Forex Trading Course Comparison - How to Be a Successful Forex Trader
The foreign exchange market (Forex), also known as FX or the currency market, is a decentralised world market for the currency trading. The primary investors in forex markets are primarily large international banks, although there are a considerable number of individual investors involved as well. The Forex market is a primary determiner of the relative values of different currencies. This will serve as your guide to Forex trading, how to get started, the hows and whys, tracking and manipulation of the market, and how to be a successful trader.
Getting Started in Forex Trading
Most of the people who get involved in Forex trading have little knowledge of how it works, and often even what it is when they get started. As a result, most first efforts of Forex traders result in losses. From these first efforts they either quit or they take a step back, do a little more learning and research, and/or practice with a demo account, then return to the market for another try. Another popular option is a forex trading course either online or on-site in Australia. The good news in all of this is that after these traders give a live account another try, they often either break even or actually make money.
Types of Forex Traders
There are 3 basic types of Forex traders. These are the Short-Term trader, the Medium-Term trader, and the Long-Term trader. The defining characteristics and strategies are explained in the below sections:
Short-Term Forex trader
They are a lot like day traders in the stock market. They buy with the intent to sell in the short term, after they recognise a small change in the price movement.
Pluses: This strategy works in theory but more often than not, fails in practice. Quick profits can be made with the ability to spot a price trend when it happens.
Negatives: Large investments are needed to leverage a decent profit. More often than not, however, the risk isn’t worth the losses that often occur.
Medium-Term Forex traders
Medium-term forex traders plan to hold onto positions for a longer period of time, enough to take advantage of better technical situations.
Pluses: Medium-Term investors require the least amount of capital of the three types, since the leverage given by more investment is only done to boost profits.
Negatives: There are fewer of these opportunities to take advantage of so they are harder to find.
Long-Term Forex traders
Long-term forex traders hold their investments for the long haul, either months or years. These investors base their decisions on long-term factors.
Pluses: Long-term profits are more reasonable since this strategy is based on more reliable fundamental factors.
Negatives: Long-term profits are made with larger capital investments since they can cover volatile movements of the market.
Tracking Your Forex Trading
Any businessman knows that the best way to track what he or she thinks the future will hold for their enterprise by studying what has happened in the past and comparing it with how they think the market will be influenced by activity today. A similar method is used by Forex traders, who use currency reports to calculate their average profits. There are many types of these platforms available, but a common, popular version is called MetaTrader, available through most Australian forex brokers.
When a Forex trader wants to review their trading, they go to the report station of their account to run a report which is based on parameters that they can input. This report can be based on trades since the beginning of their history, or other given periods of time. It is important to understand that this is not an automatic or mechanical trading system. Rather, it is a recall of past activity that a trader can base a decision upon. In their most basic terms, where all or most of the technical signals of a currency point in the same direction, there is a high probability that a trading opportunity will result in a profit. A forex trading course will go into this with more detail.
Analysing a Trade
From the report you have generated, you will set up a trading program. This program will use as many technical indicators as you wish to employ, but the more you select the more reliable your system will be but fewer trading opportunities will be revealed. If, on the other hand, you choose fewer indicators, your program will be less reliable but there will be more opportunities given.
Your report will show a tracking of trading on a minute by minute basis. This is called a candlestick chart since the bars take the image of a candlestick.
By studying the candlestick charts of trading, you will be able to get a good idea of the bullish or bearish nature of the market over the given trading period. It is a good idea to place exit points (both stop losses and take profits) even before you place an order for a trade. You should make these points at key levels and you should modify them only if you decide to change the parameters of your trade.
Manipulation of Forex
A problem that has reared its head in recent financial news is the occurrence of Forex manipulation by major banks, a problem that can have serious implications for investors. Manipulation can occur in many ways, but one of the primary methods that was recently employed was when traders who wanted to make a quick profit by buying up currencies after they knew what the starting price or what is called a “Fix” was set and before anyone else knew about the price at which the market would open.
Manipulation can also happen when word is leaked to certain investors about the upcoming trades being planned by other large companies.
The Best Time of Day to Trade
Unlike the stock market which trades only during business hours, the Forex market is active on the four different parts of the world in their respective time zones. This means that the Forex market operates all day and all night, which can mean long days and long nights for active traders. The question that comes up often as a result is what is the best time of day to trade? Unfortunately, that’s a hard one to answer, since good buying situations can happen following market overlaps and news releases. As a result, those who watch the markets more often and for longer periods of time expose themselves to more trading opportunities.
Consider What Forex Broker You Trade With
A forex broker will impact trading style based on a few factors. The first is leverage available with many forex brokers offering 500:1 while others will be as low as 50:1 (OANDA). This may impact strategies and the capital requirements. A second factor is spreads which vary dramatically between forex brokers. Fees (spreads) do add up so keeping these low are critical and for some fx brokers you need to weight up spreads vs commissions between accounts. A third forex broker factor is the trading platform and the allowance of the broker to use third party software or EAs to implement automated strategies.
The Bottom Line
The most important thing to remember with any trading strategy is for investors to strike a balance between market overlaps and news releases. As a result, traders can realise greater profits when markets are more volatile, all the while keeping an eye on the latest market reports. This allows all levels of traders the opportunity to set a trading schedule that will give them peace of mind, while not having to watch the markets constantly. An expert forex trading course can provide key details into this strategy to help you achieve your profit goals from currency exchange products.