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What is "Slippage"?
FXClub.com Tip: If you're looking for an introduction to currency trading, it's best to know all the jargon attached. Slippage is one such phenomenon in currency trading. Slippage occurs in Forex trading when an actual trade goes through at a worse exchange rate than had been shown by the broker. It is argued that some slippage is inevitable in this fast moving market, but others argue that some brokers make money through slippage. If a significant event occurs, such as the election of a new official, slippage often occurs as a natural result of Forex market volatility.
Slippage most often takes place on Sunday nights during market openings when rates of opening differ from rates of closing.
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Day Trading Forex
The riskiest, yet most glamorous form of trading in the Forex market is day trading. In recent years, the life of a day trader has become sensationalized by the media - yet few see the actual hard work that happens.
Before embarking on a day trading career, make sure that you have adequate funds to trade, an ultra fast computer and Internet connection, and the ability to watch the markets constantly as they run 24/7.
Also, make sure that you have the knowledge necessary to be profitable in such a fast paced, volatile arena.
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Where Can You Find a Good Introduction to Currency Trading?
FXClub.com Tip: If currency trading is entirely new to you, it makes sense to locate a good primer on forex trading basics. You will need to understand the terminology, how to interpret the charts and data, and review winning strategies.
A good site to start with is Fxclub.com, which offers video training that you can watch directly from your PC.
Although there is no such thing as "easy" Forex, over time with dedication and persistence, you will find it rewarding and profitable to learn.
Pay careful attention to understanding what spreads are (the difference between ask and bid price), how to determine trends, and what the ISO code abbreviations are for each country's currency.
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What Are Some Great Forex Trading Books?
If you really want to become a Forex expert, web-based information mostly designed for beginners is not going to be enough to take you there.
Luckily, there are many wonderful and detailed books available to study at length - taking you to the next level in your trading and market understanding.
One such book is Forex Trading for Maximum Profit - the Best Kept Secret Off Wall Street by Raghee Horner. This book starts with the basics, but quickly moves through trend line analysis to Fibonacci analysis - giving you all the tools of professional traders. It is available on Amazon.com and many major bookstores.
Another great book is called Left Brain Trading: The Right Mindset and Technique for Success in Forex - by Lewis Evans and Olga Sheean. Much of your success in Forex will be due to your mental conditioning and ability to make decisions based on logic rather than emotion. This book helps you attain this level of control, and also gives additional visual tips and aides. It is also available from Amazon.com
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Forex Trading Risks
FXClub.com Tip: Trading in any market is inherently risky, and as the Forex market is primarily speculative - there is always risk of losing money.
As in any trading, never invest money that you can't afford to lose! The high degree of volatility in the foreign exchange market means that you run the risk of losing your entire investment. This is why it is an excellent idea to set up a practice account or demo account, and read about the markets thoroughly before investing real currency. Companies like FXClub make for easy forex because they let you practice before delving into the real market.
There is also the risk associated with trading on an online platform -- it is wise to make sure that the platform you choose is very secure.
Last but not least, there is the risk of falling into a Forex scam. Be sure to check out your broker completely before signing up, or sending out any deposits.
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What is Technical Analysis?
Technical analysis is an alternative trading technique to fundamental analysis, and refers to the process of using charts and graphs to spot trends in currency prices.
The most often used technique is determining the market cycle - which is how long the currency takes to move from a low to a high and back again. However, technical analysis can be a haven for number crunchers - as it can get as complex as using Fibonacci numbers to anticipate changes in price trends.
A great book on technical analysis for "finance geeks" is The Forex Chartist Champion: A Visual Approach to Technical Analysis by Michael Archer. It is available from Amazon.com.
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Where Can You Find a Good Forex Demo?
FXClub.com Tip: A Forex demo account is a limited time account that you can open in order to try out a broker's platform. It is usually also limited by the amount you can trade and has some limited functionality.
It is a very good idea to open either a practice account or a demo account before signing up with a broker so that you can not only learn the intricacies of Forex trading, but also choose the platform you feel most comfortable with.
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What is Fundamental Analysis?
Fundamental analysis refers to the strategy of understanding the countries currency you are trading by looking at it's economic strengths, key indicators, GDP, and capital flows. Trade deficits and flows are also very important in fundamental analysis for Forex.
It is an alternative to technical analysis, which relies on charts to spot trends.
Most traders use either fundamental or technical analysis in trader, and the two camps argue as to which approach is best.
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What is Forex Trading?
FXClub.com Tip: Forex is short for Foreign Exchange, and Forex trading refers to trading foreign currencies - taking advantage of the fluctuations each experiences against the others.
The Forex market is the largest in the world, with trades amounting to $1.5T USD every day. It is an exciting market to learn and participate in, and presents many challenges for the new, as well as seasoned investor.
Although it is similar to the stock market in many ways, trading is not conducted on a central exchange, but on an interbank market - which is considered "over-the-counter" trading. Trades are conducted directly between the two parties trading currencies.
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