Online foreign exchange trading is massively popular and many stock traders are making the switch. Why? Here are 5 good reasons.

1. A Bigger Market

The forex market is huge, with almost $4 trillion traded on average every business day. That is more than all of the stock markets of the world combined. At the same time, the number of currency pairs available for trading is limited with about 90% of the total trading taking place in 10-20 currency pairs.

Compare this with the number of stocks that can be traded in just one country, and it is clear that the major currency pairs have many, many times the liquidity of any stock. This means that it is generally easier to get the price that you want at the time when you want it.

2. Less Corruption

Another advantage of the forex market over the stock market is that it is almost impossible for a player to manipulate prices. However huge some of the investment funds of the big international banks may be, they do not hold much power individually in a trillion dollar market. It is simply not possible for any institution to control the price of a currency pair in the way that company stock prices can be manipulated. For the same reason, insider trading is not the problem that it is in the stock market. All of this means that the playing field is much more level for the small time home trader.

3.  A 24 Hour Market

Online foreign exchange trading takes place all around the world. From Monday to Friday it is always business hours somewhere, so trading can take place 24 hours a day, 5 days a week. The market is open, in fact, from 4 pm EST Sunday to 4 pm EST Friday. This is great for anybody who cannot trade during business hours in their own time zone. You can get online evenings or early mornings instead.

4. Trade Both Ways

Currency trading is always an exchange of one currency for another. You are buying money, and the only way you can do that is to give another form of money whose relative value will change. This means that you can trade in either direction, going long or going short. While this can be done in some forms of stock trading, it is constant and therefore much more available in online foreign exchange trading.

5. Automation Works

For some reason, the forex market lends itself to automation much more easily than the stock market. Forex robots are created out of all kinds of trading systems and many of them are successful. This is not the case with stock trading. Perhaps it is simply because stock movements are less systemic, depending more on company policy and inside knowledge than technical analysis. In any case, this can certainly be one of the benefits of online foreign exchange trading.

Managed forex accounts can be a way to maximize return on investment for anybody who wants to invest in the lucrative currency trading market without trying to do their own trading. Forex trading is not easy. Trading for yourself requires many hours spent in front of the computer studying price charts and mathematical indicators, and there is a steep learning curve. Added to that, you have to be a certain kind of person to enjoy the stress and risk of trading.

Managed forex allows you to have somebody else trade for you. For anybody who is not an expert in financial trading systems, this is likely to make more profits that you could make for yourself. Of course, you will have to pay something for the service. Even so, most people starting out in forex trading for themselves actually lose money, so paying 10% or 15% of returns to a management company could still end up being a very smart deal.

Of course there is a risk even with managed currency trading accounts. The forex market is unpredictable and companies cannot guarantee returns. In fact, if you see an advertisement promising a certain return, be very cautious. In most cases there will be something in the fine print to explain that returns are not really guaranteed and you may lose money. If not, the advertisement is probably breaking the law unless you are seeing it on the internet and the company is based in a country where the laws regulating investment companies are very loose. Check out such investment opportunities very carefully if you do not avoid them completely.

There are two main types of managed forex investments. The first is the kind we have already described, where the company trades on your account and charges a percentage of the profits. Their percentage may vary considerably because some companies also earn from the brokers. This can seem to reduce the cost to you but keep in mind that sometimes you might not end up with the best broker this way. An unscrupulous manager might have you sign up with a broker who charges a fee per trade and make a lot of small trades on your account to increase their commission.

However, not all management companies behave in this way and this type of forex management means that you can always see what is going on with your account. The money is held in your name and if you are not happy with what is going on you can withdraw it or deny access at any time.

This is very different from a pooled forex account where you pay your money over to a management company who puts it into a pool with other people’s funds and trades it all together. Here you have no control over the account and must simply wait for the results and the payouts. There is a high potential for scams in this situation so check that the company is a member of a respected regulatory body before investing anything in this type of managed forex account.

More and more people are wanting to know how to trade currency from home in order to make extra money or even give up work to trade online full time. Getting involved in the forex or foreign exchange market has become easier and easier over the last few years but this does not mean that making a fortune with currency trading is automatic.

Discovering how to trade currency can be lucrative and some people do get rich, but it is a risky undertaking. Forex or currency trading is a form of speculative investment a little like stock trading. You invest in a currency pair that you think will rise in value, then exchange your money back if and when it does, so that you make a profit on the deal.

In fact, when you know how to trade currency you can also sell a currency pair that you think will fall in value. This is possible because all currency deals are a matter of exchange. When you open a trade you are placing an order to change money from one currency into another, but without ever taking delivery. You change it back the other way to make money.

Currency values depend on the economic performance of individual countries. However, most forex trading systems are based on analysis of charts which tells you which direction the price of the pair is moving. If you have a system that can identify when a price is beginning to move in either an upward or downward direction, you can open a trade and ride the trend. The benefit of this is that you do not need to understand a lot of complex economic detail.

However, systems do need to be tested. You may have paid something for a system or read it in a book or ebook that had very good reviews, but you still need to check it out in practice for yourself before you start risking any real money. Different people operate systems in different ways. You will probably also have a different broker. These factors can make a difference.

Fortunately, brokers cater for people who are just learning how to trade currency by providing demo accounts. In demo mode you can place dummy trades, using real live prices. It is a little like using a ‘play’ version of the system. You can test out the broker’s services and test the performance of your system at the same time. This is a great way to trade.

Of course you do not want to stay in demo mode for ever or you will never make any real money. Sooner or later it will be time to make the switch. When you do, it is best to start small. Keep your position and your risk low, and always set a stop loss so that your trade will automatically close out when the price goes against you. It is important to understand that no system is profitable all of the time. Some trades will inevitably lose, and a stop loss will help you minimize the amount of the losses.

Like any useful or money making skill, successful forex trading is not mastered overnight. It is necessary to get to know the market and the basics of trading. But if you can do this successfully, knowing how to trade currency can bring you a lot of satisfaction and hopefully plenty of money too.

An online forex trading course can be a huge benefit to you as a forex trader, no matter whether you are an experienced tradoer or are just starting out in the risky world of currency trading. Savvy traders are keen to lay their hands on any information that can help them increase their profits and minimize their losses, while beginners need guidance for sure if they going to survive in these dangerous waters.

It is possible to find study courses and seminars offline, but pretty much everyone prefers to choose an online forex trading course. The prices can vary enormously but usually they are cheap by comparison with offline seminars, and you get a lot of information. You will usually receive an ebook that you can download instantly and either read online or print out to study later. This is very convenient because there is no waiting.

Your online course may include other elements too, that cannot be included in a printed book. For example, in some cases you might have access to a private forum where you can ask questions and chat with other traders who are taking the course. If this is not provided, then at least you will have some method of getting support for anything you do not understand. You will be able to log a support ticket and you can expect to receive fast support from the author of the program or a staff member.

Often you will have access to video training which allows you to watch over the shoulder of a trader so that you can see example trades happening in real time. If a picture paints a thousand words, a video can take the place of ten thousand words in many cases. There is nothing to beat seeing the system you are planning to use, actually working in action before your very eyes.

Of course, all of this is available to you whenever you want it. There are no scheduled classes to attend. If sometimes your forex course might include a webinar (an online seminar) or conference call, it will almost certainly be recorded so that you can listen in later if you are not available for the live event.

Forex trading courses are usually very practical in their emphasis. You can expect to learn at least one practical trading system that you can put into action and make money with. Of course you should test it in a demo account first, but if it does not appear to be successful for you, you should be asking questions to find out what went wrong. You could not get this kind of feedback if you just went out and bought a book.

If you have some experience with forex trading, you will probably find that you are already familiar with some of the material. In this case you can skip through to the parts that interest you. Understand that the author has to provide enough basic information for a beginner to follow, and try not to become impatient with this. You may find that as much as 90% of the course material is information that you already know. That does not matter. The remaining 10% that is new to you could be hugely valuable for you. Concentrate on that and you will still get great value for money from your online forex trading course.

Global forex trading gives us a huge opportunity to make money from currency trading. Of course it is risky, and it is important to know what you are going before you trade live. Fortunately, demo trading allows us to practice our skills before risking any money.

But even with a demo account, it is important to take your trading seriously from the start. Here are 3 pointers that will help you make money with any forex trading system.

1. The One Trade Rule

It is best to open trades one by one. Even for an experienced trader, it is important not to have too many trades at risk at the same time.

This does not necessarily mean that you only ever have one trade open. If you have a trade that is in profit and you have moved a trailing stop beyond the entry point so that this trade cannot lose, it is possible to open another. But it is important to have moved that stop.

Always keep in mind that some unpredictable event such as a natural disaster, war or sudden death of a political leader could throw the whole market into confusion. Or what if your phone lines go down and your internet connection is lost?

2. Risk: Not Too High …

Risk management is vital for successful currency trading. You can succeed without being the perfect technical analyst but you cannot make money with global forex trading without understanding risk management.

If you are risking too much on each trade then at some time or another your funds will be wiped out. All systems have their ups and downs and if your risk is too high, your account balance will not be able to recover from the downs.

3. … And Not Too Low

On the other hand, if your leverage is too low, you will not make much money even from a profitable system. And if your stop loss is too close to your entry point, it will be triggered too soon.

So risk must be optimized for your system. It depends on drawdown and average profit or loss per trade, but a good rule of thumb is to risk between 1% and 5% of your funds on each trade. Only take the higher figure if losing your entire balance would not be a disaster. Generally, the more money a trader has in their account, the more careful they are with it.

Some traders consider that having a set risk per trade is too inflexible and the risk should depend on the strength of a signal. That is fine as long as the variable risk is still defined according to the system. What you want to avoid is varying the risk depending on intuition, or depending on the result that you had from the last trade. That is a recipe for disaster in global forex trading.

Forex currency trading is risky and often frustrating but it can be very lucrative if you know how to get it right. Successful forex traders have certain qualities that they all share. Knowing these FX currency trading secrets can make the crucial difference between profit and loss for the average trader.

1. Funds

While it is true that you can get started with FX currency trading with just a few hundred dollars these days, it is obvious that nobody operating a tiny account is going to make a lot of money in a short time. 10% return on investment per month is an excellent result, but if your balance is $1,000 this would be just $100 per month – not quite enough to retire to Florida for the rest of your life!

If you are starting out with just a small investment, understand that you will need to grow it slowly at first, and reinvest all of the profits. The alternative is to take huge risks and almost certainly lose it all. Your funds must be clear money that you do not need for anything else, because you are not going to be touching them for a few years.

If you are in the fortunate position of having a large amount to invest in FX currency trading, it is still wise to stay small to begin. Start in demo and when you move to real money trading, start small. Many big time traders keep their risk per trade below 1%. When you have a large fund balance, you will want to take extra steps to protect it.

2. Trading System

If you are going to trade for yourself rather than using a managed account or a robot, you will need an FX currency trading system. The best systems are usually simple. Complex systems only confuse things and lead to fuzzy signals and mistakes.

The worst thing that you can do is keep switching from one system to another. Instead, take two or three systems that have good reviews and test them for yourself. When you have found one that brings you consistent profits in both back tests and demo trading, you should have complete confidence in it. You will then be able to stick with it through bad times and good times.

3.  Mindset

The last essential requirement of a successful FX currency trader is a cool head. Do not underestimate the importance of this because it can make or break your trading performance.

We all like to think that we are calm, rational people but the stress and pressure of forex trading can cause all kinds of unexpected reactions. Do not assume that you will never react emotionally to something that has happened during your trading. Instead, recognize that stress, fear and panic decisions are pretty much inevitable and it is how you deal with them that counts. Taking time out at the right moments can help you to stay cool and keep you making money despite the stresses involved in FX currency trading.

Forex trading books are so numerous that it can be difficult for a beginner to know what to choose. If you look online on the Amazon or Barnes and Noble websites you will find probably hundreds of books on currency trading. Even small local bookstores carry a range of titles. Added to that, there are ebooks: digital books that you can often download instantly and either read on your computer and print out. So what should a beginner be looking for when it comes to choosing forex books?

1. Is It Recent

The forex market has undergone huge growth since the year 2000, especially when you consider the position of the private retail investor. It has also changed in the level of investment that you need to get started. Regulations are revised every few years too. Check that the book is recent enough to be relevant, and if it refers to legislation, check that it is valid for your state or country of residence.

2. Who Is The Author

Forex trading books and ebooks are written by all kinds of people who are trying to cash in on the currency trading boom. Some of them are successful traders but they might not be great at explaining what they do and passing on their successful systems in a way that is useful to beginners.

Others might be professional writers who may write very slick currency trading books but without really giving you a trading system that you can actually use. There are even some well known forex trading books that are written by brokers, who certainly have useful insider knowledge but again, might not give you much in the way of a trading system. This is something to consider when selecting forex trading books for beginners.

3. Forex Book Reviews

Both printed books and downloadable ebooks usually have plenty of online reviews that you can read. For printed books, the Amazon website is a good source of reviews.Even if you plan to buy a book at your local bookstore you can check out the reviews on Amazon first. You might also find cheap used copies there. Only click on Forex Trading Guides  to see all Amazon forex books and reviews.

If you are looking at ebooks, many forex forums carry a review section where members post what they thought of the latest forex systems, robots and ebooks that are available on the internet.

With all consumer reviews of this type, remember that they are different than newspaper reviews. Newspaper reviewers are usually experts in the subject while online consumer reviews are written by members of the public who might not be knowledgeable at all. Always keep in mind that the person might have very different ideas, expectations or experience than you. Try to find reviews from people whose situation is close to your own and remember that this is just one person’s opinion about the forex trading books.

There are a few forex strategies that you can use to increase your profits, no matter what forex trading system you may be using. Here is one simple trick that can help you to make more out of each successful trade.

Of course, all traders know that you should set a limit order or at least include a profit aim or closing signal in your plan and keep to it. It is important not to keep a winning trade open until the moment ‘feels right’. Either you are aiming for a certain number of pips or you are waiting for something like an oversold or overbought signal and then close immediately.

Keeping a trade open for an undefined time, hoping to make the most of it and profit from every last pip, is a road to ruin. Successful forex strategies are never based on feeling. Sure it is annoying to close out a trade at 50 pips and then see the trend continue to 200, but how often does that happen? We tend to remember trades like that and forget the others, so if you do not keep a record of what happened after you closed a trade, now is the time to start.

If it turns out to be true then you might want to back test the results of increasing your profit aim per trade, but in 90% of cases you will find that this does not happen often enough to justify that. What you may find, however, is that it is worth closing half of your position.

Of course, to do this you must either be trading more than one lot or have a broker that accepts fractional lots. You can set a limit order for the first half but you need to be watching the market so that at that time, you can set a new limit order for the second half and at the same time, move your stop loss. The new limit order could be half of your original profit target or it could be the same amount again, but not more.

There are several options for the positioning of the new stop and it is a good idea to back test these for your particular system. First option, if your stop was originally 20 pips out from your opening position, it now moves to 20 pips from the price at which you just closed half of the order.

Second option, your stop moves to your entry position plus or minus the spread. So if the trend now turns on you, you will have a profit on the first half of your trade and break even on the second half. Third option, the stop moves to half way between the opening price and the current price. What is best depends on the original position of your stop. Of course you do not want to move it so close to the current price that it is triggered too easily.

Equally, never be tempted to apply this technique to a losing trade. It would be a big mistake to only close half of a trade when it hit your stop, unless you are testing different positions for the stop. Forex strategies should maximize your profits, not your losses!