The whole world wants to learn currency trading, or so it seems sometimes from the numbers buying the courses, the “robots” and the information on forex, and signing up with a forex broker. Your mission is to be one of the few who succeed in making regular profits.
Let’s have a look at just three things that every newcomer to forex should have if they are to be successful.
1. A Demo Account.
This is available from almost any foreign exchange broker. You can have as many as you want but one should be enough, with funding of $10,000, usually, of make-believe money.
Treat this as if it were real money, if you want to really learn. Of course you can have some fun trading it at $20 a point to see how much “money” you can make in a day, but, really, you should use it to learn, and to do that you have to pretend it’s your own real, hard-earned money.
Don’t trade everything. That’s what losers do. Pick and choose. Study your currency pairings and keep them to just two or three. Get to know everything about them intimately. Then when you see a chance for profits, jump on it. That’s what the professionals do.
The objective is very simple – to show a consistent profit from one week (or month) to the next. You can learn to do this trading at no more than $1 a point. Over 95 per cent of newcomers to currency trading fail to do this, and most of them will have skipped or severely shortened the period when they actually learn currency trading by way of a demo account. Don’t let this happen to you.
2. The Simple Moving Average
The simple moving average is the only indicator, out of the dozens available, that most highly successful financial traders use. It is usually used in double format (though you can use more), e.g. a 5 day moving average and a 75 day moving average. When the shorter moving average crosses the longer one it is often a signal – to buy (or close a short position) if moving up, and to sell (or close a long position) if moving down.
Just make sure you learn this aspect of currency trading thoroughly. Decide early on which currency pairings you are going to profit from and keep to those. Work out which two lengths of simple moving average give the most reliable indication of imminent moves in price, whether you’re day trading the currency market, or trading longer term.
3. Outside Help
Few people can be successful financial traders completely on their own. The latest generation of trading software programs, or “robots” (to be distinguished from their early ancestors) can quickly get you on the right road, provided you learn how to use them efficiently before trading with real money.
Take a little time to learn currency trading, and make it an on-going project.
Philip Gegan
