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Online Forex Trading - 5 Helpful Steps for Beginners

Jun 3, 2008
Despite the fact that the trading of foreign currencies has been going on since ancient times, the first true currency exchange was established as a result of monies being wire transferred between the cities of London and New York in the 1800's. Naturally, there have been constant improvements and ongoing refinements to the various trading systems. However, nothing can equal the impact that the internet has had on the industry. If you're just starting out in the online currency exchange market, then you will probably benefit from the following five helpful steps for the beginner.

Step #1 - Get your education first. Remember the old adage that knowledge is power? This is so true when it comes to online forex trading (any online trading for that matter). So do yourself a favor and put in the due diligence of getting an education first before jumping into the currency exchange arena. For the beginner's benefit, there are literally hundreds of forex trading companies online, and the better ones offer instruction in the form of tutorial guides that will help you gain a thorough understanding of the currency exchange industry.

Step #2 - Implement a "Stop Loss" strategy. If you have completed your online tutorial, the next step is to design and then implement an investment strategy, and then stick with it. The more successful investors in the forex market will tell you that a sound investing strategy is why they have succeeded to the level that they are at. The most recommended strategy involves the knowledge of stop loss orders. A stop loss order is placed at a pre-specified price to protect the investor from serious financial loss. Once the price of the currency has climbed above (or fallen below) the specified stop price, the order for the transaction is placed and the deal is done.

Step #3 - Place a profit loss order in conjunction with a stop loss order. Use the OCO trading function to place your profit loss order. A take profit order works similarly to a stop loss order in that they help you avoid locking into a profit too early.

Step #4 - Utilize a positive risk/reward ratio. Choose the amount that you are willing to make on your trades beforehand. This should be equal to or even more than the amount you can afford to lose. This is one step that should be considered essential in order to be successful when engaging in any forex trading. The more successful investors and traders always employ this strategy so you should, too.

Step #5 - Realize that this is a long-term investment and be patient. For a lot of individuals, this is oftentimes the most difficult advice to adhere to. Successful online forex trading involves a long-term oriented mentality and more patience than what you are probably used to having. The key is to discipline yourself with this mentality before you ever get started. In fact, it is highly recommended that you do this before starting to study those tutorials in Step #1. Controlled forex trading, combined with this discipline is one of the keys to success.
About the Author
Justin Stewart has used software to automatically trade the forex market allowing him to earn a living without lifting a finger, even while he sleeps. You can use the same forex software to get the same results.
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