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Forex Essentials Course: 21 lessons to get started in Forex

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Introduction: Getting Started In Forex

Tue, Nov 18 2008, 17:39 GMT
by PFX Team

LearningMarkets.com

Over a trillion dollars per day is exchanged on the foreign currency market. The Forex market is used by smart traders for speculation, hedging and long-term profit taking.

You can trade in the foreign currency market. It is available to anyone and everyone.

Take our Forex Essentials course and follow our analysis to get started in this exciting market.

Overview: Learning the Forex with us

There are a couple things you need to know about this course and our educational philosophy. We believe you will learn best when there is a mix of media in a course. That's why every lesson you'll find in Forex Essentials contains the following:

• Written Text
  
• Video Demonstration
  
• Examples

The combination of these items will provide for you a rich learning experience where the principles will be learned, re-inforced and tested, meaning you really learn the stuff.

This course is also meant to be used as a reference guide. You can come back to it and re-read. Watch the videos again after you've started applying a principle. You will find the video demonstrations to be even more valuable as you have a better understanding, and some experience in the market.

A note to more experienced traders: You will likely still find great benefit in this course. The way PFX approaches and teaches the forex is very different from anything you've seen. We also invite you to submit feedback and offer suggestions for future courses. Simply email feedback@learningmarkets.com

What every forex trader needs to know

There are a lot of things that a new trader needs to know about the forex. This section is a summary of some of this information and a preview of the things you will learn through the rest of the course. Feeling comfortable with this information is important before you begin trading and in most cases it isn’t difficult to understand. If you are properly armed and willing to hold realistic expectations and put in some work you can find yourself Profiting With Forex in no time.

You can trade in the foreign currency market. It is available to anyone and everyone.

You don’t have to be a mathematical genius to trade in the forex market.

You don’t have to be an economist to trade in the forex market.

You simply have to learn what trading signals to watch for and how to respond when you see those signals.

First, you have to learn and understand the basics so you have a strong foundation to stand on in your trading.

While learning and understanding this material and building a strong foundation is important, you must remember that this is only your first step. You can only learn so much from this material. To truly become a successful forex trader, you need to take what you learn here and start applying it in the live market.

Think of this part of the course as Driver’s Ed. When you learn to drive, you go to class to learn about traffic rules, how your car works and what you are supposed to do as a driver. That is the first step you take when learning how to drive. However, there are two more steps you have to take before you can get your driver’s license: driving on the range and driving on the street with an instructor.

Trading in a forex demo account (a working practice account that is funded with paper, or pretend, money) is the equivalent of driving on the range when you are learning how to drive. You are in the car and you have to make live decisions, but you are operating in a controlled environment.

Trading in a live forex account is the equivalent of driving on the street when you are learning to drive.

We will be there along side of you to give you pointers and help you make decisions when you are driving on the range (trading in your demo account) and driving on the street (trading in your live account), but you will be behind the wheel. You will be making the decisions and seeing how those decisions play out in real life.

Once you’ve taken these three steps, you are ready to go out and trade on your own.

Learn how the market works and you can trade it

The first thing you need to learn about as a forex trader is your trading environment. Whether you are a brand new trader or you have had experience trading in other markets—like the stock market—you need to understand the unique characteristics of the forex market so you can be properly equipped for success.

You have access to leverage in the forex market. Leverage gives you the ability to trade a position larger than the amount of money in your account. For example, using leverage, you could place a $100,000 trade by only using $1,000 of your own money in your account.

Word of caution: leverage is a tremendous tool for traders. It allows you to make more money on trades than you normally would if you were using only your own money. However, it also allows you to lose more money on trades than you normally would if you were using only your own money.

When you trade with leverage, you have to post margin. Margin is the amount of money you have to set aside in your account when you enter a trade. For example, if you are using 100:1 leverage and you buy 1 mini lot—which is worth $10,000—you must set aside $100 as margin ($10,000 ÷ 100 = $100).

Currencies are grouped in pairs for trading.

When you trade in the stock market, you buy or sell the stock of one company. When you trade in the forex market, you buy or sell a currency pair (two currencies put together).

Exotic pairs:

(These are some other lesser-traded pairs that contain the USD and a currency from a small and/or emerging economy)

USD/SEK (U.S. dollar / Swedish krone)

USD/NOK (U.S. dollar / Norwegian krone)

USD/DKK (U.S. dollar / Danish krone)

USD/HKD (U.S. dollar / Hong Kong dollar)

USD/ZAR (U.S. dollar / South African rand)

USD/THB (U.S. dollar / Thai baht)

USD/SGD (U.S. dollar / Singapore dollar)

USD/MXN (U.S. dollar / Mexican peso)

As you begin investing in the forex market, you should focus on the major pairs and some of the crosses. Spreads (the difference between the price you can buy and the price you can sell the currency for) are tighter, liquidity is higher and information is more readily available for the major pairs—which makes it easier for you to be profitable trading them. As you progress, you can consider investing in some of the exotic pairs.

Imagine each pairing as a tug-o-war, the stronger currency pulls the price of the currency pair in its direction.

One thing causes currency pairs to become stronger or weaker: people (buyers and sellers). Remember that it is ultimately people who move this market.

What are these people watching?

You should watch the same things.

Final Thoughts

You have to be willing to take what the market gives you. If you try to fight the market, you will lose every time.

Currency pairs can move up, down or sideways. You should be prepared to know how to respond in each scenario.

The past cannot tell you what will happen in the future. However, you can find recurring patterns that can put you in position to benefit from future movements. This course will help you start doing that.

Forex Essentials Course - 21 lessons:

Published on  Tue, Nov 18 2008, 17:39 GMT