What are the basics for global currency trading about which trader must be caocious?

Answer 1

A great resource for those interesting the FX market is

http://www.oanda.com

There you can sign up for a free demo account and trade in real time using fake money. And browse their forums that cover every question a newbie might have on the markets.

One of the basics that you must be cautious of of is to not get sucked into any scams. ForexMadeEasy & other late-night infomercial type products offering you the world "For only $4000!"

In the FX Markets your leverage is on the order of 100:1. That means that for every $1,000 you have in your account, you have the ability to control $100,000 worth of currency.

This can create some wonderful trading opportunities to create some outstanding investment returns compared to a standard mutual fund, but also exposes you to much greater risk. This risk is the biggest thing a new FX Trader should understand.

You need to understand basic Technical Analysis and have a plan before diving in and trading with real money. And this plan should be either backtested against prior data or forward tested for a period of months in your demo account before you put a dime in with real $$$$.

Most people to who try to trade in the FX markets fail and loose all of their money. You must realize this up front and take the steps necessary to be in the winning 5%. I promise you that its not about innate ability. It's about hard work, discipline, planning, adequate capital, and most importantly...time.

It takes time to learn all the lessons that you have to learn in order to be successful. If it were as easy as all the informercials say it is, then why are they selling a product for $4000 on the infomercial instead of taking their capital and investing it into their own system and X-dupling their money?

Get educated, open a demo account, have a healthy respect for leverage, don't get sucked into scams, be realistic, and only trade with money you can afford to loose....in trading as in poker, scared money won't be your money for very long.

Hope this helps

Answer 2

your handle is "Forex Expert"...I think you are just a wannabee!

Look, Forex investment is very high risk trading, You can't buy contracts this morning and look to see what they have done tomorrow...This trades have to be watched constantly with up to date market prices or you will miss the moves. and since these markets are heavily leveraged, you can lose big money, real fast.

Stay away from Forex....Start investing with mutual funds that are fairly low risk.