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| Beginners in the Forex |
Forex Basics
If you've already read the "What is Forex?"
section then you should know what Forex market is
and what it is all about. If not, please, do it.
There are five essential aspects of foreign
currency market a beginner trader (and an old one
as well) should be aware of:
- Forex Fundamental Analysis
- Forex Technical Analysis
- Money Management
- Forex Trading Psychology
- Forex Brokerage
Understanding and mastering these aspects of
trading are crucial to organize your
Forex trading
experience.
Forex Fundamental Analysis
Fundamental analysis is the process of market
analysis which is done regarding only "real"
events and macroeconomic data which is related to
the traded currencies. Fundamental analysis is
used not only in Forex but can be a part of any
financial planning or forecasting. Concepts that
are part of Forex fundamental analysis: overnight
interest rates, central banks meetings and
decisions, any macroeconomic news, global
industrial, economical, political and weather
news. Fundamental analysis is the most natural way
of making Forex market forecasts. In theory, it
alone should work perfectly, but in practice it is
often used in pair with technical analysis.
Recommended e-books on Forex fundamental analysis:
- Reminiscences of a Stock Operator
- What Moves the Currency Market?
Forex Technical Analysis
Technical analysis is the process of market
analysis that relies only on market data numbers -
quotes, charts, simple and complex indicators,
volume of supply and demand, past market data,
etc. The main idea behind Forex technical analysis
is the postulate of functional dependence of the
future market technical data on the past market
technical data. As well as with fundamental
analysis, technical analysis is believed to be
self-sufficient and you can use only it to
successfully trade Forex. In practice, both
analysis methods are used. Recommended e-books on
Forex technical analysis are:
- Chart Patterns and Technical Indicators
- Candlesticks For Support And Resistance
- Trend Determination
Money Management in Forex
Even if you master every possible method of market
analysis and will make very accurate predictions
for future Forex market behavior, you won't make
any money without a proper money management
strategy. Money management in Forex (as well as in
other financial markets) is a complex set of rules
which you develop to fit your own trading style
and amount of money you have for trading. Money
management plays very important role in getting
profits out of Forex; do not underestimate it. To
get more information on money management you can
read these books:
- Risk Control and Money Management
- Money Management (A chapter from The Mathematics
of Gambling)
Forex Trading Psychology
While learning a lot about market analysis and
money management is an obvious and necessary step
to be a successful Forex trader, you also need to
master your emotions to keep your trading
performance under strict control of mind and
intuition. Controlling your emotions in Forex
trading is often a balancing between greed and
cautiousness. Almost any known psychology
practices and techniques can work for Forex
traders to help them keep to their trading
strategies rather to their spontaneous emotions.
Problems you'll have to deal while being a
professional Forex trader:
- Your greed
- Overtrading
- Lack of discipline
- Lack of confidence
- Blind following others' forecasts
These are very professional books on psychology
written specially for financial traders:
- Calming The Mind So That Body Can Perform
- Emotion Free Trading
- The Miracle of Discipline
Forex Brokerage
Every Forex trader like any other professional
needs tools to trade. One of these tools, which is
vital to be in market, is a Forex broker and
specifically for Internet - on-line Forex broker -
a company which will provide real-time market
information to trader and bring his orders to
Forex market. While choosing a right Forex broker
things to look for are the following:
Being a professional company you can trust
- Provide you with real-time quotes
- Execute your orders fast and accurately
- Don't take a lot of commissions
- Support the withdraw/deposit methods that you
can use
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