The currency trading basics enclosed cover the key facts you need to be aware of as a new trader. You need to consider each of them and if you do, they will give you an indication of whether you have what it takes to succeed at currency trading…

If you understand all the facts below, you can get the right Forex education and enjoy currency trading success. Here are your currency trading basics to consider.

Fact: Currency Trading Success is NOT Easy

You read online all the time from the vendors of sure fire systems and junk Forex robots, about how easy it is to make money trading currencies but the facts tell you its not. 95% of traders lose money and that’s a huge percentage.

If you are not prepared to get a decent Forex education and learn skills, you are going to join the losing majority.

Fact: Anyone Can Learn to Trade it’s a Specifically Learned Skill

It is a fact that anyone can learn to trade Forex. This was proved in spectacular fashion by Richard Dennis, who took a group of people who had never traded and taught them in two weeks. He then set them up with trading accounts and saw them go on to make hundreds of millions of dollars.

These traders learned quickly, they only used a very simple system, with strict money management rules but they made fortunes.

Dennis knew though that anyone could learn to trade a system, that’s the easy bit of currency trading, the hard part is applying a trading system with discipline.

We will now move to the key difference between winners and losers.

Fact: The Most Important Character Trait for Success is Discipline

If you can’t follow a system with discipline you simply don’t have one and most traders lack this key trait.

Discipline is hard, because you are going to have to trade your system through losing periods, as the markets make you look a fool and takes your money and it can be hard to stay on track. You must in losing periods, trade with discipline and keep your losses small.

Discipline is the key to success and while it can be hard to trade with discipline, if you understand losing is part of winning, keep your losses small and maximize your profits you can achieve currency trading success.

The Road to Profits

You need to consider the above key facts and understand that, learning a method is easy, learning the right mindset to succeed is the hard part but you can do both and enjoy success.

Trading the Foreign exchange or forex market can be a wildly profitable experience. Deciding on taking forex courses to gain possible riches is the first step on what could be an enriching journey. Courses in foreign exchange trading come in a variety of delivery systems. And you can sign up through local community colleges, where large groups of people are taught all at once, or study from home. Learning to trade money on the foreign exchange markets can be an easy way to make money at home because all you need is a computer and internet access.

The forex is where currency trading occurs. It’s kind of a clearinghouse where banks and official government institutions engage in the buying and selling of foreign currencies. The way it usually works is that one party or entity will purchase an amount of a particular currency (yen, pesos, etc.) in exchange for paying in a quantity of another currency (euros, yuan, etc.).

The forex market is one of the biggest and most liquid financial markets in the world. Vast amounts of currencies are traded on an hourly basis. The profit for the forex trader comes on the margins, which can be sizeable when aggregated together.

There’s also much action to be had in a forex for the trading novice and professional alike. The really good traders can easily make over $100,000 a year. Someone who’s just starting out, though, should be extremely cautious before diving so deeply into the swirling waters at the exchange. It’s always recommended that any aspiring trader become as educated as possible before beginning this kind of trading activity.

Setting up a forex trading account is done through a broker licensed and certified to engage in foreign exchange currency trading. The internet is full of websites for such brokers, many of whom offer forex training courses and online tests to see if you have what it takes to succeed in this kind of activity.

It’s also true that there can be an extremely large amount of information to digest, so look for brokers who give you training in portion sizes that can be easily digested before moving on.

Home study in forex trading is normally an integral part of your transformation into a forex trader. There are several in-depth forex training courses available on compact discs which allow you to study at your own pace.

For the most part, in this line of work, you decide how much time to devote to daily trading activities. Of course, the more time you can wisely invest, the better your chances of success.

Forex trading isn’t for the faint-of-heart. The forex courses necessary to become skilled at it aren’t a walk in the park, either. But if you have the will and a desire to think and grow rich, you too may be able to use these courses to gain possible riches!

One of the most profitable business ventures these days is international currency trading. Despite the fact that the world of trading seem to be unstable with the global economic meltdown posting a threat, entrepreneurs still find themselves dabbling into the world of currency trading on a global scale. In spite of the recession happening in various industries, people who are into the forex trade continue to expand their business in this trade.

Why is this so? The main reason for this is because the international currency trading scene is very dynamic. You never really know how it’s going to spin. Although some people might think that this unpredictability can cause this business to become unattractive, the contrary seems to happen. Alongside with the unpredictability of forex comes the fact that it presents a fair game to everyone. So long as you have what it takes to thrive in this fast paced environment then you can expect a windfall of profits to proceed.

The Pull of Currency Trading

There are many reasons why people continue to get enticed to try their luck with international currency trading. One reason for this is that the business has no strict qualifications. You may enter this business equipped with nothing but the interest to learn and become an expert with it. Anybody can actually enter into the forex game, whether you are still a student or an undergraduate who may not have had the chance to finish a college degree. Everybody is welcome to play the game.

In addition to this, currency trading is easy to learn. Your best ally would be the skill of being observant so you can note how currencies tend to rise and fall within the market. You can also start small with just one account and grow it to trade beyond 200. In a matter of weeks, you can possibly find yourself comfortably opening and closing trading windows among other forex business players. There are also plenty of online and print learning materials that you can use as reference to learn more on the technical side.

Also, the world of forex trading is not dependent on the outcome of the recession. Keep in mind that you are using the money here so there really is no way that they will simply be stuck somewhere. People need money so they need to exchange currencies to facilitate their other businesses. The important thing about forex is that you can easily identify the values of these currencies so you can buy and sell accordingly.

Things to Watch Out for in Forex

Of course international currency trading also has a few notable things to watch out for. First of course is the market trend. Because nothing is certain, you always have to be on a lookout for great currency opportunities. You should also be able to do plenty of forecasting especially if you aim to plunge into new currencies. The trade should always be a continuous learning process for you and because of this, you should expect failures and bad trades to happen along the way.

Trading currencies involves a continuous process of learning new methods to break into the market. There’s no room for being complacent because the business changes rapidly and rates fluctuate every now and then. This is why some people develop certain types of currency trading systems to be able to target their weakness and spot the right opportunities just as they occur.

One of these methods which is becoming increasingly popular is spot currency trading. In using this, you will need to heavily utilize the power of online marketing coupled with an experiential understanding on how the international world of forex trading occurs. Spot currency trading may not be a suggested method for newbies trying to break into the world of forex. You will need to have an individual expertise on the business, either that or you need to work closely with brokers or consultants who can guide you through the process.

Knowing How to Use Spot Currency Trading

Becoming successful using this method of currency trading involves a combination of professional and technical expertise. While you may be incurring lots of experience through your trading methods with fellow forex businessmen, you should never forget about the side of learning new information as well. Brush up on your knowledge by reading books that tackle the advancements in forex trading.

You can also watch out for online tutorials which can also help you learn the trade much easier and faster. Lots of forex experts even conduct free online workshops, provided you only subscribe to their websites and blogs. The important thing to pick up from these learning venues are the technical contingency plans and probabilities that should help you outline how you can use spot currency trading to your advantage. Online forums are also a fun yet fruitful way of knowing more about forex trading. You can also interact with other forex businessmen in these online portals.

The Benefits of Using This Trading Method

There are lots of advantages associated with spot currency trading. One of them is fast and timely transactions because you heavily rely on the internet to translate your purchases and selling points accordingly. By using the internet, you can always access your forex account wherever and whenever you may be. You can also talk to a wider group of people and trade across different countries with a few easy clicks.

Another thing with spot currency trading is that you can easily record your business proceedings as you do them online. Your transactions via email are saved in your inbox and your transactions via chat can also be saved as well. Should there be disruptions or issues arising in between, you can easily refer back to the discussions you have had to sort out things accordingly.

Another good thing about spot currency trading is that it enhances your forex intuition. You learn when to break in and when to drop forex openings. You learn to become more careful and weigh risks accordingly. In the end, you start to think long term more than just relying on what you have at the moment.

If you want to trade currencies then you need a currency trading system that will get the odds in your favour and here we will show the basics that make a successful one. Anyone can build one and incorporate it in their Forex trading strategy and it’s easy to do – Let’s look at the basics.

1. Identifying the Opportunity

The best way to identify an opportunity is to use support and resistance and good old trend lines. We won’t explain support and resistance here – but if you are not familiar with it look it up on the net – Here we want you to keep in mind one key point:

When you trade be selective and only trade valid support and resistance.

What do we mean by valid?

- The more tests the better

- The more time frames involved the better

- The longer the duration between the time frame the better

The above are just general guidelines – you can use 2 tests but 3 tests or more, are better and look for resistance or support that is considered important by the market.

You then need to decide after spotting the opportunity on your forex charts when to trade.

2. Executing the Trading Signal

Never simply buy into support or sell into resistance with your currency trading system.

This wont work, as your predicting what may happen and as you can’t predict the future ( despite what many guru’s will tell you), you are simply hoping or guessing and the market will kill you.

You need confirmation.

If you don’t know what momentum indicators are look them up – you need them and there an essential part of your forex education.

You only need a couple to confirm the move – more is not better as you need a simple system – more complicated ones have more elements to break.

The way to use them is to watch for a level to hold and when momentum shifts away from the level then you trade.

Don’t just look for support or resistance to hold though – incorporate breakout methodology. It’s a fact that most trends start form new market highs NOT Market lows. So, if prices breakout supported by momentum buy them!

Most traders can’t do this they want to get back in on a pullback that never comes – don’t make this mistake trade the breakouts like the pros do.

Finally be very selective and only trade the best set ups – in forex trading you don’t get paid for how often you trade you get paid for being RIGHT.

Trade sparingly and only trade the big high odds trades.

3. Stops and Profits

Stops are easy and behind support and resistance. Place them as soon as your currency trading system gives a signal.

If you are long term trend following, keep your stop well back and give the market room to breathe, so you don’t get stopped out by random volatility.

You are going to miss the turn but as you can’t predict that anyway, that’s fine.

Catch 50 – 60% of the big trends and you will become very rich.

Swing trading is another matter.

You’re looking for smaller moves and they can disappear quickly, so use a profit target and take your profit early!

Don’t worry about perfection of what you might have made – concentrate on making money – no one is perfect but that won’t stop you enjoying currency trading success.

4. Managing Your Money

Forex trading is risky, that’s why the rewards are so high. Many traders however try and restrict risk so much they create it.

They trade to often have stops to close and move them too quickly and end up losing.

Confront risk cheerfully!

Forget all the common wisdom about risking 2% per trade- if you’re trading a $10,000 account that’s 200! If you don’t risk much you wont win.

If you have a high odds trade risk 20% and have the courage of your conviction.

If you take calculated risks at the right time you can enjoy currency trading success.

FINALLY REMEMBER THIS!

So there you have it the above is a simple system – support resistance and a few confirming indicators and the best systems are.

Keep in mind that forex trading is as much to do with mindset as method and you need to maintain discipline.

Simple currency trading systems are easier to understand, apply and have confidence in which leads to the discipline to follow your currency trading system to long term currency trading success.

Many traders want to learn currency trading and the obvious place to start is with a currency trading course and there are many that are sold online – but how do you choose one? Here are some important points to consider.

1. Are The Vendors Traders?

I would say most the currency trading courses sold online are not traders and are simply marketing companies. Ignore any course that promotes itself in the following way:

- You can earn a living forex trading with no effort

- You can make a regular income

- Forex day trading or scalping works

- They will reveal secrets that no one else knows

All the above is simply hype used to sell a course and none of it has any basis in reality.

2. Track Records

The next point to look at is the track record.

If your currency trading course does present one then look for the following disclaimer if you see it – don’t buy it! Here it is:

“CFTC RULE 4.41 – Hypothetical or simulated performance results have certain limitations. Unlike an actual performance record, simulated results do not represent actual trading. Also, since the trades have not been executed, the results may have under-or-over compensated for the impact, if any, of certain market factors, such as lack of liquidity. Simulated trading programs in general are also subject to the fact that they are designed with the benefit of hindsight. No representation is being made that any account will or is likely to achieve profit or losses similar to those shown”.

Well if you have read that you will see a vendor can make up anything he likes in hindsight to make his currency trading course more attractive – don’t be fooled its not real.

2. Guarantee

Do not ever buy a currency trading course without a guarantee of what you are getting most reputable currency courses will give you your money back if they don’t deliver what they say, so make sure you have the comfort of one before buying.

3. Be Realistic and Remember

A currency trading course should not be seen as someone giving you profits but someone giving you the tools you need to apply for profits.

Vendor can only give you the tools and show you how to use them the rest is up to you and you must accept responsibility for your actions – ONLY you can give yourself success.

It’s a bit like teaching someone to do anything, there will always be those that fail, those that achieve success and those that achieve massive success. The good news is – everything about learning currency trading can be specifically learned and applied, by those with the desire to succeed and a willingness to learn.

You are not restricted by body or mind only certain people can become successful sprinters and rocket scientists but currency trading is different. You don’t need to be fit and you don’t need intelligence – currency trading is essentially simple and does not rely on an innate gift from god.

You are going to say if that’s true why 95% of currency traders fail do.

Well it’s not for the above reasons, it’s due to the fact they either get the wrong forex education or have the wrong mindset – but they could learn the correct one if they want to – we will cover this area more in the next article in this series.

For now all I want to stress is – if you get the right currency trading course it can help you get and apply the right tools for currency trading success – IF you use the above points as a guide to getting a good one.

When it comes to currency trading, retail traders are often unprepared for what lies ahead and many end up losing their first account. Then they either give up, or they take a step back and do a little more research and open a demo account to practice.

Those who do this practice on demo account will often eventually open another live account, and experience a little more success , either breaking even or turning a profit. To help avoid the losses from hastily diving into forex trading, it is imperative that a trader have a reliable forex trading system to help them. There are many vendors selling forex trading system and many retail traders are at a lost of which ones to select. There are basically 5 important factors to consider when selecting a winning forex trading system:

1. The risk reward ratio – this is a pretty simple method and almost self-explanatory. A good ratio to use when involved in Forex trading is 1:2. In other words for every dollar that you risk your looking to get two dollars back in return. If you do anything less you’re setting yourself up for failure as you would have to have successful trades over half the time. This method allows you the luxury of breaking even with a 33% success ratio.

2. The win loss ratio – this method is to be used in conjunction with the risk reward ratio. Your goal is that you’d want to produce profit for at least the same amount trades that you are producing loser. Going with anything more would mean that your risk reward would have to be higher.

3. Drawdown – this is based on the amount of losses that would consecutively occur. In most cases you should not saying any more than three, but if you have a higher risk reward ratio, this number could be greater and still not affect your overall situation.

4. Past performance – if you’re going to get a good forex trading system, you’re going to have to look into the past performances of the system. If you know that the trading system has done well over saying the past 10 years, you can buy with confidence.

5. Average trade drawdown – this may not be a necessity for all forex trading systems but it is still useful. It is the ability to evaluate how long a trade will go down and die before it makes a turn to move to profitability.

A good forex trading system that does not need to involve expensive software. It is actually quite easy to get a grasp of. Have a basic set of trading rules and use the candlestick format on your chart as you make note of profits and losses and entries and exits. Doing this will enable you to see if your system is profitable in the long run.

As you go through this process, you will find a forex trading system that you are comfortable with and have the confidence that it will produce profit. What you do this you need to have the discipline to stay within your system so you can create the same situations that you did while testing it out. By this time, you should have a good feel for how it works and be able to apply it successfully.

Taking these few pieces of advice will enable you to pick a forex trading system that will work for you. If you are still unsure about how all this works, feel free to contact me and I will get back to you as soon as I possibly can.

Most people shudder at the thought of Forex Trading because they think that it is very high risk trading because of the great amount of leverage involved. However the money making potential in Forex Trading is huge when compared to other financial instruments worldwide.

This article will highlight three great reasons why you should consider Forex Trading or at least a managed Forex Trading Account when considering between the multitude of investment instruments available on the market today.

Firstly, the forex market is the most liquid financial market in the world today. This means practically that even in a falling or rising market, there will always be a ready buyer or seller on the market. Most of us have been caught in situations where we want to sell a stock but there are no ready buyers in a falling market.

The great amount of liquidity in the forex market today, means that not only can you sell your currency fast but you can also acquire it fast as well and in rapid succession. That’s one reason why George Soros managed to funnel large amounts of money through the several South East Asian currencies during the currency crisis and made huge amounts of money in the process.

Secondly, the forex market is a true global market meaning that it operates 24/7 during the weekdays. This means that if you really wanted to, you could trade through the night and the day. Thankfully there is forex trading software now that helps you monitor trades and hunt for good trading opportunities and when you just enter your trading strategy, and the robot takes over and closes your position for you. The trading platforms now are so robust that you can set your downside indicators to close your position when it falls below a pre-set number so that you do not lost money even while you are sleeping.

Thirdly, the Forex Market is controlled by macro economic factors. Currencies are representations of how strong the economies are and how global trade affects them. The US Dollar rises and falls against the Euro in response to how strong the US economy is. Central bank intervention also plays a large role in this matter and such details are readily known to anyone today with internet access. You would want to contrast this to stock markets where the fund managers are usually the first to know about a scandal or bad quarter as opposed to the main retail investors. Another aspect of marco economics is that currency trends take a long time to play out. This means practically that we will not be caught off guard so fast when there is a turn in the market which takes a few years to play out.

In conclusion, we have highlighted three reasons why you should consider Forex Trading as a possible way to make money online. Take some time this weekend and go to the library and read all you can on the subject and then practice as much as you can with the free simulated accounts that most forex trading brokers provide and only spend money when you have accumulated enough profitable paper trading. Remember with great risk comes great reward in the Forex Trading Market. Carpe Diem!

Copyright © 2006 Joel Teo. All rights reserved. (You may publish this article in its entirety with the following author’s information with live links only.)

Don’t they look wonderful? All those currency trading systems promising you a regular income, with no effort and just a few hundred dollars! The vast bulk lose (I am being generous saying 99%) so why do they? Here’s why.

Because the track records are not real, there made up and normally carry this disclaimer.

“CFTC RULE 4.41 – Hypothetical or simulated performance results have certain limitations. Unlike an actual performance record, simulated results do not represent actual trading. Also, since the trades have not been executed, the results may have under-or-over compensated for the impact, if any, of certain market factors, such as lack of liquidity. Simulated trading programs in general are also subject to the fact that they are designed with the benefit of hindsight. No representation is being made that any account will or is likely to achieve profit or losses similar to those shown”.

Now a currency trading system that carries this disclaimer is not worth the paper it’s written on, as it’s made up knowing the closing prices. If we all knew tomorrow’s price today, we would all be multi millionaires but we don’t.

Also you have to think – if the trading system is that good, the vendor should have the confidence to trade it himself.

If he doesn’t why should you?

You can get a free currency trading system which will out perform the bulk of systems sold – simply look up Richard Donchian’s 4 week rule ( its in our other articles) simple? Yes it is – but it makes money and best of all its free.

You can also construct your own trading system and this is very simple to do.

The best way to start is simply to do a breakout system, that follows long term trends, uses support, resistance and uses a couple of momentum indicators to time trading signals.

I have been trading for 25 years this way and can tell you this will work far better than any currency trading system sold with a simulated track record.

The Good News!

Is you can make money trading forex, as everything about forex trading can be learned, by those willing to invest a bit of time.

The rewards can be life changing – but as in any area of life where money is to be made you need to make an effort.

So learn currency trading the right way and don’t believe any track record that has a simulation – it will end in tears and the wipeout of your account equity.

Use a free one from the net or build your own currency trading system, for long term forex success.

Currency trading systems can make you money and they are very time efficent but you have to shop around the vast majority will wipe you out quickly. The good news is there are ones out that can make big consistent profits and to find them you simply have to check a few points which are enclosed.

Check the Track Record

Would you trust a driving instructor who wasnt qualified and hadn’t passed their driving test?

Of course you wouldn’t, so don’t trust someone trying to sell you a system that has never been traded. The vast majority of trading systems sold have never been traded in real time and have the disclaimer below as a warning, if you see it be very cautious here it is:

“CFTC RULE 4.41 – Hypothetical or simulated performance results have certain limitations. Unlike an actual performance record, simulated results do not represent actual trading….”

big limitations and the disclaimer goes on to give you the key as to why these systems make money:

Simulated trading programs in general are also subject to the fact that they are designed with the benefit of hindsight. No representation is being made that any account will or is likely to achieve profit or losses similar to those shown”.

So now you know why they win – its hard to get it wrong when you know what happened!

so forget these systems, if they were that good the programmer would be making so much money they wouldnt be selling them and would have at least have had the confidence to use it for themself – ask for their account statements and you will normally never get a reply

There mostly put together by marketing companies, who rely on these track records and some enticing copy to lure the unsuspecting or greed investors, who never really think about the limitiations of these systems.

Look for a real track record audited with account statements over at least 3 years.

Understand the System!

Even if the currency trading system, you need to know how and why it works and make sure you have confidence in the logic its based upon if you dont you will have difficulty following it.

If you don’t have confidence in the logic – you simply won’t have the discipline to follow it, when it starts losing and all trading systems will suffer drawdown. If you don’t have the discipline to follow your trading siganls you don’t have a system by definition.

Check the Peak to Valley Worst Drawdown

I know systems that make triple digit gains – but can drawdown by 50% or more and know other systems that have the same growth rate and can take 3 – 6 months to hit a new peak in equity.

This is NORMAL and all systems will have drawdown to various degrees and several months to recovery.

Check the drawdown and time to recovery, by assuming you join the system on the worst possible day. Can you handle it? If you can great, if not don’t invest and look for another system.

Always assume your worst drawdown is ahead of you.

Trading systems should be judged over years not months and if you compound 50 – 100% per annum, you’re up there with the very best.

Some currency trading systems can and do make great returns – but most are junk and the above tips will help you find the best and one that matches your risk profile.

Finally!

While most traders like to follow a ready made system, there are some good free ones on the net and you can also build your own – it’s far simpler than many traders believe and can be just or more lucrative than buying one.

Take time to look around and you will probably come to the same conclusion.