Advice For The Forex Currency Trader

I wanted to share advice for the forex currency trader. This can be a tough business if you don't understand the basics that make a great trader. I want to help you understand what it takes be in this business.

You're first going to need a good broker. Brokers are a dime-a-dozen on the internet. There are a lot of average ones, a few good ones and some that are even scams. It requires a lot of homework on your part to find the good ones and the best way I've found out to do this is public forex forums. You'll find these if you Google them where people, just like you, are looking to learn all about this business. There is constant talk about brokers and you should get an unbiased look at which ones are good and which ones a poor.

The next thing you need to know is about when you're going to trade. The best time is during peak hours when the volume is the highest. The reason for this is that there is so many people trading that currency is only affected by market forces. During low volume times, one big bank can push a currency in a completely different direction. This is why it is best to stick with the peak hours of the day.

Lastly, you're going to need to develop a daily routine. Often people will get in front of the computer and wonder how they're going to make money. As much as people like to have each day a new adventure, the people that are successful follow daily routines that are the same. When you develop these routines, it becomes easier on the head.

The Importance of a Forex Education

What is the importance of a Forex education? While Forex may not mean much to the average consumer, in actuality everything we know in American commerce is affected by Forex, the foreign exchange market. Every time the American dollar reduces in value or inflates, it's because of the world scene of financing. Only someone who follows the goings-on of the foreign exchange market could understand why all avenues relate to each other and are affected.

Some have carefully studied the foreign exchange market over the years and have planned their investments according to predicted changes. The shrewdest of investors have profited immensely, as they were able to learn the market, see disaster coming and knew exactly what to do in order to minimize their losses. Of course, learning all of these financial aspects would involve a solid Forex education.

If you are in business, whether doing business online or if your company is expanding to overseas locations, then the foreign exchange market will be of paramount concern to you. Forex doesn't merely involve foreign currency but also trade, politics and worldwide economics. (Namely, how one entity affects another on a global scale.) Have you ever desired to learn more about Forex finance and trading but weren't sure how to get started?

Even if you are not a trained economist, you can still learn how Forex operates through many affordable online resources. A Forex education is available online from such companies as the Forex Club Academy. The Forex Club Academy offers an easy-to-follow text course that explains the fundamentals of Forex trading through e-books, video aids and other visual methods of teaching. This makes the course easy to understand regardless of your educational background. For more information on what the academy can offer you visit the Colt FX website.

Forex Trading Signal Software

The Forex Market is probably the biggest money making opportunity in the world today for a number of reasons:

1. It sees over 2 trillion dollars change hands each and every day.
   
2. It works globally so you can trade at all hours.
   
3. It's easy to trade in Forex these days. All you need is an internet connection.
   
4. It's very easy to trade in the Forex market. There are multiple brokers and it's easy to open a trading account.
   

However, the Forex market is a promise which turns into a huge trap for most traders. Over 90% of them lose money in their trades. The main reason for this is that these traders don't know how to identify the market signals, i.e. when to enter the market and when to exit it. Most of these losing traders play the market by guess work. They end up making huge mistakes and lose time after time.

To avoid making these mistakes you need to work like the pros and use a Forex trading signal generating software. A forex signal software is a system which gives you buy and sell entry and exit points into the market. This has a few benefits:

1. It saves you a lot of time so you don't have to monitor the market all the time.
   
2. It allows you to identify more entry points and so make more money.
   
3. It helps you to make more money by making better decisions.
   
4. It cuts out the emotional side of trading and lowers your mistake ratio.
   
5. It lets you trade based on advanced models which work more accurately than a person can alone.
   

Using such a software can mean thousands of dollars more in your bank account each month. It can also mean moving from the 90% losers to the 10% winners.

Top Forex Trader Advice

I'm here to give you the top forex trader advice that I use everyday when I do my trades. These are tips to help the trader become better and more efficient at making trades.

When should I trade?
You should trade during peak hours. This is the time when most people trade, so there is the highest volume. I know when it comes to business, people usually suggest to not follow the crowd, but I'll explain in this case. There is such a high volume of trades, the currencies really do follow market forces or "the invisible hand". During the lower volume times (off peak hours) big banks and firms with a lot of money can make trades that affect the direction of the market. The last thing you want to do is trade at this time because they can make a currency go up or down, which is very unstable for you.

I don't seem to be making much on my profitable trades, and I seem to lose more when I make bad trades. Why?

Well, skill could very well be the problem. Assuming you're a good trader, than you probably have poor margins to make profits. Basically your broker needs to be paid for trades, and they take a cut, which is the difference between bid and ask prices. As you know, the broker is going to get paid no matter what, so your losses are often worse and your profits are often small. All you need to do is make larger trades that are for more money. This reduces the percentage taken by the broker and you should notice that your profits will be more and losses should be less(as a percentage).

What do I do when I make a bad trade?
Just cut your losses. This is probably one of the most simple rules you could take in, but most people have a hard time with it. Just sell it and move on.

Forex Trading Advice

Here is the first tip - don't take forex trading advice from someone who hasn't traded forex.

Ironically there are a lot of 'information peddlers' out there who are the Worlds greatest experts but have never traded a day in their life. They've never traded interbank (they wouldn't know the a spot from a Eurodollar from a collar), nor have they traded personal account. I've met quite a few of these individuals on forums. The best advice your going to get is from someone in the market, or who has been in the market!

Unless you have traded you will have no idea what it feels like to trade - the intense concentration when you have a position, especially a bad one that you are riding or how exhilarating it is when you make consistent profits! Even better is the feeling when you have ridden a bad position and it's come good, even when most bad positions are better being cut (it takes experience and judgment to be successful in this type of situation).

So when you are looking for advice make sure the person giving the advice has a history of trading and of successful trading whether it's interbank or personal account.

Tip 2
Don't take advice from someone who's never lost money on forex - take it from me such an animal doesn't exist. Traders love to boast of their successes but if you look behind the scenes they usually have made even bigger losses (it's an ego thing). You are much better getting advice from someone who's been round the block and back as the best lessons are learnt from our mistakes not our successes.

When I was hiring traders (in my interbank trading days) I always looked for consistency. I always knew that consistent profits equalled bonuses for all of us.

Tip 3
Learn before You Earn. You cannot even try forex trading unless you absorb as much information as possible. You not only have to learn the jargon and understand micro economics, to some extent, but you also have to get into the traders frame of mind.

A useful place to start is join some forums as this is an excellent way to ask traders what their thoughts are about markets, currencies and the market sentiment. It's also a great place to hang out when you are practice trading. I know of a few people who run trading clubs but these tend to be amongst people who know and trust each other.

Tip 4
Get a practice trading account. Most good brokerage firms provide one. Don't sign up to a broker just to get a dummy account. Do your homework first. It's often a good idea to ask other forum members about their experience - as in most things in life - if you get a good referral from someone who has used the facility then that is always a safer way to go!

Tip 5
There's a bit of an overlap here with tip 4. It is so important to get a good broker and develop a good trading relationship. You will find that there are some specialist brokers that concentrate on certain types of trading. You will find that most brokers frown upon scalping and will shut down your account if that is the type of trading that you adopt, although there are a few specialist brokers out there that will cater for that type of trading. Most brokers prefer day traders (traders that open up positions for no shorter than 30 minutes and usually square off before the end of their trading day).