Currency Trading for Beginners
Currency trading for beginners should be done in low-monetary-risk environments, such as simulated trading or paper trading. Once beginners start trading with real money, good ways to start are mini forex accounts with little money at risk.
Beginners should attempt trading, real or simulated, only after they are thoroughly familiar with both forex markets and currency trading fundamentals. There are courses, books, seminars, and mentors that can help in getting started.
Also, trading, in all it’s forms, should be approached with a plan, just as any business should be where money is at stake. This plan should include (but not be limited to) money management, entry and exit signals, and other rules about forex trading that affect trading returns.
Currency Trading for Beginners – Back-testing
Once you have a trading plan for forex, back-testing your system with historical data is one of the most important things to do before starting to trade with real money.
In back-testing, you go through historical data and place simulated trades according to the rules of your trading system. The profitability of this back-testing method should partly tell you whether your system has potential.
Remember, though, that historical returns are no guarantee of future returns on any system.
Currency Trading for Beginners – Paper Trading
Next step in currency trading for beginners should be a paper trading phase, where the rules of the currency trading system are tried out with actual, live data. However, you place trades on paper, with no actual money at risk.
Paper trading simulation should show you some insights into how the markets actually behave in real trading situation.
For example, you may find, in a real-time situation that the market moves so quickly that you are unable to place trades at the price points you desire. This slippage is especially important for currency day traders that usually have very narrow profit margins on any single trade.
Also, with some online trading firms, you can open a demo trading account and place simulated trades with the company’s online system, as you would do on real-time trading, but with no real money at risk.
Currency Trading for Beginners – Mini Forex Accounts
Currency trading for beginners with mini forex trading accounts places real money at risk. Therefore, beginners should be confident on their trading strategy and plan before attempting to trade with mini forex accounts.
Full back-testing and paper trading your system should give you some insight whether your trading system has any potential before opening a mini forex account.
Mini forex accounts allow for the lowest margin requirements, meaning that you can open a forex trading account for far less than a $1000 dollars and place trades.
Currency trading for beginners should only involve extremely low-leverage, low monetary risk positions.
In addition, some forex trading companies offer, for a small fee, guaranteed stops that make the trading safer for a beginner.
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