Old but good advice cautions us to "look before you leap." If you start trading on the foreign exchange markets before doing your homework you deserve to lose your entire investment and you probably will.There are many ways to learn and practice first: Take advantage of them!
I cannot say this in a nice way for fear you'll miss the point, so here it goes: Learn forex trading in advance of beginning trading or be prepared to lose your entire investment. You would not try to take an automobile out onto the highway before you had learned to drive and you wouldn’t try to dog paddle across a lake before you found out how to swim. So, why would you ever consider squandering your precious funds trying to gamble on the forex markets if you had absolutely no knowledge of what you were doing? Make sense?
So, what's the alternative? In reality, there are a few of them however they all center on practice. The same as learning to ride a bicycle or waltz, you learn from your mistakes: The minute you discover what doesn’t work, you can start to figure out what does work by process of elimination. In the world of forex there are simulations, games, software and “practice” accounts to help you get your feet wet without any danger of drowning. At the end of the day, what you are attempting to learn is how the various currencies are different from each other and how they trade against each other.
Most of the trading on the foreign exchange markets is done by banks, financial firms, brokers and individuals. Banks have been practicing this since the 1970’s and they pretty much know what they are doing. Individuals, looking to make a quick dollar, on the other hand, may BELIEVE they know what they are doing but, in reality, they haven’t the foggiest clue of how to place and then exit from a triumphant currency trade. Their egos won’t permit them to stop until a huge loss slaps them right in the face.
If you'd care to take the wiser route of a levelheaded and open-minded student, the first thing you will need to do is find trading software and a learning program that can give you the edge you will need over other traders. There are lots of computerized gaming programs to help you with this undertaking. You will also need to open a free “practice” account with a reliable forex broker. You will then need to do some research on current world events and read the news about forex trading conditions at the moment.
Once you think you have a grasp on things, you can start putting down fake trades with play money in a real marketplace. By keeping detailed records, you can start to observe what worked out and what didn’t work out and learn from that. Only when your track record begins to look promising should you commit real money to actual trades. Before you can begin this stage, however, you will have to choose a dependable forex broker to do business with. Here, you need to be VERY careful. The Internet is full of fake brokerage companies and phony brokers. Ask for references from experienced traders. Don’t be foolish.
In the end, make sure you understand the laws that concern to you and to forex brokers. Only some brokers are approved to do business with individual traders. The woods are full of wolves. Protect yourself by being knowledgeable and by keeping your eyes open. Good luck on what can be a very profitable venture!
Bob Gillespie
© 2011 Robert M. Gillespie, Jr.
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