Why dont you sign up for a practice account (www.forex.com). A representative will call you and you can ask them questions. Day Trading More novice traders try to catch trends in daily time frames than any other method however, this method of trend following is doomed to failure. Fact: The data within a day is totally unreliable and support and resistance levels are meaningless. Volatility can and does, take prices anywhere and all daily movements are random. You can’t get the odds in your favour and you can’t win – PERIOD There are countless millions of traders, trading trillions of dollars daily and it’s laughable to think that you can trade in such a short term time frame and win. So why do so many traders try it? Well, it’s a good story and many vendors appeal to the greed and naivety of investors and try and sell them forex trading systems or courses, but they don’t trade them! They make money from selling their product – they win by selling their product and the trader loses in the market. Don’t fall for the myth of Forex day trading! Advantages: None! Keep in mind: You are guaranteed to lose, as you can never get the odds in your favour. Swing Trading Swing trading is perhaps the easiest way for novice forex traders to learn a Forex trading system. The aim is to catch reactions in major trends which normally last a few days to a week. Swing trading has the advantage of there are plenty of trades to go for and you know if you are right or wrong quickly. Forex swing trading is easy psychologically, as you have obvious stop levels, small loses and profits are generally banked quickly. The key to successful swing trading is to spot valid areas of support and resistance and then use momentum indicators, to execute trading signals in line with shifts in price momentum. For example, traders would wait for a test of support and for price momentum to turn up away from support and then trade to the long side. The key with swing trading is always to CONFIRM With momentum indicators – before executing a trading signal. EVER simply hope a level will hold or try and predict as you will lose. Advantages: Easy to learn, its fun, there are lots of trades, it can be very profitable and it’s easy psychologically. Keep In Mind: Make sure you don’t just guess or hope with swing trading and you use momentum indicators to confirm your trading signals. Long Term Trend Following The most lucrative form of trading and also the toughest way to trade. If you look at Forex trends you will very often see trends that last for months or even years yet, very few traders have the mental discipline to hold these trends and milk them for all they’re worth. Forex trend following requires patience, to wait for and enter these trends when the risk/ reward is at its best and then have the mental discipline to follow them. Why is it so hard to do? Because most traders are not mentally prepared to accept big gains. The above may sound odd – as surely all forex want big gains? The answer is yes they do, but accepting them is another matter. The problem is – if money is important to you (as it is to most traders) then counter trend moves, which eat into your open equity, can tempt you to bank a profit early. Most traders get excited when they get a profit and the bigger it gets the more tempted they are to take it, before it gets away. As volatility eats into open equity the temptation becomes too great for most traders and they bank early. They end up taking an average profit or mediocre one, when they could have had a huge one. If you are long term trend following you need the courage of your conviction and tremendous mental discipline to ignore counter trend swings and keep your eyes on the bigger prize. Forex trend following is tough mentally but the rewards are immense, if it is done correctly and you have the right mindset. Advantages: You can make huge profits! Keep in mind: You need to be patient when timing entry levels and you also need to be able to psychologically handle short term severe dips in open equity. You need to keep your eyes focused on the end prize – not the short term swings against you. It’s not easy to do but very lucrative. New Trends & Turning Points It is the dream of most traders to be able to catch important market tops and bottoms. Catching these turning points offers low risk and high rewards, as you are in at the stat of a new trend and these turning points normally see profits piled up quickly. Catching turning points is satisfying, very profitable and its not has hard to do as many traders think. If you use sentiment tools such as % bullish and Net Traders Positions, you will with a little practice, be able to spot these turning points forming. Then you can time entry with on your forex charts. The key is to WAIT for clear confirmation of a trend change – before getting on board. These moves don’t come around very often but if you look out for them, they will give you some great profits coupled with low risk. Advantages: Great risk to reward, it’s a lot easier to do than many traders think and it gets you in at the start of big trends which, normally see big profits emerge quickly.
Keep in mind: You need to be careful in timing your entry and enter at the right time furthermore; these trades only come around a few times a year, so you have to be patient and wait for the right opportunities
Comment by bobbino1 — June 20, 2009 @ 6:46 am
Cool another person who wants to trade forex. #1 Read and educate yourself about trading: technical analysis is an important aspect to study when trading forex #2 Be careful of Forex scams out there. Use common sense and find reviews of forex dealers out there
#3 Have a money management/risk management plan.
Comment by forex-si — June 20, 2009 @ 6:46 am