Learning to Trade Forex

By: Geraldgreene
Learning to trade forex is very easy. Learning to trade forex well and at a profit is much more of a challenge.

There are several outstanding reasons why learning to trade forex is a worthwhile educational project. Forex, or foreign exchange trading is the granddaddy of them all in the trading field. Daily volumes are into several trillions of dollars. The huge size of the forex market reflects the basic use of money by everyone in the modern world. This massive activity every business day means that the skilled forex trader has a virtually unlimited pool of money to tap into almost at will.

After learning to trade forex successful forex traders can earn hundreds, thousands, or far more dollars a day right from their home computer. One of the most successful forex traders know to man, Mr. George Soros, once made in excess of a billion dollars in just a few days time by correctly forecasting that the Bank of England would not be able to defend a grossly overvalued British Pound.

Once Soros had completed his analysis he didn't just sit on it, he took massive action and placed a large short position against the Pound. As the Pound went from around 2.000 to 1.5000 Soros made his huge fortune.

So to come back to the good reasons as to why learning to trade forex may be a terrific idea for those new wannabe traders who have risk capital to trade with:

1. The forex market is where the big money is. There are no predefined limits as to what a skilled trader can make from trading forex.

2. The forex market is international and in major currencies extremely active. You can trade forex 24 hours a day five days a week.

3. The forex market is extremely liquid and deep. This means that there are always dealing quotes at which you can buy or sell active currencies at narrow spreads.

4. Forex trading usually comes at you in a hurry. Your trade will most often move into a profit or hit a stop loss point within a few hours, sometimes within minutes or even seconds.

5. Currencies usually trend in one direction for very long time periods. It is not unusual for a currency to trend in one direction for three to five years at a time. When you trade with the major trend you gain a trading edge.

If there is one point you must keep in mind about learning to trade forex it is this one. Your chances of having a successful outcome to your trade are increased tremendously when you trade with the major trend. When you enter your trade on a correction within the trend your odds of completing a successful trade become excellent.

For example, let's say that you have identified the Euro as being in a major uptrend against the US Dollar. This is easy to do by looking at a long term chart of the Euro against the US Dollar. Instead of immediately rushing into the forex market and buying the Euro you wait until a correction takes place, as they often do, and you buy the Euro on a pullback to its long term trend line. This takes some patience and discipline to do but the payoff can be huge.

As the major trend kicks in your Euro position is immediately in profit. Then you have the pleasant decision to make as to when to take your profit. Learning to trade forex can be broken down into a series of decisions like this.

The key to learning to trade forex at a profit is to take your time and make a careful analysis as to the direction of the trend. Then you must wait for a good entry point. Patience and discipline are the hallmarks of the most successful forex traders.
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