What is Forex or Foreign exchange?
First of all, it is a way of making money. Even better, it is an extremely powerful way of making money. Forex is short for foreign exchange which means exchanging currency pairs like EURUSD or GBPUSD to make profit. The idea behind this is simple; you sell a currency pair when it has a high price and you buy it at a lower price, the difference between the two price quotes being your profit... or loss God forbid. Simple right? Well, not really. There is a lot of study and work before getting to know when to sell and buy to make profit. And of course, there are chances of losing some or all the money invested, which is not very pleasant.
There are a few things that I love about this business. For instance, the only one responsible if you win or lose is you, or the possibility of making a lot of profits, not to mention working from home, having your own business and the list could go on. Considering how hard it is for anyone to find work these days, I see this as a great opportunity for anyone that is willing to invest some work and time in it.
The right way to financial trading
An excellent starting point in this trading business would be getting acquainted with it. I mean really know it just like the back of your hand or anything else you know best. Although it has a great potential, the risks are even bigger. When finished learning just learn more. If there’s one thing that is true about this activity, it is that you never stop learning about it. Fortunately there are books, courses, webinars, tutors and all kinds of learning resources, some of them even free, so you don’t have to worry about having a difficult time finding learning materials. There are also forums and online communities of traders that are sharing their knowledge and experience.
After learning enough about this foreign currency trading, the next step is to create your trading plan. As everyone out there are saying: “You won’t survive the forex market without having a well-built plan and without following it.”. A trading plan will help you follow what you’ve learned. It will contain information about your goals, motivations, trading hours, trading routine and more. It will also contain your trading strategy or trading system.
With your trading plan and trading system ready, you can start testing it. No trading system is a 100% winner, especially the new ones. There are two ways of testing a trading system: back-testing and live-demo testing. Starting with back testing, one will use the trading platform to watch the chart’s history and check if the trading signals, provided by the system, are valid or not. Chart patterns tend to repeat themselves over and over again, so if the system proves itself, let’s say a 60% winner (that is from 100 trading signals 60 would’ve end with profit), it will keep this winning ratio in a live trading session as well. When you’re done back-testing the system, it advisable to test it on a live demo account. All forex brokers allow you to try your trading skills on real, live charts with virtual money. So they’re giving you some money to trade with just to see if you’re ready for the real thing. Nothing wrong can happen in this mode and in the eventuality of losing all the money another account can be opened. This is called paper-trading. Your trading system must be improved during the testing period to bring it at a higher winning level.
Following these steps, makes a wise way of starting this business and will spare you from losing a lot of money. You will still encounter some losing trades, but the goal is increasing the number of winning trades.
A personal endeavor in the foreign exchange market
My personal experience with forex trading started a few months ago, so I’m relatively new to this business, but with all the intention to make it the best I can. When I realized how big this is and how much it is to be learned I started right away and even now I’m still learning. Anyway, I’ve created my trading plan and system and now I’m live testing it with real money. It is very hard at first since the system has a lot of floss, but the profits are starting to grow as the errors from my strategy are eliminated. So I’m advising everyone to test the system first on a demo account and with back-testing. It will save you from a lot of headaches.
Although there are many free forex learning resources, the paid ones usually tend to be a better option, containing a more complete information. Since my favorite way of learning and the one I trust most is by using books, I will list a few examples that I consider the most relevant:
1. Learn Forex Earn Forex
2. Forex Profits (book and video)
3. The Forex revolution
4. Learn the art of Forex trading
5. Forex training lessons
Check them out and see which one fits you best. I think this is a great opportunity so I felt like sharing it with you here. If anyone is interested in the subject or has more information to share, please do so. I will also add more articles on the subject later.
