Using trends to profit from forex trading may seem almost too simple. Yes, it is a simple strategy, but it works … provided you can tell the difference between an emerging trend and a mere fluctuation. That is where the skill, experience and tools come in. But really it is a very simple strategy and you should not try to complicate it.

There are several different ways of identifying a trend using either technical analysis (charts and indicators) or market knowledge (fundamental analysis). Drawing trend lines on a candlestick chart is probably the simplest method. You can identify triangle patterns that will predict a breakout in one direction or the other, and check these against other indicators such as the MACD crossover. It is also wise to check your pattern on charts for different periods, e.g. check hourly against daily charts etc.

There is no need to know all of the different methods for spotting a trend. Perfect one or two reliable methods and you have all you need to make money. Remember that all methods have their successes and their failures, and it is the overall profit or loss over the long term that counts. Do not be put off by one failure, and control your risk so that a couple of losses in a row will not have a big effect on your funds or on your confidence.

Experience can make all the difference and you would be well advised to practice on a demo account before trying out your method on the real market. Traders with many years of experience can often recognize patterns without even knowing that they are doing it. They do not consciously remember having seen a situation before, but long experience of watching and trading the markets gives them a deep knowledge that will often help them identify signals very fast. It is worth beginning to develop that experience before you leap in with real money.

In the beginning you will not be able to ride the whole of a trend from its starting point to its peak or trough. In fact, hardly any trader ever does this. You must wait to be sure that a trend is forming. Equally, do not try to hold out until the last moment to try to grab every last pip. Set your profit target and be happy with it. In the long term this will pay you better than trying to second guess the market.

Finally, do not follow any type of forex trading system that relies on changing your position size depending on whether your last trade was successful or unsuccessful. This is a recipe for disaster, as thousands of ruined gamblers have discovered. If you have a good system your profits will exceed your losses without resorting to gambling. Investing time in your forex trading education is the key to making money from the forex markets.

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Broker Forex Trading Platform

Brokers need a solution that is reliable and flexible so that they can adapt it to their particular business. Above all, they want it to be user friendly so that it is easy for their clients to use while providing all the information that clients want at their fingertips.

Most brokers either use custom built software or adapt something that is available out of the box. Custom platforms may seem like the ideal solution for a broker but they are expensive and take a long time. Even if you have delivery of your software, you can be waiting a long time for all of the bugs to be ironed out.

Pre designed forex trading platform packages have several advantages. First, you can be pretty sure they work so you are starting with a system instead of starting from scratch. A huge amount of time can be saved by your programmer, who will just have to change things around so that it does what you want.

Do not neglect the customization, however. It is important that broker trading software is branded to your own company and has a different feel for users than other companies’ platforms that they may have used before.

Trader Forex Trading Platform

Traders will usually go with whatever interface their broker provides, but they will be looking for something that is easy to use and provides plenty of technical analysis. The software is often a very important factor in the choice of a broker.

Again, reliability is vital. You do not want to be linked up to a platform that makes errors or is frequently offline. Security is another factor. It is important that your funds are protected and your account cannot be accessed by hackers.

If you are using an automated forex system to trade for you on autopilot, it is essential to check that your selected broker’s software will work seamlessly with your robot. If you buy a premade robot or forex expert advisor you will usually receive a list of compatible brokers.

Many successful traders now have someone automate their system so that they can switch over to autopilot trading without changing their trading style. The platform of choice for most robots is Metatrader 4. This is free software on which your programmer can build a trading system for you. It is the most popular forex trading platform for the expert advisors that are sold on the open market and it is compatible with many broker software platforms.

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Traditional trading was done through phone, meetings, talks and a lengthy process of introduction that took some time before an agreement could be reached. Remember how long a free trade agreement used to take? Well in a certain sense similar but to a smaller scale. Now with the internet, online trading is the new ‘it’, because it is easier, faster and much more accessible for anyone to get into online buying and selling, making easy money from an upturn of demand and a drop of supply.

Online trading has crossed over to all sectors on the internet – from commodities like Forex capital, futures, stocks and bonds, metals, precious metals – even plantations even Burma and livestock in the Middle East, they are all goods and services that come under the umbrella term of commodities that can be traded with all over the world. This means more and more opportunity for you to make the money fast and open up several revenue streams for your benefit.. Its all about the business inflow and outflow – which means how a business is performing in a particular market. You have to be a sort of economics Nostradamus – knowing how much business there will be in the future.

For example, the Beijing Olympics and the developments that preceded it increased the demand for base metals and iron about 100 fold in the world metals market, which caused its price to rise a lot. Prudent traders bought up as much of the commodity as they could and sold it back to the Chinese market and thus made quite a bit of money from it. You see how easy it is? Well don’t judge world shaking events like this as the only way you can predict how much or how little a commodity will cost. With a recession like this that we are experiencing, the demand for certain things will be bound to drop and rise at the same time, its just about identifying what you can or cannot buy and when to do it.

Online trading is simply buying and selling and this is something anyone can do – a fact made that much more tenable by the fact that you can do it on the internet from home, with just a click of a mouse and market watching on your cable T.V. Learning is also an important part of your investment journey and once you wise up to the market you choose, you will sure make good money on the side.

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You should know that there are minimum investing levels and they may vary greatly from one brokerage to another. If you are dealing with a private broker, then you might be exempt from putting down this minimum down payment, although placing $50 within a brokers firm would get you as far as your front door in terms of profits. There are really tiny accounts you can open from as little as just a few hundred dollars while normally a set amount of a thousand dollars is the minimum. You should also know that putting your money into a broker’s account gives you a margin – that can double, triple and multiply the ‘investment dollars’ you have – meaning you can invest more, in different markets and different currencies. This allows you to increase your portfolio easily and maximise profit allocation. The ability for investors to do this also means that the market gets ‘excited’ easily, so watch out for the signs.

One note about signs, Forex, by trading accounts, is one of the most predictable markets ever. Stocks, futures and equity markets are rigid sometimes and can sometimes surprise you as they feel even the smallest reverberations left behind by mini economic disasters from one wee corner of the world. But we usually know what affects the Forex landscape and you can see what will happen. Long time traders will tell you that this market has a set pattern and general market cycle that it follows and strategy planning can be used as a forecast blueprint you can use so that you will know when to buy, sell and hold out.

Forex also has a great online interface, which combines the portability and accessibility of the internet and the ease and lucidity of the market. Most transactions and order fills are done electronically and many firms has set up Forex trading programmes and interfaces that are electronically driven and based on the superstructure of the internet, so investing in Forex can be as easy as checking your email in the morning. I think the most important thing is that you have to do research before you choose your broker or company to represent you and handle your investment wants and needs. Research! Research! Research!

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So what are the different types of forex trading account? First let’s take the standard account, which has the highest minimum investment. Most brokers ask for at least $10,000 and with some you need $50,000 to open an account. The standard lot size is 100,000 currency units. So with leverage of 100 times you would be putting up 1,000 currency units per lot.

It’s a lot of money (excuse the pun) and it comes as a relief to most traders to know that they can have a mini account with one tenth the position size, ie requiring 100 currency units to control a lot size of 10,000 units. The forex micro account is one tenth of the size of the mini, with a lot size of 1,000 units that you could control with just 10 currency units assuming 100 times leverage.

So why is the standard lot size so big? Years ago, before the rise of the internet, forex trading was done through dealing desks. Most trading was in the hands of the large financial institutions such as banks. It was possible for private individuals to get involved, but they had to phone a broker to give their instructions. The time cost of this meant that brokers would only consider taking on clients with a substantial amount to invest.

However, when brokers began transferring their services onto the internet, the costs were slashed almost at once. It was no longer necessary to have a staff of dealers answering a bank of telephones. Traders could control their own accounts from their own homes or offices, by logging on to the brokers’ website.

This means that it is now cost effective for brokers to offer much lower lot sizes and therefore much less of a minimum investment. Brokers leapt at this opportunity to attract a huge number of new clients, and the forex mini account was born, soon to be followed by the micro.

The minimum investment varies with the broker. Scaling down from the standard lot size you might expect the minimum for a mini forex account to be $1,000 to $5,000. In fact, many brokers will let you start with less, but it is better to have that kind of sum if you plan to trade mini lots. If you have less than $1,000 to invest in your trading, it would probably be better to start with a micro account.

There is something else to consider too. Taking the example that we gave earlier with 100 times leverage and assuming that the currency unit in question is the US dollar, if you open a forex mini account you will be dealing in lots of $10,000, requiring you to put up $100 for each trade. To many people that can seem like a lot of money. Remember, forex trading is very risky and your trades will not always be profitable. Some losses are inevitable. Are you comfortable with committing $100 to every trade?

If not, then a micro account might suit you better, at least at first, even if you have more than the minimum required to open a forex mini account.

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One thing that you will need before you begin trading for real is a profitable system, and you may have to test several before you find one that works for you. You do not have to search very far for systems. There are many available on the internet. They are often found in the form of an ebook which you can download.

Always check your system in two ways before you begin trading for real. First, backtest it. This means that you look up the past 6-12 months’ charts (or more) and calculate what your profit or loss would have been if you had been following the system during that time.

Backtests can be very revealing but of course past results are not a guarantee of future profits so even if the system performs well in backtests, you still need to carry out forward testing too.

So second, you will operate the system on the real time market in a forex demo account. You can begin to do this at the same time as the backtesting, but using the demonstration mode will take longer because you must wait for real time changes in the markets.

Most systems rely on trends, patterns and indicators that may not occur every day. So your opportunities for trading in real time may be limited. Still you have to check the markets each day to see whether your signals for opening a trade are there.

Forex day trading or scalping systems are a quicker way to trade. The aim here is to make a small profit on many short trades, often lasting only a few minutes. Day trading is generally considered riskier so it is probably not the best choice for a beginner, even though it is tempting to see quick results.

Whatever system you choose, be sure to run it in demonstration mode for several months and be making consistent profits that way before you switch to real trading. This requires patience, but patience is something you will need as a successful forex trader so this is a good way to develop it.

Most brokers will provide a free forex demo account and they are a great way to test your system and hone your trading skills risk free.

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The problem, of course, is that with such a small balance you have to take huge risks in order to have any chance of making more than a few cents a day. Taking huge risks will wipe you out for certain, but making a few cents a day quickly becomes boring and can seem like a big waste of time. Many people, therefore, either lose their $25 a few times over and then conclude that forex trading ‘doesn’t work’, or lose interest.

However, there is a way to use a micro forex account that can bring you the results that you dream of … in time. There is no reason why you should not profit from a small account just as from a big one, but you must understand that you need to start with $100 to $500 and look out for a good broker.

You will also need a system that is suited to a smaller account. This means no big risks. Some systems seem attractive because they advertise a win rate of around 90%, but this inevitably means that when a loss does occur (and it will) it will be big. If you have a micro forex account you are likely to be using relatively high leverage so you want to avoid that situation.

Another good use for a forex micro account is for the beginner who does have more to invest, but wants to practice his skills or try out his system at low risk. You have probably already used a demo account but there is a lot to be said for going live with real money sooner rather than later, while keeping the position size very low. This allows you to trade at some risk and discover how you react to the stress of the live market. Assuming you make out okay, you can then gradually add to the balance of your funds until you are ready to move up to a forex mini account.

Some traders also like to have a micro account in which they test new systems or ‘play’ with hunches or new ideas. This is fine if you can afford to lose a small balance over and over. Playing at forex or trading without a clear system is almost never profitable for any length of time. However, for traders who cannot resist the odd trade on the side, using a micro forex account is better than opening a trade in your regular mini or standard forex trading account.

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Most traders use candlestick charts for this purpose, because they are so clear. Bar charts can also be used if preferred. Line charts would not be used.

The first thing to consider is whether the market is rising or falling. This should be visible at a glance, especially if we check several time periods. Use an indicator like Bollinger Bands to make sure that a rising market is not overbought, or a falling market oversold. Once we have this information, which should just take a few seconds to verify, we can begin to draw trend lines on our technical analysis chart. Here’s how.

First, draw a straight line through the highest highs and another through the lowest lows.

1. Bullish market

If the two lines are approximately parallel and heading upward, there is an upward trend. The two trend lines can be used as support and resistance lines, which means that we assume the price will remain within the area between the two lines while the trend continues.

So if the price hits the lower line, you could buy on the assumption that it would soon rise again. First of course you would check against another indicator such as the Bollinger Bands and perhaps check in another time period to make sure that there are no signs that the trend is ending.

Some forex traders would also open a trade to sell the currency pair when the price hits the upper line, on the assumption that a retracement is due. This bucks the trend so requires extra care, but can be a profitable strategy.

2. Bearish market

If the two lines are approximately parallel and heading downward, then you have the opposite situation. The trend is downward. Again the lines act as support and resistance lines. This time you would be acting in line with the trend by selling when the price hits the upper line. Buying when it hits the lower line would be bucking the trend in the hope of a retracement.

3. Stable market

If the two lines on the technical analysis chart are approximately parallel and horizontal, the market is relatively stable and there is no trend. You could still trade on the basis of the support and resistance lines but most traders using trend-based systems would wait for a new trend to form.

4. Converging prices

If the two lines are not parallel but drawing closer together so that they would meet at an imaginary point in the future, sooner or later the price will break out and head in one direction or the other. Either wait for the breakout or place conditional orders so that if the price breaks above the limit of the upper line you would buy, and if it breaks below the lower line you would sell.

5. Diverging prices

If the two lines are not parallel but moving farther apart, this indicates that prices are becoming increasingly volatile. Most traders would stay out of this market.

Of course, financial trading is always risky and there are no guarantees. Always test systems thoroughly using the technical analysis chart in a demo account before risking any real money.

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1. ECN Forex Brokers

These companies use the Electronic Communication Network, a global online marketplace that caters for many different types of trader from retail to the big banks and market makers. The spread on the ECN is small, sometimes almost non existent, so brokers using this network will usually either add a couple of pips to the real spread or charge commission or fees per deal. You can often get better prices from an ECN broker but take a close look at their fee structure and consider what it would mean for you on a typical deal.

ECN brokers are often better for scalpers and may even welcome them because they are dealing directly with a big market. Slippage is not so much of an issue, either for scalping or at times of forex news reports. They are also usually well regulated.

On the downside, the variable spread can mean more uncertainty when setting stop losses and limit orders. ECN brokers also tend to offer fewer charts and may have a less user friendly trading platform because they are not specifically aiming to attract beginners. They tend to assume that you know what you are doing and have a paid subscription to do your technical analysis elsewhere.

2. Forex Market Makers

Market makers usually offer you their own prices, based on the price that they expect to get on the ECN. When you open a deal they need to match it in the ECN to cover their risk. Clearly here there is room for the price to change in the moment between you clicking the button and the deal going on to the ECN. This is slippage. It can mean that you do not get the price that you expect, which can be a problem, especially for scalpers who are usually looking for very small profits from each trade. For this reason scalpers and market makers are not a good mix and could be unwelcome.

On the positive side, market makers can be a good choice for a beginner. They will usually provide good technical analysis, news alerts, a user friendly platform and a demo account. They will almost always offer a mini forex trading account so that you can start trading with a few hundred dollars or less. This is a very important factor for many new traders choosing forex brokers.

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There are many ways to trade forex or the currency market. Most people think of traders watching charts on their computer, waiting for conditions to be right and then manually opening and closing trades at the best times.

But that is not the only way. You can hire somebody to do this for you by signing up for a managed account. If you choose this route, be sure that you retain control of your funds and can see what is going on.

Or you can get yourself a forex robot that will trade for you. Robots are simply software programs that are able to act according to your instructions. You will set up an automated system that will trade for you at any time of day or night, when the conditions are right. This can be a very attractive option for beginners because it cuts the learning curve right down, but you should be aware that there are still risks involved and you do need to spend a little time understanding how the robot works and how to set it up in the best way to maximize your profits without exposing your funds to excessive risk. Fortunately, most automated forex systems come with full instructions.

If you want to invest more time in forex trading courses in order to make money for yourself with manual trading systems, you will find many styles of currency trading training available online and offline. Offline you can buy printed books from any bookstore or you can apply to join a forex trading seminar. These are usually held in hotels in larger cities and may be expensive, but if the seminar is right for your level and addresses points that help you make money consistently, they can be well worth the expense.

The same is true of coaching and mentoring programs that you can find online. However, the internet also offers a lot of other options. These include free forums where you can ask questions and receive advice from other members – just keep in mind that they may or may not know more than you.

You will also find systems set out in forex ebooks available for instant download on the internet. Some of these are free, but you will only usually find the most basic information in a free ebook. You must expect to pay anything from $30 to $100 for a solid, practical system that includes an ebook plus training in the form of videos.

Videos are one of the biggest benefits of getting your forex training online. They have many of the advantages of learning trading from a successful trader in person at seminars, at only a fraction of the cost. With a good video series you will watch over the author’s shoulder as he or she sets up systems, analyzes the market and opens and closes trades. In a way it even beats a live seminar because if you miss something you can play the video over again. So it is worth paying a few dollars for video in online forex trading courses.

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The word forum comes from the big open square in the middle of Roman cities where citizens would gather to hear the news and discuss important current issues. Formerly known as bulletin boards or message boards, online forex forums are sites where traders can go to discuss issues related to forex trading. A few are restricted to paid members, but most of them are free and can be accessed by anybody who chooses to register a free account.

In an active and popular forum, there are usually several discussions underway. If you post a question or comment you can expect to receive a fast reply. The only problem with this is that you usually do not know whether the replies can be trusted.

Forum members may appear to be experts but they could be anybody at all. It is easy to hang around long enough to pick up the language, then start handing out advice to others. Some might be complete beginners. Is their advice really valuable to you?

Of course in some cases there may be indications that a person is well qualified to help you. For example, you can often see how long the person has been a member and how many posts they have made. Someone who has been an active member for a long time may be a better advisor that someone who just joined. Or so it seems. But what if that long standing member just likes hanging out in forums?

Even the best traders who are actively making money from forex can sometimes give conflicting advice. Traders have different attitudes, systems, strategies and priorities. Oftentimes they may take more of a risk than a beginner would be comfortable with. This means that it may not be possible for a beginner to follow what they suggest.

A forex forum is a useful place for certain types of discussion. For example, it can be great to get feedback from other traders who have used a particular product or service such as a broker or an automated trading system. You still have to keep in mind that different people have different abilities and expectations, of course. Just because somebody could not figure out how to use something, does not mean that anybody else would have a problem with it. Try to get a range of opinions and look for responses from people who are in a similar situation to your own, when checking out reviews on a forex forum.

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So what is forex trading? Forex, FX or 4X are all short forms of ‘foreign exchange’, which means the buying and selling of currencies. Of course, if you want to get some foreign currency you have to exchange your own or another currency for it.

If you have ever done this for the purpose of foreign travel, you will know that the exchange rate is constantly changing depending on the relative values of the two currencies – the one that you are buying and the one that you are selling. If you change money back after your trip, you may end up making a profit on it, if the exchange rate went your way.

So from there you can easily understand how forex trading works. You buy (or commit to buy) a currency that you think will rise in value, then sit back and relax until it is time to trade out with a good profit. That is the idea, anyway. Of course it is not that easy. You cannot just make a guess. The prices can go the wrong way and then you lose.

So how can you know whether a certain currency will go up or down in value? Of course, this is the million dollar question. Nobody can predict the fluctuations in currency prices with 100% accuracy. The market is just too huge and volatile, with too many contributing factors.

The forces that drive changes in currency prices are economic ones. Anything like a rise in interest rates, an improvement in the GDP, higher retail sales or employment rates is a sign that a country has a strong economy. The big investment houses will want to invest in that country, so its currency will be in demand and the chances are good that its currency will strengthen.

However, these economic factors are hard to predict unless you have a deep interest in international economics and political finance. Fortunately, there are other ways. Most traders do not even try to analyze the market in economic terms (this is called fundamental analysis). Instead they rely mainly on technical analysis.

Technical analysis is based on charts that show whether a certain currency pair has been moving up or down lately, with all the fluctuations over many different time periods from one minute to one day. These are provided by most forex brokers. On top of this, your broker will normally offer mathematical indicators which plot other factors that may help you to assess trends, such as moving averages.

This may sound complex but most of the work is done for you. The skill lies in learning or constructing a system to use with the charts and applying it with consistency and discipline. If you are a visual-oriented person who is comfortable with figures and can generally stick to what you resolve to do, then you have a good chance of learning to make money online from home with forex trading.

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Here is one technique that may do just that for you, if you implement it right. It’s a method that you can apply to profitable trades to maximize your gain from each one.

You will have heard over and over that you must not hang on to a winning position beyond your profit target out of greed, hoping to make more money that you need. Well that is true, but at the same time there is something you can do to take advantage of those times when the trend is pushing on more strongly than you expected. It is a great tactic for day trading although it would be equally valid for a longer term trade. I call it ‘trimming the scalp’.

All you have to do is when your trade reaches your profit target, close one half of your position. Of course this assumes you are trading two lots or more, or have a broker who accepts fractional lots. This gives you the flexibility that you need.

So, exit half of your position. At the same time, of course, amend your stop loss order to one half of the original size too. You can also move the stop loss to your original trade entry position plus or minus a couple of pips to take account of spread.

You have now closed on half of your profit target, plus you have a half size order open in the market that cannot lose because its stop loss is set at point zero. Set a new price target and place a limit order at that point. It could be the same number of pips as your usual price target or a little less. Don’t make it more.

However, if you have a losing trade, do not try to apply this same strategy. Never hang on to even half of your position in a losing trade. Remember, this strategy applied to winning trades will maximize your wins. So if you apply it to your losing trades it will maximize your losses … not a great idea.

If you apply this ‘trimming the scalp’ forex day trade strategy over all of your profitable trades, the effect should be to increase your average gain per trade without affecting your losses.

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The history of the forum dates back to Roman times when the forum was an open place or square in the middle of the city where the male citizens would meet to discuss important matters such as politics or law. The word came to mean any discussion group or its location, and it was adopted by online communities to replace the old ‘bulletin boards’ of the 1990s where messages were posted in threads and often emailed to all members.

Now you simply log in and post your questions or comments on the forum. In all of the active forex forums you can post a question about currency trading and have an answer very fast. This can be useful but it can also be dangerous. Usually you do not know anything about the person who has replied to your question. Perhaps they know less than you do.

It is very easy to appear to be an expert in anything on the internet. All a person needs is to pick up the jargon of currency trading and sound confident. You do not usually know their real name or anything about them. You can see how many posts they have made, but all that means is that they are active in the forum, it does not prove that they are actively trading. They could be forum addicts, wasting all their time chatting online instead of making money. Be careful not to fall into that trap yourself!

Even if you really are seeing replies from successful and experienced traders, they may have different priorities or aims than yours, or they may use strategies that you would not be comfortable with. So although you can certainly get free forex trading advice on forex forums, you might want to be cautious in how you use it.

One of the best uses for a currency trading forum is to search for recommendations and reviews of products and services. For example if you are thinking of signing up with a particular broker or buying a certain forex robot, you can check the forums for feedback from other traders who have used that service.

This type of feedback can be very useful in helping you to decide whether a product is right for you, but again you will not necessarily want to take anybody’s word for anything. You may come across one person who has very strong views either for or against a product while you yourself might have a very different experience with that same product.

People are often very critical of a product that they could not figure out how to use, for example. You might find it easy to use and be very successful with it. On the other hand you will sometimes see glowing reviews from people who have used a product for a very short time and been lucky with it. Longer term the results might not be the same.

So remember that one person’s opinion is just that – it is not a universal truth. It is always best to gather responses from as many different people as possible when you are looking for free trading advice and reviews on forex forums.

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1. The Buck Stops With You

Whether you are looking around for a day trading system or developing your own, remember that whatever you do is your responsibility. Ask for advice and help by all means, but do not believe everything you hear. People are different and their trading styles can vary hugely, so never follow advice blindly.

Equally, you can buy in a system but do not neglect to test it. Even if the guy who designed it says that it will double your money in two months for certain sure, you must test, because there are three possible problems with that. One, he could be lying. Two, maybe it used to work great but it doesn’t work any more. Three, maybe it works for him but for some weird reason to do with your spread or whatever, it doesn’t work for you. Your money is your responsibility and yours alone, so put the system to work on a demo account until you are sure.

2. Stay Calm

The biggest enemy of any trader is his or her own emotions and this is especially true for the person who wants to learn day trading. If you are the kind of person who makes bad decisions under stress, you might want to think again about choosing day trading as your strategy. This is a fast moving world where seconds can count in thousands of dollars, so you need to keep a very cool head.

Now pretty much everybody likes to think they are a calm kind of person who would react well under pressure, so even if you are convinced you are going to be the world’s number one ice cold trader, test yourself as well as your system in that demo account. If you veer off the system even once or start altering your position size, closing out early, waiting too long etc in demo mode, sorry but you are not ready for real life trading when things will be much more hairy. Work on it.

3. Track Everything

Even though you have to work fast when you are using day trading systems, it is worth taking the time to write everything down. Again this is a habit you can train yourself into while in demo. You will be amazed how much it helps you to see why things went right or wrong when they did. This can enable to to tweak a marginal system into a profitable one and make all the difference to your bottom line. A simple spreadsheet recording your position, the signal(s) and the opening and closing prices is enough during trading. Afterward you may want to add a comment.

4. If In Doubt, Keep Out

This is a well known trading and investment rule. Do not take a chance on something that nearly fits your system but not quite. It may work once but over the long term this will lead to disaster. There is probably a reason why the system is set up for the signals that it has, and if the market does not fit, do not force it.

Equally if you are sick or under stress about another area of your life, it can be better to stay away from the market, especially while you are still a relative beginner. There will be other and better opportunities to learn day trading when you are feeling in peak condition.

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Of course you will pay commission in some form, but an experienced forex trader is likely to make a lot more money than a raw beginner, so it can still be very profitable. In addition, you do not have to spend hours every day looking at charts and analyzing currency prices on the internet.

But is it really so easy? What are the risks involved in managed forex trading?

First, it is important to understand that all speculative trading is risky, whether it is in stocks, currencies, commodities or anything else. Nobody makes money on every trade, and that includes the most successful professional traders. So there is a risk that your manager will make losses on your behalf. However, it is true that their results are likely to be better than yours in the medium to long term, even if there are times when things do not go so well.

Second, be aware that for a standard forex managed account the minimum investment can be high. This is because a trader is normally trading your account for you on a commission basis. Clearly, the more money you have in the account, the bigger the expected returns and the more commission he can expect to make. You can see that it would not be worth his time to deal with an account balance of a couple of thousand dollars.

However, there is another option. In the case of a standard managed forex account, your money is held in a separate account that you can view and have access to. But there is another way of investing in managed forex trading which is called a pooled account. Here your money goes into a pool with other clients’ funds, to be traded all together. In this situation it does not matter how much your individual funds are and the company will usually accept small investments.

There is more of a risk with pooled accounts in that you cannot see what is happening. You have to trust that the funds are being held safely and the results are accurate. It is very important to check up on the background of the company and particularly, whether they are members of any regulatory bodies that will protect you in the event of a failure or crash. There is a real risk of scams with unregulated managed forex trading, so do your due diligence.

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So what are the most important fundamental factors in global forex trading? Which reports and announcements have the power to shake the forex market?

1. Interest Rates

Probably the most important fundamental indicator for a nation’s currency prices is the interest rate. High interest rates are generally associated with strong currencies. Of course they can also have a relationship with inflation rates.

Announcements of interest rate cuts or increases in any of the major currencies can have a massive and sudden effect on the forex market. In the short term, a cut in the interest rate will lead to investors selling that currency and so the price drops. At the same time of course they will buy another currency whose price will rise. You can often predict which other currency will benefit from this and get involved for a profitable trade.

Often, the effect can be longer term too. An interest rate change announced by the central bank is often an indicator of a steady fall or rise in the economy. This can lead to a trend that traders can profit from.

2. Gross Domestic Product (GDP)

GDP is the primary indicator of the economic strength of a nation. You could consider it as being like a profit or loss figure for a country. A higher GDP tends to be associated with a strong currency. Confidence will rise in times of high GDP.

Most countries report their GDP figures quarterly. There are usually predictions of the expected figures and the short term effect on currency prices at the time of the announcement may be more to do with whether the predictions were met than with the results themselves. For example if the prediction is for good results, and the results announced are good but not as good as expected, the currency price might actually fall. However, longer term the currency will usually show a fairly strong correlation to GDP.

3. Consumer Price Index (CPI)

Again a high CPI is an indicator of a strong economy. Currency prices in the global forex trading market will often respond accordingly.

4. Producer’s Price Index (PPI)

Less well known but equally important for the economy, the PPI is an earlier indicator of inflation because changes in prices for producers will affect the consumer price index a little further down the line.

5. Retail Sales

The retail sales figure is a measure of the receipts of retail stores and therefore also of consumer spending. Rising sales usually indicate a strong economy and rising currency prices.

6. Employment figures

Employment is another indicator of the health of an economy. Large job losses indicate a weak economy and are likely to lead to lower retail sales as people have less money to spend. More jobs being created shows an active economy and is likely to result in consumer confidence, higher retail sales and a higher GDP.

7. Durable Goods Orders

This figure measures orders placed with manufacturers in a country. Again a rise is associated with a strong economy. This is an important indicator for the manufacturing sector and also for export figures and the GDP. Correlation with global forex trading prices is not as strong as for some of the other factors but it can have an effect.

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As yourself if the brokerage that you have signed up with is legitimate or not. There are many ways to gauge whether they are legit, one of the easiest ways is to find out how long they have been around and what ties they have with offices offline. Good brokerages have been around the block and have dealt with different types of Forex accounts. Look up on their portfolio and you should be able to spot their long list of achievements.

They should also be transparent in the way they do their business. All your questions must be answered in a clear and concise manner, and all the information you need must be given to you as soon as possible. For one you need to know the qualifications of their brokers, how long they have been around, their clients, their portfolio strength and any financial information that you need. Knowing these will give you a secure environment to place your money in, especially in an environment which gives you up to and over 10% (as high as 100%) of the money that you put in. You should know the level of expertise of the brokerage that you are involved with, and be assured that someone who is competent is handling your account.

This is a very important thing to look out for when opening a Forex online trading account. Make sure you have full control of your account, knowing exactly what happens and where your money is going. You should have full involvement in the decision making process and your decisions should be acted upon almost instantly. The important thing about the liquid Forex market is that you need to take full advantage of it. There has to be no delay in the investment process and your broker should be able to act on your decisions as well as give you advice on it. One of the problems about brokerages that have been reported by investors, especially those online, is the ironic delay of operations when it comes to investing and making decisions.

The internet and Forex markets should give you the speed necessary to react to changing market psychologies and trends, and thus the communication tools that are given to you to engage in fiscal dialogue with your broker should be easy to use and efficient. Also, this applies if you are a budding investor as well. There has to be some training involved when you sign up with a brokerage. Tell them that you are relatively new when you do get their services. Good brokerages will be able to give you a good dummy account to practice on as well as some training programmes that will help you get familiar with the mechanics of online trading. These are valuable assets that should be provided to you when you get a Forex online trading account

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This sounds like a great way to get into a win-win situation but it does have its costs. In the first place of course you have to take into account the spread or transaction fees on the two positions. Calculating the cost of this and balancing your hedge requirement can be rather complicated.

Also of course by reducing your risk you are also reducing your chance of profits. Assuming your original trade goes well, the hedge position will lose, so that overall you make less money than you would have. For this reason it is not something that the average trader does all of the time. However in some circumstances, such as where you fear something may be about to happen that will overturn a current trend, you might decide it was worth doing.

It is possible to offset one spot forex transaction with another spot transaction in order to hedge it. However, this is often not ideal because of the short term delivery time of spot contracts. If you want to protect your original position for any longer you have to find another way. The most popular way is to offset with a foreign currency options contract.

As of May 2009, hedging was banned by the NFA (National Futures Association). Most reputable US brokers are members of this association which regulates forex as well as and other financial trading brokers. This means that if you try to operate a hedging trade, your broker will close it out. Usually this happens automatically.

A way around this if you like to use forex hedging systems within the same account is simply to set up with a broker in another country where it is still allowed by the regulatory bodies. This includes the UK at the time of writing. Many of the larger brokers have a UK branch since London is the biggest currency trading floor. So you can simply ask them to transfer your account to their UK office. If they cannot do this, you may have to switch to a new broker. If trading with forex hedging was your main way of making money it is probably worth doing that.

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1. Investment Level

Look for a brokerage service that is aimed at clients at your investment level or a little higher. They vary widely from a $25 minimum right up to $10,000 or more. Do not go for the forex broker with the lowest minimum investment unless you really are going to invest the minimum. Each company’s spread and services will be different, and you want a service that is a good match for you.

2. Regulation

Check their membership of regulatory bodies. This may give you some protection in the case of the company’s failure. Keep in mind that the regulators will depend on the country in which the company is registered. The main US regulators are the Commodity Futures Trading Commission (CFTC) and the National Futures Association (NFA). Foreign brokers will not be registered with them but will have other options. Check exactly what those are and what protection they give you.

3. Platform

Take a look at the software platform. You can usually access this in a demo account. Unless you plan to subscribe to a separate technical analysis service, you will want something that offers good charts. Some forex brokers also offer financial news alerts which can be useful. Do not forget to check that the order process is clear and simple, to avoid mistakes.

4. Costs

Costs can be quite different from broker to broker. They may charge a fee per transaction or they may operate solely on spread, or a mix of the two. Spread is the difference between the buy price and the sell price. Check the costs for the currency pairs that you are most likely to trade, since this is what will impact you most.

5. Lots

The broker will have a minimum lot size which is related to the minimum investment level. Generally, a standard lot is 100,000 currency units, a mini lot is 10,000 and a micro lot 1,000. It can be useful to be able to trade smaller lots for some systems so that you can take several lots per trade alter the amount of each trade, close out half of your profits, etc. Alternatively, some brokers allow fractional lots so that you could trade half a lot, etc.

6. Leverage

Leverage means that you do not need anywhere near the actual lot size in your account. Most traders probably operate with 100 times leverage, so $10 controls $1,000, $100 controls $10,000 etc. However, some brokers offer 200 times or even 400 times. This allows you the opportunity to make more money with less, but also carries more risk.

7. Support

There may be times when you need technical support fast. All brokers offer some kind of service, but it is worth testing speed and style of response by asking a technical question after you have signed up for a demo account with your shortlisted forex broker.

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