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women drowing graphAs long as you keep trading the forex you will have to keep learning it. That’s the difference between falling back and staying ahead. Always remember to keep forex education an ongoing priority. It’s after all a small price to pay considering the gains you could make.

Forex education: Why?

Technical reasons

It is very important that you learn from a good practical forex education program, which is designed to help you make profits without a big investment. Knowing precisely when to trade and what to trade is vital to your success in Forex Trading. In order that you know the intricacies of “when” and “what” to trade in a forex market situation, you need to take a practical Forex education program designed to help you understand the price momentum of the foreign currency market. When you actually start trading the forex, understanding price momentum is the key that will help you book profits without big upfront investment. Conversely if you don’t understand price momentum you stand to loose heavily even if your investments were high.

What then is a price momentum in forex trading?
It can best be explained with an example. Imagine for a moment that the value of the Euro was rising against the dollar, and if that were the trend in the price momentum, then your chances of booking a profit are greatly increased if you look for the resistance and support to hold before taking your position and seeing price momentum weaken as levels are tested. Got the point. Price momentum is a currency exchange rate trend in a particular direction, but as the example must have conveyed to you, it is something best understood by taking a forex training course. What all this means in simple language is, you must know that if a currency pair were moving in one direction, at what point will you take up a position in the market and when you should liquidate the holdings. Knowing or not knowing those parameters well is the difference between making profits or suffering losses. And you can learn these things only by educating yourself.

Historical reasons

More than four decades back, currency-trading market as it existed then, was relatively stable with very little speculation. Why was that? The prime reason was that news traveled very slowly, with the result that if for example, one part of the globe witnessed a deteriorating economic climate; it did not have the same calamitous effect on markets elsewhere in the world, as it happens today.
In contrast, present day forex has seen explosive growth especially after the introduction of the Euro. So as more and more people started entering the forex markets you have a situation where forex education has become more and more essential. The forex market is so complex today that if you haven’t had good forex education you are guaranteed to fail. For example, you must know at the least to read currency charts and technical analysis that leading brokers publish.

Technical analysis, what’s that?
It’s a commentary on leading currency pairs that brokers publish at their websites. Not all of them turn out to be good. Nor does it always turn out to be a good reading of the market. But you must have the wisdom to read through the technical analysis and decide if that’s what is indeed going to happen in the trading sessions ahead. All this calls forex education. You can’t decipher a technical analysis without proper forex education. Terms like Fibonacci ratios, candlestick patterns are a kind of mathematics that you will encounter sometimes in forex technical analysis.

Risks caused by forex leverage

These days’ forex brokers offer clients a leverage as high as 1:100 and that means it’s both a risk and an opportunity from the point of view of the client. Leverage is often called the forex trader’s biggest enemy as it could lead you on to a roller coaster of profits and losses. So be careful. Your motto should always be “learn forex before you leap into it.

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