1.
Preparation
o
1
Educate
yourself. Before you begin trading, even in a practice account, take time to
read up on the forex market. Make sure you understand forex quotes and charts,
along with the basic elements of fundamental and technical analysis. Get
familiar with trading on margin -- borrowing funds to trade -- and leverage,
using those funds to make large trades.
o
2
Investigate
forex platforms. There are dozens of online forex services that can be your
tools for buying and selling. Review costs, features and company reliability.
Use the National Futures Association's BASIC search to check on your top
choices and make certain that they are in good ethical standing.
3
Open a
practice account once you've selected a forex platform. This allows you to
familiarize yourself with the system and test your trading plan. Forex markets
move very quickly --- you don't want to lose an opportunity because you don't
understand your trading platform.
o
4
Develop a
trading strategy and plan. Determine what currency pair you want to focus on,
and under what conditions you will trade. Test this plan in your practice
account.
2.
Trading
o
1
Open a
live trading account once you feel comfortable with the trading platform and
process. Make an initial minimum deposit and provide proof of your identity.
o
2
Place your
first trades as your buy criteria are met. In general, buy when you believe
that the U.S. dollar (or other base currency) is weak and likely to get stronger.
o
3
Set up
stop and limit orders. These orders are instructions to sell your positions if
certain criteria are met. This puts your sales on autopilot --- the trade
orders will kick in if the market starts to plunge, making certain you can get
out of the position if things go badly.
o
4
Sell when
your sale criteria are met, as dictated by your trading plan. As much as
possible, stick to your trading plan -- this will help you avoid emotional
decisions and potentially costly mistakes.
o
5
Practice
patience. You can make a lot of money trading forex, but you can also lose a
lot. Remember that conservative forward momentum is nearly always better than
the risk involved with a skyrocketing rate.
