The Basics Of A Good Forex Trading Tutorial

October 22nd, 2008 by Ivan Tan

Forex trading as a way of earning quick money, but it is not for gamblers and speculators! It is for hard workers interested in areas of market behavior, human psychology and current trends in commodities traded in large quantities and values. The sole commodity in Forex Marketing is International Currencies. Let’s get the basics straight so that you can get on the correct track from the start.

Never Trade On Hunches:

Any trading should be based on accurate data and never on intuition. Sometimes, lady luck could be on your side for you to get away with stray deals made purely on sixth sense. But it cannot last long. One big crash is enough to send everything you had in smoke!

Study As Much As Possible:

If you are the lethargic or procrastinating type, keep out of Forex Trading. You need not read a degree before trading in Forex Trading, but go on the basis of few currencies at a time; of which you have a fair knowledge of their current market trends. For your initial deals, select currencies whose exchange rates do not fluctuate widely in the short term. It will minimize your losses and similarly, profits too (if any) may not be anything fabulous.

The “studying” involved is just being educated and keeping abreast of important global current affairs embracing economics, politics and big business with a general understanding of how people react to price fluctuations of certain commodities.

Strive to Pre-plan An Exit Point:

If you find a certain currency is gaining in value, you might try to buy a lot of it to make a profit by re-selling at higher prices as it continues on its upward trend. But it does not go on forever. So you must put a stop to trading at a point before the trend reverses causing you losses on any stocks unsold. You cannot calculate the exact timing when the tide may change; and it may still continue even after you have stopped buying. Don’t worry about how much more you could have made by continuing further, because it does not always happen that way. Learn to play safe first.

A knowledge of what factors cause certain currencies to rise or fall in rates at a given time would be advantageous for better timing of trading activities. The other option is to have a fixed percentage at which you will stop trading on a particular currency even when it is still continuing in your favor.

Limit Risk Taking To The Maximum You Can Lose:

If you have already lost say, 25% of your trading balance, you may try to recover it fast by throwing the balance 75% on a trade that looks good. What if it misfires and you make a further loss?

Never let your emotions overrule your balanced mind that tells you to play safe because in trading, unexpected profits as well as losses are always possible.