By Matthew Vint
Most people are lured to Forex trading by the possibility of easy money, high returns, guaranteed trading methods, low investment and the use of high leverage. While there is some truth in these possibilities, it's not as easy as it sounds. The claim for easy money usually is for the brokers and salespeople. High returns are possible but often they only offset even more significant losses. The only guarantee, regardless of the trading method you adopt, is sometimes you will win and sometimes you won't. Many brokers will allow you to open an account with as little as $100 but you cannot operate a Forex trading account with that little money. Regarding high leverage, it is true that the Forex market allows you to use up to 400:1 leverage. However, while it can play in your favor, it can also go against you. The extreme use of leverage is best left for more advanced traders and professional traders.
As a beginning trader you will make mistakes. The key here is to avoid making major mistakes that wipe your trading account completely clean. Developing your trading philosophy is the first step in avoiding big mistakes. There are a number of things you should consider doing, when developing a Forex trading philosophy:
1) Start and maintain a trading journal. From the first day that you begin to think about venturing into the Forex arena you should begin to write it down either on paper or in a file on your computer. Many people even start blogs about it. Daily writing about the subject increases your knowledge and skill as you learn to internalize the concepts of trading and then express them. A trading journal and the discipline to write in it every day is the most important part of your trading day.
2) Make time to learn every day. Forex trading is a dynamic event. It changes often as economic, political and civil problems arise and are solved. The 24 hour news cycle means people react much faster to world events and if you do not keep up with these events and learn new strategies to counteract them then you will fall behind and lose money.
3) Money Management requires that you understand leverage, how to use it and how to avoid its overuse. It also requires that you plan each trade based on your risk profile and the ability to plan for losses. Losses do occur and you must make sure that your money management plan allows you to lose sometimes and still make a profit.
4) Trading plans go hand-in-hand with money management. Once you have decided on a trading plan or system, learn it inside and out. Then practice it until you can do it in your sleep and make money. Then take it live and follow the discipline of the plan and remove emotion from your style. Take your losses like a big boy and celebrate your wins.
5) Remember the market is bigger than you and will take your money if you do not respect it. The "trend is your friend" will help to keep you out of contrarian trades and save you a lot of money.
In conclusion, the development of a Forex trading philosophy requires you to actually sit down and think about what you are doing. You cannot just all of a sudden decide to trade currency and think you will be successful. It takes time, study and patience - consider each of these carefully and you will become a better trader.
How Forex Trading Works is a resourceful website that serves to deliver free, online content relating to Forex trading, to anyone and everyone.
Article Source: http://EzineArticles.com/?expert=Matthew_Vint
As a beginning trader you will make mistakes. The key here is to avoid making major mistakes that wipe your trading account completely clean. Developing your trading philosophy is the first step in avoiding big mistakes. There are a number of things you should consider doing, when developing a Forex trading philosophy:
1) Start and maintain a trading journal. From the first day that you begin to think about venturing into the Forex arena you should begin to write it down either on paper or in a file on your computer. Many people even start blogs about it. Daily writing about the subject increases your knowledge and skill as you learn to internalize the concepts of trading and then express them. A trading journal and the discipline to write in it every day is the most important part of your trading day.
2) Make time to learn every day. Forex trading is a dynamic event. It changes often as economic, political and civil problems arise and are solved. The 24 hour news cycle means people react much faster to world events and if you do not keep up with these events and learn new strategies to counteract them then you will fall behind and lose money.
3) Money Management requires that you understand leverage, how to use it and how to avoid its overuse. It also requires that you plan each trade based on your risk profile and the ability to plan for losses. Losses do occur and you must make sure that your money management plan allows you to lose sometimes and still make a profit.
4) Trading plans go hand-in-hand with money management. Once you have decided on a trading plan or system, learn it inside and out. Then practice it until you can do it in your sleep and make money. Then take it live and follow the discipline of the plan and remove emotion from your style. Take your losses like a big boy and celebrate your wins.
5) Remember the market is bigger than you and will take your money if you do not respect it. The "trend is your friend" will help to keep you out of contrarian trades and save you a lot of money.
In conclusion, the development of a Forex trading philosophy requires you to actually sit down and think about what you are doing. You cannot just all of a sudden decide to trade currency and think you will be successful. It takes time, study and patience - consider each of these carefully and you will become a better trader.
How Forex Trading Works is a resourceful website that serves to deliver free, online content relating to Forex trading, to anyone and everyone.
Article Source: http://EzineArticles.com/?expert=Matthew_Vint
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