First off, let me give you a basic idea of what the FOREX market is.
- The Foreign Exchange Market (Forex or FX for short) is the largest and most liquid marketplace in the world. The Average Daily Turnover in the FX market is approximately $3.8 trillion dollars. That's almost 3 times our national debt to China in a day. Wow!
- This market is based on real time exchange rates between foreign currencies. These rates vary greatly on a day to day basis and change throughout the day. The market is only closed on Saturday because of time differences between markets.
- The Forex market involves Currency pairs (EUR/USD, USD/JPY, EUR, GBP, etc.). The first Currency in the pair is the Base Currency and when you buy or sell a currency pair you are "buying" or "selling" the base currency.
- Money is made by speculating on what certain currencies or, more importantly, Currency Pairs will do in a given time frame based on Technical and Fundamental Analysis.
- The exchange rate between currencies changes by pips or the 4th decimal point in the currency pair. ($0.0001 or 1/100 of a cent for the dollar)
- Because currencies vary by such a small amount of money in their fluctuations, Forex Brokers can offer you Leverage which allows you to magnify your profits (though also your losses) in this market. Typical leverage is about 100:1 for standard accounts and sometimes up to 400:1 in mini and micro accounts. This means that, in a standard account, one can control up to $100,000 worth of currency with just $1,000 in an account.
The Forex market can be an extremely profitable one; even without much experience it is possible to profit from the constant fluctuations of the Foreign Exchange Rates. One of the best things about this exchange is that high volatility means more money to be made and in times of financial uncertainty like these, Exchange Rates fluctuate frantically and FOREX speculators prosper.
1.) My best advice is to start at Babypips.com and click on the "new to forex" graphic. Their forex school is where I learned a lot of what i now know and use everyday. Everything from Japanese Candle Sticks to Simple and Exponential Moving averages to Money Management and Risk. Babypips is a great site.
2.) The next thing i will recommend is to open a practice account. There is no better way to learn that to become profitable on an account that uses fake currency in a real market. I would recommend maintaining profitability for at least 4 months before trading a live account. Trust me, I made the mistake. Trade practice until you are very comfortable with your platform and the market.
3.) Become familiar with MetaTrader 4. This, in my opinion, is the most powerful trading platform out there. It is from this terminal that you can create and allow Expert Advisers, or algorithmic trading programs to trade your accounts for you.
Please feel free to contact me any time with questions about this exciting marketplace; I would be more than happy to point you in the right direction.
