Tuesday, August 7, 2012

Forex Trading Education

A prospective forex trader would be well advised to spend a little time researching a respectable currency trading course. Of course he or she will want to start making money as soon as possible, but forex trading is risky, and if they do not get a good foundation they could easily be losing pots of cash instead. Currency price movements are not easy to predict, and a trader needs to take many factors into consideration. In addition, it is imperative to open and close trades at the right moment to get maximum profit from any price variation. If a trader tries to work all of this out for themselves it will take a lot of time.
It would be ideal if the forex trading course covered all the necessary principles of foreign exchange trading, and beneath you will discover my recommended list of what I would expect to find in a quality course.
1. Principles of currency trading
Any high-quality currency trading course will make clear the fundamental principles of the forex market including leverage and margins, pips, spread and other costs, and what to look for in a broker.
2. Technical analysis
The understanding of charts and other indicators is known as technical analysis. The trader uses these to spot signals to buy or sell, such as trends or swings. Different systems rely on different indicators. Consequently, an investor would not require to learn all indicators, but just those which were significant to his or her system. At a later date, a trader's system may change, so it would be convenient if the currency trading course could be looked at yet again later on. This would permit an investor to alter his or her system relatively effortlessly.
3. Fundamental analysis
Fundamental analysis relates to the financial news, announcements and other events which affect foreign currency prices. In the end, it is each country's economic performance which causes the value of its currency to change. One does not need to be able to foresee all these events. It is quite normal for traders to avoid the market at these times. But it is vital to understand how the process works and keep an eye on the alerts for anything that might influence trading.
4. Risk management
Risk management concentrates on minimizing losses through the use of stops, and protecting income by limiting the position size. In general risk on any one trade should never be more than 5% and many traders work on 2%, 1% or even less. Fund size has a great effect on risk, and one should reduce it as funds increase. Anything over 5% is pretty much guaranteed to wipe out funds. A trader may feel like taking a chance for quicker growth on a small fund but wiping out their funds is not a good way to go!
5. Mindset
Forex trading education is worth little if it does not cover the most essential aspect of all which is mindset. Ultimately, if a trader does not take the time to comprehend the mindset of a successful trader, they will not be in a position to profit from the market.
Self-discipline is the key. Without this, emotions such as fear, greed or excitement will take over and money will be lost. A trader must also be able to handle losses, and not allow them to get the better of them. Of course risk management will always help, however patterns of behaviour can be established if emotions are permitted to take over, and this will lead to losses. A good forex trading course will include teaching and exercises to help a new trader master the art of self-discipline and keep their emotions off the trading floor.

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