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Key Points of Foreign Currency Exchange For Newbie Traders

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For anyone interested in trading foreign currency exchange, the internet is a treasure trove of excellent information. In fact, it is now so good that you practically do not need to visit a library or buy any books! All you need is time and the determination to plough through a lot of stuff. To be an expert trader, you need to know about economics (both micro- and macro-). You also need to know about what central banks do (and what commercial banks do). You should also be aware of how the world’s bond and stock markets function and why a “down day” at the NYSE (“New York Stock Exchange”) might result in a drop in the “TSE” (“Tokyo Stock Exchange”) or the “Shanghai Comp.” (“Shanghai Stock Exchange Composite Index” ) at their openings.

Signing up 2 “demo accounts” can also add to your knowledge base. These accounts can teach you the fundamental mechanics of putting on a trade and help you with keeping up with the news and various commentaries.

Foundation Knowledge Trading Foreign Currency Exchange

Most of the information that you need to know about forex can be found on the internet, for free. Start with the central banks of the world. Visit their websites, looking for anything related to “monetary policy” (because that’s what really shakes forex prices). Then, migrate to the websites of some of the world’s largest forex-trading banks [Barclays is a good place to start and Westpac – plus ANZ – is a wonderful place to end]. While you’re at it, start reading the Business section of the Sydney Morning Herald, Reuter’s “Global Market Data” and Bloomberg’s “Currencies” section of their “News” department – every morning. Last but not least, start working on your charting skills. If you are a newbie, go visit stockcharts.com.

How The Internet Can Help With Foreign Currency Exchange

After you have done enough reading to understand how forex works and which currency pair you are interested in the most, go open a “demo account” with any bank or broker that interests you. (Actually, open up 2 different accounts, as in that way you will be able to compare features and pricing.) Pay attention to all the different ways you can buy and sell, set stop losses and monitor what’s going on. Check out their charting abilities. Look for the word “Fibonacci”. [If you can’t see it, get another “Demo” (because Fibonacci retracement arrays are to forex charting what the Ashes is to cricket: you can’t live without it).] Email or call customer service; check to see that they’re helpful.

Making Profits From Foreign Currency Exchange As A Newbie

Try this strategy on your “demos”. Open up a 5-minute chart of the AUD/USD. Get into your “chart indicators” section and hit the button for “exponential moving averages”. Set the first one to 8-periods; set another one to 34-periods. Colour them different colours. Notice what is happening to the lines on the chart. The 8-period line should be slightly ahead of the 34-period line. It’s your leader. When it crosses over the 34-period line, follow it (with either a buy or a sell). When it crosses again, reverse your trade. If you’re unsure of yourself, slap a “SMI Ergodic Indicator” on the bottom of your chart. Use it to confirm all trade signals coming from the moving average line crossovers.

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