EDUCATION IS KEY IN FOREX TRADING - forex trading basics wiki

EDUCATION IS KEY IN FOREX TRADING ~ forex trading basics wiki

Forex trading has become very popular of late. But Forex is not a get-rich-quick-scheme by any means. To make money in Forex you need to know what you are doing. A bit of luck certainly helps but there is no way you are going to come out ahead if you don’t put some time and effort into learning what Forex trading is all about.

If you ever invested in any other market, such as equities, you know that the first thing to consider before placing any trade, is the risk/reward ratio. If the reward is not enough to make the risk worthwhile, don’t take it. On the other hand, risk provides the opportunity to make more money. If you know how to take calculated risks, you will see a profit. But here again, if you don’t know much about Forex, you will not know what a calculated risk is and won’t see the opportunity when it arises.

International Forex markets trade over $4 trillion on a daily basis. But 90% of Forex traders lose money within weeks of placing a trade. So how do the other 10% make it big? What do they know about Forex trading that takes them over the top?

Education is Key

The first thing to remember is everyone can become a successful trader. It take time, experience and a lot of education. Every trader should sign up for an online tutorial of some sort before opening a trading account. Most Forex brokers offer instructional courses on their website and this is good to get you started. There are also independent free courses such as Learn FX Live offered by Hector which provide the future trader with all the basics and advanced tools for turning a profit.

Education is key to knowing how to make money. In 1983, millionaire Richard Dennis proved that anyone can be taught to trade successfully. He took a group of people of all walks of life, ages and intelligence and called them the Turtle Traders. He spent two full weeks teaching them all they needed to know about Forex and how to gain confidence in trading. At the end of the course, he opened up an account for each and gave them $250,000 to trade. Five years later, the group together had amassed well over $100million and some of the Turtles went on to become well known financial professionals.

Dennis’s experiment proved that with enough education, the average person can gain the confidence and courage to take the risks at the correct time. He believed that it is all in the mind and that you can teach your mind how to think and feel. By using a simple trading method, anyone can trade profitably.

Focus on the risk involved, jump at the opportunity when it presents itself and don’t pull out too early. Never let your emotions get in the way and accept the losses along with the wins. It’s all part of the game.
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FOREX TRADING AS AN INVESTMENT INSTEAD OF A GAMBLE - forex trading basics in telugu pdf

FOREX TRADING AS AN INVESTMENT INSTEAD OF A GAMBLE ~ forex trading basics in telugu pdf

There are thousands of articles and media reports that equate any type of investing to gambling. When you focus on investing on the Forex or commodities markets there is even more of the inherent prejudice of the mass media to discredit it as an investment and call it gambling. While this is not an accurate depiction of the markets, it may accurately describe many of the people involved in the market. The Forex and Commodities Exchanges are legitimate venues for investors with risk capital. Many of the people that trade in these markets are gamblers rather than investors. 

The impression that currency speculation is actually gambling comes from a lack of understanding about the process. The people choosing to call it gambling have some pretty strong facts on their side however. More individuals lose money in the Forex market than make profits and no system is foolproof. These are simple facts but they cloud the real picture. It is the same amount of money be being lost or gained. Every loss or gain results in the opposite loss or gain on the other side of the equation. This does not mean (as some suggest) that it is impossible to profit over the long term based on the structure of the market. The fact that the majority of the profits are made by an overall minority of the investors, it is clear that there is in fact a skill and strategy involved that can be learned and developed. 

Investing is a Business – Treat it Like One

This is nowhere more important than the Forex. If you base your decisions on a planned and established strategy making a handsome profit it is more than possible over the long term. This requires either a solid understanding of technical and fundamental indicators, or a strict disciplined approach in a price point strategy. The most successful investors while adhering to one method have enough understanding of other methods to become aware when they should not invest at all based on market conditions. 

The key difference in the mentality of investing as a business compared to the gambling mentality of many individual investors is in what the focus is on.
The investor mindset is focused on the ratio of risk to profit potential and conservation of capital. Professional investors are not bothered greatly by losses because the amount of the potential loss is already calculated in advance and deemed an acceptable risk. If every position is 2% of capital risked, than no single loss or even a series of losses will have a dramatic enough effect to cause an emotional turn. By the same token even a large profit is simply a new number to consider, maintaining correct sizing so there is no more or less risk in the next position. 

This basic structured process takes the wild balance fluctuations and emotional highs and lows out of Forex trading, and to be honest may make it seem boring. It is business and work, not entertainment so this is not a negative. While potential profits of 2% and 3% seem very boring and timid consider this. Many people lose money every day trying to make 20% returns, but if you manage 2% or 3% a month than you will be earning 24%- 36% a year on your portfolio and that is exciting to anybody.

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