Forex is a market place where traders from all around the world buy and sell currencies for the purpose of making money. The goal is to buy a currency that’s low in price currently and is predicted to rise in some short future. It’s the same with selling, it’s just the reverse – sell when the price is high and is predicted to go down. Here is where the saying, “buy low, sell high,” comes from.
In this small tutorial, I’ll gently introduce you to the whole concept of trading, give you my strategies, share tips from my few years of experience (it was a bit more than a few; the rest was more thinking and less of trading), give you some valuable information from the books that I read, and overall answer any of your questions.
For now, I advise you to read the whole tutorial, then try to decide if trading is the right thing for you, and finally go back, re-read and try to apply.
In order to start trading, you need a few things – starting capital, a broker and a platform
- Starting capital – starting even from 5€. Seriously, you can find brokers that allow you to start trading with as small as 5€… and some even give you a free starting capital (more like a credit that you can use to earn money)
- Broker – there are thousands of online brokers; and of course, you need to spend some time searching the one that’s most suited for your needs. Here are the two that I’m using:
- Platform – a program with an interface that will allow you to execute trades. The majority of brokers support Metatrader4/5.
The Main Pillars/Rules of Trading
Warren Buffet once joked about the two rules to trading:
- DON’T LOSE MONEY!
- Don’t forget rule number one!
I completely agree with this. People that get sucked into trading usually deposit and of course lose lots of money. Then they discover that it’s not that simple so after suffering big losses, they decide either to quit and never turn back or to start over and this time gets more educated. And of course, there is this third group that does the same thing (with some minor adjustments) over and over again.
With all that being said, I’ll just try to summarize the whole idea of trading (forex and other markets) in a small list:
- Trading is a zero-sum game! In order for you to make money, someone else needs to lose! Most brokers report that around 80% of traders eventually lose their investments, which means that you need to be better than most of them. This means:
- Take your time to learn how to trade successfully. Education, start small, practice, scale up… not so complicated.
- Find your own style – not each tactic that’s out there is for you. Take bits from all of them, and build your own.
- Use technology! This is just obvious. With a huge amount of computing power, you don’t need to do much. Maybe just to decide to “pull the trigger, or not”
- If you don’t know, ask an expert – basically, anyone that knows better than you!
That’s it for now. I hope this isn’t too much to comprehend. Anyways, it’s a process…you’ll get it eventually.