5 Things You Should Know When Starting Forex Exchange

On May 9, 2012 | By | In Strategies

The Forex or Foreign Exchange market is a global currency market which has a lot of lucrative deals to offer to its investors. As a newbie to this market or one who is thinking of making a foray into this ‘territory’, it would be advisable for you to be aware of the basics of Forex trading before you actually indulge in it. Even though a lot of people may have gained huge amounts of money from the Forex market, this market has caused huge losses to undisciplined and inexperienced traders too. In order to maximize one’s potential to earn from Forex markets and to avoid making blunders given below are some important tips that all amateur Forex traders should know before plunging into the market .

 

First Thing To Keep In Mind – Confine Your Emotions – Ideally speaking, there shouldn’t be even a trace of fear, panic, excitement or greed in the calculations of Forex traders. However these traders are human beings and hence it is not possible for them to completely restrain their emotions. Thus, the ideal solution would be to find a way of controlling the emotions and minimizing their effects on one’s Forex investment decisions. Amateurs or beginners are advised to start with small amounts. This will also help the investor to understand his/her long term goals.

 

Second Thing to Keep In Mind – PIPS – The second thing that you ought to know before starting Forex trading is the definition of PIPS. A pip can be defined as the smallest possible measurement of change between two pairs of currencies. PIPS typically have two or four decimal places. So the changes which have three or five decimal places are known as pipettes or pips. For example – a EUR USD pip is 0.0001.

Third Thing to Keep In Mind – Currency – Of course, how can one ignore currency when dealing in the world of Forex trading? Before stepping into the Forex world, it would be useful to understand that currencies always exist in pairs and they are denoted by their symbols for convenience purpose. Therefore, you will be dealing in currency pairs such as EUR/JPY, EUR/USD, USD/JPY, EUR/INR, etc. It also helps to have the symbols memorized for smoother transactions.

 

Fourth Thing To Keep In Mind – Start Off With A Demo Account Always – This is something that a lot of amateur Forex traders often forget or overlook. Since you are comparatively new to the world of Forex trading, therefore it would be in your interest to sign up for a free demo account to practice Forex trading with virtual currency in your account balance. This is just like balance wheels for bicycles, once you are used to it you can have them removed or in this case, close the account and start trading live.

Fifth Thing To Keep In Mind – Determining The Trend By Looking At Forex Charts – As an amateur, you are advised to observe Forex charts to find out the resistance, trend and support of the currency you are dealing with. Such charts can be observed at different time segments like a day, an hour, four hours, fifteen minutes, five minutes, one minute, etc. When you are able to identify the trend you will also be able to predict the same and stop your loss or calculate your profit as per the support or resistance level.

 

Thanks to Sara Muler from Loans For People With Very Bad Credit ™ for writing this interesting article.

 

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