Forex for Dummies
Forex Basics
If you've already read the "What is Forex?" section
then you should know what Forex market is and what it is all about. If not,
please, do it.
There are five essential aspects
of foreign currency market a beginner trader (and an old one as well) should be aware of:
Understanding and mastering these aspects of trading are crucial to organize your
Forex trading experience.
Forex Fundamental Analysis
Fundamental analysis is the process of market analysis which is done regarding
only "real" events and macroeconomic data which is related to the traded currencies.
Fundamental analysis is used not only in Forex but can be a part of any financial
planning or forecasting. Concepts that are part of Forex fundamental analysis: overnight
interest rates, central banks meetings and decisions, any macroeconomic news, global
industrial, economical, political and weather news. Fundamental analysis is the
most natural way of making Forex market forecasts. In theory, it alone should work
perfectly, but in practice it is often used in pair with technical analysis.
Recommended e-books on Forex fundamental analysis:
Forex Technical Analysis
Technical analysis is the process of market analysis that relies
only on market data numbers - quotes, charts, simple and complex indicators, volume
of supply and demand, past market data, etc. The main idea behind Forex
technical analysis is the postulate of functional dependence of the future
market technical data on the past market technical data. As well as with fundamental
analysis, technical analysis is believed to be self-sufficient and you can use
only it to successfully trade Forex. In practice, both analysis methods are used.
Recommended e-books on Forex technical analysis are:
Money Management in Forex
Even if you master every possible method of market analysis and will make very accurate
predictions for future Forex market behavior, you won't make any money without
a proper money management strategy. Money management in Forex
(as well as in other financial markets) is a complex set of rules which you develop
to fit your own trading style and amount of money you have for trading. Money management
plays very important role in getting profits out of Forex; do not underestimate
it. To get more information on money management you can read these books:
Forex Trading Psychology
While learning a lot about market analysis and money management is an obvious
and necessary step to be a successful Forex trader, you also need to master your emotions
to keep your trading performance under strict control of mind and intuition. Controlling
your emotions in Forex trading is often a balancing between greed and cautiousness.
Almost any known psychology practices and techniques can work for Forex
traders to help them keep to their trading strategies rather to their spontaneous
emotions. Problems you'll have to deal while being a professional Forex trader:
- Your greed
- Overtrading
- Lack of discipline
- Lack of confidence
- Blind following others' forecasts
These are very professional books on psychology written specially for
financial traders:
Forex Brokerage
Every Forex trader like any other professional needs tools to trade. One of these
tools, which is vital to be in market, is a Forex broker and specifically
for Internet - on-line Forex broker - a company which will provide
real-time market information to trader and bring his orders to Forex market. While
choosing a right Forex broker things to look for are the following:
- Being a professional company you can trust
- Provide you with real-time quotes
- Execute your orders fast and accurately
- Don't take a lot of commissions
- Support the withdraw/deposit methods that you can use
For beginning Forex traders I recommend these four brokerage companies that are
probably the best Forex brokers to start with:
- FXOpen — one of the most popular and progressive brokers with MetaTrader platform and comfortable trading conditions for all kind of traders.
- InstaForex — a reputable MetaTrader 4 brokers, allows Islamic Forex trading accounts, while you can deposit and withdraw money via WebMoney.
- FXcast — good because you can start trading Forex with as little as 10$, use MetaTrader 4 platform and the dozen of various deposit and withdraw methods, including WebMoney, e-Bullion and wire transfer.
- LiteForex — broker that supports MetaTrader 4 Forex trading platform and doesn't require a lot of money to start with.
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