Menu Close

Forex Trading Strategy For Beginners

How you ever thought about making a trade globally? Some people might be hesitant to do such a thing, but the opportunity is just waiting for you out there. You don’t have to travel outside your country if that’s your concern.

With the availability of the Internet, you can do forex trading on a global scale, even in your own home, at work, and regardless of your location.

The FX market seems complex, especially to new traders, and they find it rather challenging to go about the trade. But nothing is impossible once you’ve learned the trade. So it is a worthwhile venture that you might want to consider even on a tight office schedule.

Being employed in a particular company may not give you all the money that you would need to finance your everyday living. Therefore, doing some extra work is often recommended, especially when money is difficult to find in today’s times. But, worry no more; the FX market is not far from your reach.

Identify your goals upon entering the FX market. This is the primary step so that you will stay focused on your endeavor. Of course, once you’ve set up a goal, you have to do all it takes to reach that goal, but it should be in a reasonable manner.

In going through forex trading, you will need an investment program and a good one. Don’t settle for anything less because an effective way to succeed in forex trading is a good program.

Most rookies commit the biggest mistake of their lives by availing of fake programs. The FX market is a vast industry, and the fact is, many scams and con artists abound on the Internet, which provides useless materials for beginners. This often leads to frustrations of beginners because they’ve already failed even before they get to start the actual trade.

Find a legitimate forex investment program. Although it might require a bit of looking around, as well as a bit of your time, once you get what you’re looking for, you’re in a good start.

You don’t have to settle with expensive programs, nor with programs promising easy and quick profits with less risk. However, you must be aware that though the FX market offers many opportunities, it is also surrounded by many chances. To become like the pros, you need to learn the forex trading system; and you have to be serious in learning it.

A good program is dynamic. It provides daily advice, manuals, DVD materials, computer disks, and other important forex trading stuff or resources to transform you into a successful trader.

First, check if their previous clients are satisfied with their services and see if they have built a good reputation in the business.

Professional traders regard forex trading as a science, some think it’s an art, and to start the actual trade, you must undergo a lot of practice.

After all, practice makes a perfect trader. Demo accounts are surefire ways to learn the different techniques used in the FX market. After you’ve mastered it, you can proceed to a mini account.

Here you can make an actual trade, but the risks are minimal. If you think you’re quite ready, then get a regular trading account. This is an efficient step-by-step process because you get to learn many things while practicing.

Always maintain calmness, and act like the pros. You are about to make big money, one that you probably never imagined in your entire life.

Forex trading is done on a margin. Margin trading allows you to control more money than what is actually in your hands. For example, to trade one million US dollars, you should have a security deposit worth ten thousand US dollars. This is a typical example with the rate at 1%.

The FX market spans around the globe so that you can trade twenty-four hours a day. If you choose to do margin trading, the spread rate is much lower compared to futures trading. The requirements are also relatively low.

Familiarize yourself with all the ins and outs of forex trading. Trading globally poses many risks; you must learn to overcome all these risks to earn big profits. Get a good forex trading program.

Discover Some Magic To Beat The Forex

One of the best-known and least understood theories of technical analysis in forex trading is the Elliot Wave Theory. Developed in the 1920s by Ralph Nelson Elliot to predict trends in the stock market, the Elliot Wave theory applies fractal mathematics to movements in the market to make predictions based on crowd behavior.

In essence, the Elliot Wave theory states that the market – in this case, the forex market – moves in a series of 5 swings upward and three swings back down, repeated perpetually. But if it were that simple, everyone would be making a killing by catching the wave and riding it until just before it crashes on the shore. So there’s a lot more to it.

One of the things that make riding the Elliot Wave so tricky is timing – of all the major wave theories, it’s the only one that doesn’t limit the reactions and rebounds of the market.

Single the ideas of fractal mathematics make it clear that there are multiple waves within waves within waves. Interpreting the data and finding the right curves and crests is a tricky process, which gives rise to the contention that you can put 20 experts on the Elliot Wave theory in one room, and they will never reach an agreement on which way a stock – or in this case, a currency – is headed.

Elliot Wave Basics

• Every action is followed by a reaction. It’s a standard rule of physics that applies to the crowd behavior on which the Elliot Wave theory is based. If prices drop, people will buy. When people buy, the demand increases and supply decreases, driving prices back up. So nearly every system that uses trend analysis to predict the currency market movements is based on determining when those actions will cause reactions that make a trade profitable.

• There are five waves in the direction of the primary trend followed by three corrective waves (a “5-3” move).
The Elliot Wave theory is that market activity can be predicted as a series of five waves that move in one direction (the trend) followed by three ‘corrective’ waves that drive the market back toward its starting point.

• A 5-3 move completes a cycle. And here’s where the theory begins to get truly complex. Like the mirror reflecting a mirror that reflects a mirror that reflects a mirror, each 5-3 wave is not only complete in itself; it is a superset of a smaller series of locks and a subset of a more extensive set of 5-3 waves – the following principle.

• This 5-3 move then becomes two subdivisions of the next higher 5-3 wave. In Elliot Wave notation, the five waves that fit the trend are labeled 1, 2, 3, 4, and 5 (impulses). The three correcting waves are called a, b, and c (corrections). Each of these waves is made up of a 5-3 series of locks, and each of those is made up of a 5-3 series of waves. So the 5-3 cycle you’re studying is an impulse and correction in the following ascending 5-3 series.

• The underlying 5-3 pattern remains constant, though the period of each may vary.

A 5-3 wave may take decades to complete – or it may be over in minutes.

Traders who successfully use the Elliot Wavy theory to trade in the currency market say that the trick is timing trades to coincide with the beginning and end of impulse 3 to minimize your risk and maximize your profit.

Because the timing of each sequence of waves varies so much, using the Elliot Wave theory is very much a matter of interpretation. For example, identifying the best time to enter and leave a trade depends on being able to see and follow the pattern of larger and smaller waves and know when to trade and when to get out based on the ways you identify.

The key is in interpreting the pattern correctly – in finding the right starting point.

Once you learn to see the wave patterns and identify them accurately, say those who are experts, you’ll see how they apply in every facet of forex trading and will use those patterns to trigger your decisions whether you’re day trading or in it for the long haul.

Earn Thousands Hourly (With A Forex Simulator)

Test-driving an online forex demo account is the preferred method for potential traders to minimize risk. A demo account readily allows a cautious person to go online and observe precisely how a paid version would work.

Think of it like playing the popular war game Command and Conquer: you send in the troops (gobs of fictitious money), make a few tactical maneuvers (invest in speculative exchanges) and conquer territories (reap profit).

It can be addictive. Without investing and risking any real money, the investor plays with ghost money in an account and initiates buys and sells the same way you would do it in reality. The software used for these demo accounts parallels what the actual trading platform does.

Accurate figures are pulled from exchanges, trend charts are generated, and profits are calculated from buy/sell maneuvers., A trader sees the net loss or gain should real you had used money in the transactions.

Even a novice can trade. Let’s assume an investor pretends to open a margin account with ten thousand dollars. He watches trends in the currency markets and believes that the dollar will go up in value against the British pound.

The demo software empowers him to purchase at a ten to one margin; he then authorizes a buy of one hundred thousand dollars and sells one hundred thousand dollars of Pounds. There will be a spread, or difference, which accumulates to the gains, or “profit.”

Why invest time with demo accounts? Simple. It’s safe to learn the currency trade without having real money to lose.

Think of it like crashing your car in driving simulators or doing crazy rolls in an F-14 – on a Playstation. You stretch your creativity, test your reflexes and build your skills, all behind the safety of a highly immersive computer screen. Your mind gets a full reflex workout without incurring damage to property and incurring lawsuits!

The same holds for forex trading. Again, spending time with a demo account allows the potential trader to gain skills and learn the ins and outs of the game and the marketplace.

A person can then see if they genuinely have the instincts necessary for the market and have sufficient knowledge to “play with the big boys.”

Almost all online companies involved in forex trading offer demo accounts, sometimes free and sometimes for a small fee. However, even if a payment is paid, it is usually worth it because a forex trader can flex his skills and knowledge for vast profits after spending some time practicing with the forex demo software.

Setting up a demo account requires nothing more than a valid email address and your name. Upon activation, you will have access to the standard charts, graphs, ordering system, and even prediction tools.

The latter is quite interesting, particularly predictive implements based on Fibonacci… but take care that such devices can never predict swings in the market. Too many social, political, and environmental variables cause erratic fluctuations, and no software can ever consider those.

Richard Peyton, my good friend, benefited from a forex demo account. After months of study of the forex market, you convinced Jackson that he could make a go of it as a day trader in the forex market.

His girlfriend, however, wasn’t confident and feared the inherent risk. She considered forex nothing more than sophisticated gambling.

Richard went to a brokerage company online that he felt held a good reputation. He set up a demo forex account and began to make trades as though he were using real money. After several days on paper, Richard garnered consistent profit.

He continued learning, and his confidence increased that he grew anxious to open a real forex account and invest a percentage of disposable income. His girlfriend also saw how he had made a nice profit and relaxed on paper and withdrew her objections.

Today Richard and his family do very well financially through forex trading; he leaped into a world of vast financial potential and built a fortune with a demo account. He retired from his day job.

Do Not Lose Your Shirt With a Margin Account

The key to the FOREX market for the average investor is the margin. Without margin trading, currency trading would be beyond most investors.

First, I will explain what the margin is and how it works.
When you have a margin account, you can control large amounts of currency with a relatively small cash deposit. When you have a margin account with a broker, you are, in effect, borrowing money from the broker to control a more considerable lot of currency.

Currency is usually sold in lots with a value of $100,000. A common term used when discussing margin accounts is leverage. Leverage is how much you can control with a certain amount of money. The power is usually displayed as a ratio such as 1:100. That would allow you to control currency worth 100 times the amount of money you have invested.

To better explain this, in a FOREX exchange with a 1% margin account, you could control $100,000 worth of a currency while only investing $1000.

Margin accounts can allow you to increase your profit significantly; they also allow you to increase your risk. A trader can lose more than their initial investment; with a bit of prudence, though, you can minimize losses. Most brokers will terminate a trade before the losses exceed the original deposit.

Benefits

As discussed before, a margin account allows you to buy more with your money, which can significantly increase your profit on successful trades. By controlling a $100,000 worth of currency for only $1000, the potential gain is more significant. When dealing with large lots of money, even small changes can produce effective results.

Currency on the FOREX market is traded in far more precise units than actual cash is. As an example, the American dollar is traded down to four decimal points. So when you were to quote the dollar against another currency, you will see a price like $1.7834 instead of $1.78.

A PIP is the smallest unit when trading currencies; when dealing with $100,000 lots, each pip is worth about $10.
If the price of the American dollar changes from $1.7834 to $1.7934, you have a net difference of 100 pips.

If you have a lot of $100,000, then that 100 pips will translate to $1000, whereas if you were not using the margin, your original $1000 would only show a profit of $10. Hardly what most would consider a highly profitable trade?

In short, the primary benefit of using a margin account is that it can significantly increase the profit margin of trade.

Risks

Since there is such a significant increase in profit potential when using a margin account, it only stands to reason that there is also an increase. It is quite possible to have your entire margin account wiped out fairly quickly. For example, when using a 1% margin account, a shift in the currency of a single penny will cost you $1000.

The FOREX exchange has many safety features to help you reduce the risk of this happening. One example is a stop-loss order. A stop-loss order will automatically close out your position in a currency if the price crosses the point you have set. This allows you to limit your losses while still realizing a profit.

Another risk that many people overlook is that if the price nears the point where your losses are close to being equal to the value of your margin account, your broker may close out your position.

So, for example, if you were trying to eliminate a temporary downturn that you expect to turn around soon, you could find that your broker has closed it causing you to lose your entire balance and have no option to make a profit if the price moves up again.

Dogs-of-the-Dow System

Have you ever heard of the Dogs-of-the-Dow system? It’s a well-known system in the stock and trading business. Several stockbrokers have earned a lot of money by working with this system.

They are using it for several years now.

They think it’s a safe way to let your money grow slowly but consistently.

If you know the Dogs-of-the-Dow system, you know that the system makes yearly a better percentage than the index.

If you have used the system several years ago and used it correctly for those years, you would have earned an excellent percentage each year.

Double figures are more than ones made. A high yield income of 17.7 % average annual return since 1973 has been completed.

The Dow Jones Industrial Average overall return was 11.9 % during that same period.

So you would have made almost 6 % more each year. Not bad at all If you never heard about it, let me explain how that system works.

In the year, primarily early January, you look at all the companies that give you the highest dividend payment.

You make a basket (several companies added together), then decide how much percentage you will spend on each company.

Next, you buy each company’s stocks to a certain amount of money you have available and wait until the year passes.

When the year has passed, you make up the balance and see how much you have earned.

If you don’t want to trade frequently, the Dogs-of-the-Dow system is a very relaxing and defensive, and profitable way of money investment.

If you want to make a higher profit, trading is a better and faster way—foreign currency trading in particular.

Foreign currency trading requires little more than just knowing the currency course rate.

Understand some basics techniques of how the market trades those currencies.

With the proper knowledge and techniques, you can quickly turn $ 50 into $ 1000.

Trading then isn’t just making money. It’s also fun. The fun is that you can do it 24 hours a day. When one market closes, the other opens up. So you go from New York to Amsterdam to Tokyo to Sydney and back to New York.

I want to hear about the benefits of trading foreign currency instead of other money investment products.

Forex Trading Strategy For Beginners

Recent Posts

Forex Trading Strategy For Beginners

error: Content is protected !!