Wednesday, August 27, 2008

Forex beginners - Learn with a free online practice account

The best way for forex beginners to learn about currency
trading is about is to open a practice account.

Most forex brokers offer a free practice account to those learning about forex.
This works online in a virtual capacity so you can trade with immunity not losing real money but virtual practice money. You gain experience in how margin trading works and the forex broker wins a prospective future client by providing the service.
Practice accounts give you the chance to get practical experience in the
forex market.

When the forex market reacts to new information due to world situations
you are able to see how it affects your trading.
You will be able to see how prices change at different
times of the day and how various currencies react to each other.
Because you are not losing or gaining real money fear does not affect you learning process. Having said this it is much preferred that you trade as though you really were trading with real money as emotion is a major factor of trading.

It becomes a simple process of trying all sorts of combinations and strategies to see how you cope and what works for you. It is a very helpful process to learn how your margin trading or leveraged trading works. Begin simply and then add the processes of learning how to analyze charts and read the indicators.

Experiment and have some fun but make it a serious learning process by imagining you are using real money. That way you will get the most out of your practical learning experience.

An excellent platform to practice and learn is at OANDA.

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Tuesday, August 12, 2008

Beginners forex - what is a stop loss ?

• Stop Loss Order – When an order is put in position it can be automatically stopped at a specific price and is commonly known as a stop/loss order. Stops are used keep the exposure to losses at a minimum if the market moves against an investor's position. For example, if an investor is long (investors purchasing position at lowest cost) at USD132.45 you may put in a preset stop loss order just in case the dollar drops. It can be set for any amount you wish but for example lets use USD131.55 as what we will set to minimize losses, that is if the dollar drops below your purchasing position. What we are aiming for here is for the dollar value to rise, but just on the off chance it drops the stop/loss order is a safety net.

• The only thing you can control in Forex is when you buy and when you sell so having set a stop loss order gives you a very small chance of control over losses keeping them to a minimum. Naturally this is something you are not aiming for as selling below your cost brings a deficit……hence the name stop/loss.

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