I'm going to take my previous blog further now by giving you some steps and tips to follow when you start trading currencies.
The difference between successful traders and unsuccessful traders is planing. If you fail to plan you plan to fail. Successful traders have set procedures which they follow each time they invest.
Choose currency pairs which operate in the way you wish to trade.
Some currencies value is sporadic and changes many times per day while others are far more steady, making slow progressive movements up and down in value over a extended period of time. Your safe bet is always the slow yet steady, however, this means potential profits will be less often.
Once you have made that decision the next is slightly easier and to a degree has already been made. How long will you hold your position? This could be as little as minutes or as long as weeks.
Next you need to consider what you will do if your investment makes or loses ground faster than expected? At which rates will you sell? This is your exit strategy. Once you have decided on this be sure to follow it accordingly.
Analise the markets.
Forex offers a lot of great resources to help you get an idea of how the market is going to perform. Do your research, study graphs read relevant news articles. There are also a number of other websites which offer comprehensive research for free, XE.COM is one of the best ones.
Keep track of what you have done
It can be difficult to keep track of your investments, especially when you begin trading more that one currencies at a time. A good habit to get into is to keep a diary. Set up your diary so that it is easy to read and understand, consider the following things each time you make an investment and entry:
The date and time you bought, the rate you bought for, your reason for investing how you did, your strategy including your exit, the time you sold, the rate you sold, the gain or loss on your investment.
The diary will help you spot potential successful trading patterns which may come up again in the future.
Manage your risk
There is always a risk in every investment, it is important to manage this so that if the worst happens you aren't left in an awful situation.
Forex offers a number of safeguards for traders, it allows you to set reserves for currency
movements so that if something happens while you aren't at your computer you will automatically sell.
This is a great feature because it can be set to your exit strategy limits and so stops you losing more money than you had anticipated without you knowing.