Managing Your Money

Forex Trading: Where To Start Forex Trading?

The idea of Forex (or foreign exchange) trading sounds too good to be true. Is it really possible to make money with Forex trading?

If the prices on the Forex markets stayed the same all the time then you would think there would a definite winner and loser for each Forex deal that took place. But that is a far too simplistic view. OK, if the deal was for me to sell you real dollars for real dollar notes, there’s unlikely to be a winner or a loser. Of course, if you offered to sell me $500 for $400 then you’d lose $100 on the trade and I’d win the same amount.

Of course, since it’s real life, Forex trading isn’t quite as easy as in that example.

The exchange rate between any two currencies is a moving target. Just look at the graphs and you’ll see how much movement there is in an hour, let alone a day. Then remember that whilst dealing Forex can be simply selling Australian Dollars to buy Roubles. I could change my dollars into euros first, if the mood took me. Of maybe it would make sense that two (or three or more) currency exchanges would benefit me more than just a single trade. Even after the trading fees.

If you’re just starting Forex trading, it will pay you to go through at least one of the online Forex courses available.

Then dip your toe in the water by placing some money in a Forex trading account.

Don’t waste your time or effort with the demo accounts you can get. It just isn’t the same thing. You won’t make the same decisions if it’s not really your money. If you don’t believe this, go ahead and open a demo account. But pay attention to your stomach when you make a trade. If it doesn’t tense up with worry in case you lose your fictional dollars (and it probably won’t) then ask yourself whether you’d have the same reaction with real cash. My bet is that you won’t trade real cash anywhere near the same way.

Which means your first foray into Forex trading should be with real cash. As with any form of gambling (and Forex counts as gambling, at least to start with), make sure it’s cash you don’t care if you lose. But it is still cash.

Next up, unless you want to be glued to your computer screen 24 hours a day, get some Forex software to help you. At its most basic, you want a software program that will take note of your win and lose limits and will end the trade at one of those points. A “stop loss” is set when you place a trade to make sure that you don’t lose all your cash if the trade goes against you. And it’s good practice to quit a trade when you’re ahead.

Find out more about automatically trading Forex here.

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