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Thursday, April 19, 2007

Forex Basics: How to start Your trading

By: Yudi Hariyanto

Everybody must have known about forex (currency exchange) market and advantages that offers. To start and try, there’s some tips about basics in forex and tell what you need to join in this challenge market.

Trade forex Learning

Before 1980’s, only large players such as banks and multi national corporations were permitted in the forex market. But after that, there are revisions that allow small investors to participate using ‘margin account’. This one makes forex trading has become so popular because with margin account 100:1, with a $1000 investment you can control $100000.

However forex is not an easy thing and you need to learn to make prudent investment decisions. Learn the risks that involved in and find out as much as possible about the forex market are a good step for any beginner before start trading in Forex. Also don’t forget to set up your mentality.

FOREX traders usually require a broker to handle transactions. Most brokers are reputable and are associated with large financial institutions such as banks. A reputable forex broker will be registered as a Futures Commission Merchant (FCM) with the Commodity Futures Trading Commission (CFTC) as protection against fraud and abusive trade practices.

To open an account in forex is very simple. You just need to fill out a form and provide the necessary ID. The form will include a margin account agreement which states that the broker can interfere with any trade it deems to be too risky. This is to protect the interests of the forex broker – most trades, after all, are done using the broker's money. Once your account has been established, you can fund it and begin trading.

Many brokers have different types of accounts to suit the needs of individual investors. Mini accounts allow you to get involved in FOREX trading for as little as $250, while standard accounts may have a minimum deposit of $1000 to $2500 depending on the broker. The amount of leverage – using borrowed money – varies with accounts. High leverage gives you more money to trade for a given investment.

HOWEVER – beginner traders are advised to get familiar with FOREX by doing paper trades for a period of time. Paper trades are practice transactions that don't involve real capital. They allow you to see how the system works while learning how to use the various software tools that are provided by most FOREX brokers.

Most online brokers have demo accounts that allow you to make free paper trades for up to 30 days. Every new FOREX investor is strongly advised to use these demo accounts at least until they are showing consistently steady profits.

Each broker has their own set of software tools to aid in making transactions, but there are a few tools that are common to all FOREX brokers. Real time quotes, news feeds, technical analysescharts, and profit and loss analyses are some of the features you should expect to see on most online brokers' web sites. and

Almost every forex broker operates on the Internet. To access their online services you should have a reasonably modern computer, a fast internet connection, and an up to date operating system such as Windows XP. Once your forex account is set up, you can access it from any computer – just enter your account name and password. If for some reason you are not able get access to a computer, most brokers will allow you to make trades over the phone.

Forex Trading are commission free, means that you can make many trades in one day without worrying about gaining high brokerage fees. Brokers make their money on the 'spread' – the difference between bids and ask prices.