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FOREIGN EXCHANGE TRADING: WHERE DO YOU GET STARTED?

There are basically two kinds of investors, those who prefer to study the market and employ a “buy-and-hold” strategy, and those that prefer a more active trading style, moving frequently in an out of stocks, commodities or currencies to achieve their investment goals. There are academic arguments for the pros and cons of each style, but for the active management-minded trader, foreign exchange, or forex, trading offers the medium and opportunity for satiating your personal preferences.

The Australian stock market consists of companies whose exports and imports amount to 35% of the nation’s GDP. International trade is commonplace, and with each transaction, a cross-border currency payment must follow. Large banks and insurance companies used to have a monopoly in currency markets, but the Internet and easing regulations have opened the market for individuals for the past decade. Its popularity has grown for ten years, but many have failed due to a lack of commitment to basic principles that must be learned and put into practice at the outset.

Where do you get started? This is the most common question that forex brokers hear daily. Preparation starts with educating yourself on the industry information, lingo, and dynamics. Review forex websites, forums and blogs, and visit your local bookstore or library to check for additional information. The objective here is to gain a general familiarity with the topic before you take a formal class, the next step in the process.

Forex trading is no different than any other performance-based profession. You must learn first how to be successful from the experts of the craft before making any attempt at entering the market. Forex trading is not about luck. It is all about consistency in trading results. You will not be perfect. You will have winners and losers, but the “net” of your trades must be consistently positive for you to be successful. Experts will share their tricks of the trade and educate you on the finer points of strategy. You will learn how to choose a broker, how to use his trading platform, how to avoid fraud, and how to use a forex chart to determine when to enter and exit the market.

When you complete your course, are you ready to start trading? Absolutely NOT! Nearly 60% of beginners in forex trading lose their bankroll in the first six months. In every study made on the topic, the conclusion is clear: the failures were due to impatience and lack of the necessary experience to deal with rapid swings in the market.

Brokers understand these issues. They do not make any money on you if you fail. For that reason alone, they have created elaborate education programs and supplemented these study exercises with “free” demo trading accounts. You can trade “virtual” currency pairs with real time data and charts, practice as much as you want, and keep track of your performance over time. Many successful traders admit that they practiced on “demo” accounts for as much as a year or more to gain the consistency and confidence they knew they would need in the real world. There is no shortcut for experience. Practice, Practice, Practice!!!

The popularity of forex trading in Australia is a matter of fact for the past decade. Trading can be done at home, and in most cases, brokers will support “24X7” access to currencies market that follow the Sun on a business day basis. Preparation, education and a strict practice regimen are the necessary requirements for success. Follow these dictums, and you, too, can have fun and reap valuable rewards in the process.