Forex Trading For Beginners

Forex trading is becoming more popular every day and for good reason. Fortunes can be made in a day. The market is traded up to 20 billion a day. Yes, each day.

Forex trading is not necessarily easy. It takes often years to really get the hang of it. With that said let me tell you what you can do to get the hang of it and not lose your butt while doing it.

There are several brokers out there that offer free demo accounts. Use them! A demo account uses all the real world information, but it does not place real trades and thus real money. This gives you all the time and resources you would ever want to start learning Forex.

You can treat your demo account just like you would if it was real. And you should do exactly that. If you really want to learn, pay attention like it was real money.

Many of the demo accounts are quite advanced too. They have rich tools to help you analyze the trades you made and lots of other info at your fingertips.

Get a demo account and spend a lot of time with it. In time you can learn enough to start making real trades. However, until you are making money just about every time with your demo account I would not put real money into it. You are simply asking for trouble. It is never a good idea to invest in something that you do not fully understand.

I actually spent just about a year on my demo account before I invested one dollar in real money. It was worth it! My first 4 - 5 months I was losing money consistently, which at the time was discouraging, but you have to learn. However, I am proud to say that I really did not lose $60,000. It was just demo money.

We all dream of quitting that day job, but I can assure you that if you do not do your homework you will surely fail. The good thing is that you will only fail at first. With enough practice and patience you can succeed.

The trick is to study. When your brain is fried from all the Forex info then study some more. Keep at it and in time you will succeed.

Just remember to use a demo account to learn how to do it.

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Forex Trading Education - The London Open Checklist

A thorough Forex trading education must include an understanding of the effect market timings can have on trading and liquidity.

One of the most active periods of the day is from the time the London market opens. Often around that time good trading opportunities will appear.

As part of your Forex trading education, learn to analyze market conditions around London open and begin to recognize good setups.

The following questionnaire and checklist will help.

London Open Preparation

About 15 to 30 minutes before London open check the answers to these questions:

Are the MACD indicators on the 4 hour and 1 hour charts in agreement? If they are not going in the same direction be very careful!

Is there MACD divergence on the 4 hour, 1 hour, or 15 minute chart? Look for other clues to confirm that price may go in the direction of MACD divergence.

On the 4 hour chart what is the overall trend?

Do a Fibonacci calculation on the last swing high and low and see if price is pulling back to an optimum retracement level or whether it is reaching a key extension level.

Note price in relation to the 200 EMA (Exponential Moving Average) on the 4 hour, 1 hour and 15 minute charts. Is price bucking the trend? In other words, is price above the 200 EMA on the 4 hour and 1 hour chart but below it on the 15 minute? Then be prepared for price to go long at some stage. (Draw the opposite conclusion if price is below the 200 EMA on the 4 hour and 1 hour chart but above it on the 15 minute chart.)

Are any Economic Reports imminent?

As the candle closes on the 15 minute chart at London open, do you see any distinctive candle patterns such as tweezers, or doji's or hammers indicating price exhaustion?

If I entered a trade right now in a particular direction, what would be the risk and where would I place my stop?

Within a few minutes of London open, if you see a number of factors converging from the analysis above, make a decision one way or the other:

• trade
• wait for clearer signals or a better entry point

Carrying out an analysis in this way each day at London open will do much to increase your Forex trading education.

It will make you aware of what is happening on the charts and in the marketplace and help you to arrive at conclusions.

There is no magic formula involved with Forex trading education. Put simply, successful Forex trading is the result of years of hard work, study, practice, and experience often gained through painful trading scenarios.

Eventually the newer trader learns mental discipline, and how to control the emotions - probably the biggest part of a Forex trading education.

Practice a procedure like the one above day after day and begin to see some progress as you get nearer the time you make profits consistently from currency trading.

For a free pivot point calculator, Fibonacci calculator and the best free economic calendars click here:

http://www.vitalstop.com/Forex/tools.html

For a free candle & chart pattern recognition reference tool click here:

http://www.vitalstop.com/Forex/Candle-Chart-Patterns

See how to use trendlines to get an optimum trade entry point:

http://www.vitalstop.com/Forex/trendline.html

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