, and execute their orders based on their research and knowledge. But what good traders Don't do however, is to ask other traders' opinions. One good reason for this is because more than 90% of the traders in the World today are losing traders anyway! Why get advice from people who can't trade for themselves?
Also, if you keep posing questions to different people, you'll eventually get very confused yourself. This is because many people trade in different ways. If you're a long-term trend trader, why ask advice from a day trader? If you're a value investor, then why seek an opinion from a momentum trader? This is a complete waste of time and effort.
Asking too many questions takes away your ability to feel responsible for your own actions. If a trade fails, it's not your fault right? After all, you took this trading advice from someone else... let's just blame that guy! He gave you bad trading advice and it's his fault that you lost money!
But guess what, that guy doesn't care. He's not the one losing money... you are! So take full ownership of your trading career, and find out the answers to your own questions if you have to. Don't rely on anyone else but yourself.
About the Author
To learn more, download my free 26-page guide here: "Forex Trading Traps!"
Harold Hsu is the owner of http://ForexSystemProfits.com where he provides premium Forex trading information and resources.
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