Forex Trading for Beginners – Page 2

The forex markets are open 24 hours a day and close only between Friday and Sunday afternoons EST (New York) time. Most trading activity, however, is when two or more major exchanges – New York, London, Zurich, Hong Kong, Tokyo or Sydney, are open. To see how these opening times overlap in relation to your own time zone, you can download a table here. There is a lot of other useful information on other topics of interest too for our members.

An example of a forex 'trade' – in layman's terms

Let’s say the current EUR/USD buy price is 1.2620 (1 EUR = 1.2620 USD). You buy 1 lot of EUR because your analysis reveals that the rate will rise (meaning the value of the euro will go up in relation to the dollar). After 15 minutes the sell price has risen to 1.2640. You can stay in the trade for as long as you like, but if you 'close your position' (selling euros and buying back dollars), then your 20 pip gain equates to a profit of around $200 and this would be paid back into your trading account, together with the 1% margin (guarantee) required for the trade. On a standard account this is $1000 per 100,000 unit lot. With a 'mini' account amounts are divided by 10, so 20 pips would be $20 and the guarantee required $100.

Why might forex trading be of interest to you?

If you are currently resident, planning on retiring in, or making your base in a foreign country, you should be able to use the internet (even via your mobile phone) without being affected by regulations and controls on foreign workers. In the case of forex (currency trading), transactions are made overseas, but deposits and funding can be made using your 'home' or offshore bank account. An ATM card makes it easy to withdraw cash anywhere. Trading forex in Asia is quite feasible and could be tax-free too.

Forex trading advantages and benefits

Easy to learn to start trading, mentally stimulating, even exciting;
Can be done anywhere there is an internet connection – even using internet shops, or 'wireless' on the beach! Many brokers have web-based trading interfaces which means they work through a browser like Internet Explorer or Firefox. Others require a one-time download to a PC first;
Markets open 24 hours from Sunday through Friday afternoon (EST);
Completely under your own control as to what, how and when you trade;
No joining fees or set-up costs required to become a forex trader;
Free sources of information, free software, free training, free practice accounts from banks brokers and dealers; no commission on trades;
Learn and practice with a demo account for as long as you like without making or losing real money, but your results are not really true to life.
With knowledge and experience, there is the potential of earning tax-free extra income from forex trading.

And on the "other side of the coin"...

There is of course the risk of loss as well as chance of gain with live trading;
As with most things in life, there are winners and losers, so you should not invest funds you cannot afford to lose. Often loss will come before gain, as experience, knowledge and forex trading strategies are learned;
Despite the promises of 'experts' who sometimes charge large amounts of money for information or products that they claim will make you a winner all the time with their secret or special systems, there is no ‘Holy Grail’ – no foolproof system that will guarantee consistent success with forex. The constant movement of prices in both directions preclude this;
Practicing with a demonstration account is educational and mentally stimulating, even fun, but successful trades require self-discipline and good strategy. This comes only with experience through study and practice.

So how and where do you start to learn to trade for profit?

While you are practising trading using a demo account from a dealer or broker, our next recommendation would be to purchase an introductory forex trading course such as Forex Nitty Gritty. It costs less than $40 and could save you a lot more than that.

Advanced forex training and coaching for serious traders became available in October 2010 with the release of Bill Poulos's Forex Income Engine with Trade Alert Software.