The largest increase in retail trading accounts in the last
decade has been in the area of foreign exchange, FX or Forex trading.
There are now a huge number of online brokers and market makers who
are offering incredibly low commission rates, high leverage and
access to currency pairs and crosses from around the world.
Trading platforms have also evolved offering FX traders faster
and more reliable platforms than ever before whilst reducing
latency for orders being placed and executed to levels previously
only available to major financial institutions. Foreign exchange
markets have the longest opening hours of all financial markets,
trading non-stop from 10.15 on a Sunday evening until the close of
the New York market at 9.15 on a Friday. This has encouraged
thousands of new traders to enter this market and is likely to
continue to see strong growth in client numbers and trading volumes
in the coming years.
With the increase in new traders so there has seen an increase
in the number of adverts appearing offering quick wins and huge
profits. This is not something unique to the FX market; this is a
common theme across all financial products, especially at the
retail end of the market. As mentioned in other areas of this
website there are no quick wins or short cuts when trading. The
principles remain true for Forex markets as they do for futures, CFD or spread betting;
get a full understanding of the market you are trading, appreciate
what makes the market move and by how much and take a considered
approach to risk. This will give you a solid base to build your
trading experience and allow you to find your way in what can often
be a very volatile set of markets. The volatility of the
Foreign Exchange markets is often the reason retail traders choose
to trade them especially after reading about traders who make
'50 tics' per day and how it is possible to achieve huge returns in
a short space of time. This is indeed possible, just as it's also
possible to generate huge losses in a short time. Volatility will
always be part of the markets; understand and respect it and you
will give yourself a far better chance of becoming
successful.
Many Forex Brokers now provide access to
valuable free research and charting packages that previously were
only available to the institutional market. These research
documents are normally delivered directly to your inbox and should
always be taken where offered. Most FX brokers and market
makers are unable to provide trading advice but they are able to
produce useful and factual information about currency pairs outside
of the majors that may result in more profitable trades.
Technical analysis of the foreign exchange markets is used by a
huge number of new and experienced traders with a number of
training courses available to help you try and forecast the markets
next move. Some of this analysis can be very advanced and so before
embarking on a 5 day intense training course it is worth
looking at some of the basic principles of technical analysis and
to gain a thorough understanding of these before moving on the more
advanced teaching. You wouldn't expect to learn to drive in a
Ferrari so take your time and choose a course that's suitable for
your style of trading and for what you are looking to achieve,
rather than one that promotes the dream of being a millionaire by
Christmas. A number of educators offer excellent FX seminars and
webinars at a small cost with courses being presented by
experienced traders who have a wealth of knowledge about the
markets they trade.