Foreign exchange trading is not a new investment but nowadays is more easily accessible to the not so wealthy. Whenever venturing out into any type of investment your number one goal should be to NOT lose money.
First things first. Before even opening a demo account much less a real account. You'll need to know how money works. Yes I said how money works. Money always prefers to be treated nicely. Money follows where it is treated best. Lets use an example in step two so you can get an idea of what I'm talking about
Alright. In this example we are going to use two countries. The united states or America and Canada. Now lets say the united states has an interest rate of 2.75 percent and Canada has an interest rate of 3.75 percent. Money is going to tend to flow towards a higher interest rate. So that means investors are going to start dumping there money in bonds with Canada because they can make more money. If I had a choice between 2.75 percent and 3.75 percent naturally I'm going to pick 3.75 percent.
Pretty simple so far right? Well its not that simple unfortunately. You see there are other factors you have to account for as well. Is Canada's unemployment rate higher than the united states. If so investors might seem unsure of the direction of Canada's economy. While Canada would have a higher interest rate the united states would seem a safer place to park money even if it had a lower interest rate. Is inflation on the rise in the united states if so investors and/or banks might think that the united states is headed for trouble and view Canada as a safer bet.
The point i'm trying to make to you wether you have a live forex account or kinda tinkering around with a demo account is that there are countless factors that affect the forex market. Don't just look at your charts, see a currency move up and decide "hey i think i'll buy" it may be moving up in a short term but the foundation of the currency might be cracking from underlying problems with the country of its orgin and ready to collapse. You do not what to get caught in a collapse. When I first started trading i got caught in one and lost about a thousand dollars in roughly two hours. Not a good feeling trust me and i don't want that to happen to you.
Well i hope this little how to helped out some. I hate to see people lose money. I trully beleive in the law of abundance. This law states that there is enough money to go around for everyone. We just have to make good decisions but we need to do our homework first to make those decisions. Remember that bulls make money, bears make money, pigs get slaughtered. Words to live by in the investment world.
- Always make an informed trade
- Never get greedy take your profits and be happy with them
- Never trade based on hope and faith
- Never buy forex signals, they don't work, none of them
- Never buy forex material, everything you need is free on the internet just search around for it
- Please research before making a trade
By ehow.com
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