As a beginning FOREX trader, it is vital that you start to learn the basics of trading before committing any real money to trading.

You do this by trading a demo account, what is often referred to as ‘paper trading’.

How long should you paper trade a demo account?

That depends on several factors, some of which are:

• Your familiarity with trading concepts and systems
• The amount of time you have available to paper trade
• Your risk comfort level
• The amount of capital you are prepared to risk
• Your strategic objectives for trading currencies on the FOREX market

Commonly suggested timeframes for paper trading are from one to three months.

Ultimately the length of time you spend paper trading before putting your real hard-earned capital at risk is dependent entirely on your comfort and confidence that you have developed an effective trading system that is going to give you the returns you are seeking whilst mitigating any risk of total capital loss.

Finding an acceptable risk / return balance is a very personal matter.  You will know when you are ready to trade for real, once you have studied enough, developed your own trading signals, or tested a commercial trading signals service for long enough that you are confident that it will work for you.

Where do you find a FOREX trading demo account to use for paper trading currency exchange?

There are literally hundreds, probably thousands of FOREX dealers in the world market providing trading platforms for the retail / consumer trader market.

They have various features and pricing structures.

The best ones are commission-free with only a minimal cost or no cost fee structure to set up a trading account. They make their money on the spread, that is, the difference in market price between the Buy and Sell price on each currency instrument they offer.

Generally spreads are around 3 to 5 pips. Some are higher than 5 pips, meaning they are making more money proportionally off each position you take in the market and making it that much harder for you to get into profit on each trade.

A FOREX dealer offering a 4 pip spread is a good choice.  Less than 4 pips, sometimes the dealers won’t take your orders in times of high market volatility, and sometimes those are the exact times when you need to get into or out of a position FAST!

To be continued…

As forex trading becomes a more extended financial activity around the world the need of innovative approaches to forex trading increases and naturally develops as a result of the constant search for profitable trading systems that are also reliable and understandable even for the beginner trader.

Considering the great number of people already involved with forex trading it’s not really surprising that some of them may find innovative systems that can make good amounts of money even for most aspiring traders without having to pay dearly for the common mistakes committed at the beginning of the road to profitability.

Recently a veteran trader, one of those traders that have tested almost everything on Forex, has been spreading the word about an original and quite revolutionary way to trade the markets. It is a system based on what is called Price Driven Forex Trading (PDFT). This new system is a system based in three trading strategies that are able to produce consistent and systematic profits for the trader that follows PDFT to the letter.

Many would agree that in order to be successful in the markets; this is, making more money than the amounts you may lose in a bad trade; you must be original, innovative and different in your trading systems. And this is in all its extension the basis of the Forex Trading Machine which is based on a different approach to currency trading, this is by the use of PDFT which is a method of trading the forex market without using any type of indicators, support or resistance levels, moving averages, pivots, oscillators, fibonacci, trend lines or any other trading tool you can think of.

It sounds almost “heretical” for some traders, specially the old ones, but everything indicates things work pretty well with PDFT and the Forex Trading Machine. If you are in doubt your are welcomed to test it risk free. Who knows and you may find that the system is right for you and even make some extra bucks while you realize this.

=> http://www.squidoo.com/forex-trading-machine-profits/

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If you want to learn currency exchange correctly then you need to understand the formula of market movement. Most forex traders don’t and that’s why they lose money - so here it is:

The equation is simply:

Forex Fundamentals (Supply and Demand) + Investor Interpretation = Price

Now that’s nice and simple - but most people fail to understand how the equation creates price.

If you believe ANY of the following then you will lose

- You can predict market movement
- You can trade news stories and win
- You can day trade and win

Lets look at the equation more closely and its significance.

Supply and demand fundamentals and the news a relevant but despite the fact that we all have the facts to see - we all draw our own conclusions on what they mean - we are not creatures of logic, we are dominated by our emotions of greed and fear.

It’s a fact that prices tend to spike away from fair value and then return to it - as all spikes based upon human emotion are short lived. As humans when our emotions get involved, we push prices to far up or down as greed and fear take hold.

Most markets form important market tops, when the news and fundamentals appear most bullish and rally when there most bearish, this is human psychology at work. So if you try and trade the news you wont win in most instances as - its not only instantly discounted in the price, you also don’t know how the millions of traders will perceive the facts.

Human nature is constant of course and chart patterns that represent this psychology repeat - but don’t be fooled that they do so to a scientific theory - they don’t. Trading is an odds game not a game of certainties. You don’t trade and predict you wait and trade the actual event i.e. the reality of price change.

You also have to keep in mind that trader psychology needs to be measured over the long term and you can’t tell what the mass of traders (millions of them) will do within a day

So keep in mind that the best way to trade is to follow price action on a forex chart and ignore the news, forget scientific theories and people who say you should predict and finally forget day trading, as the time period is to short. If you understand the above bit of forex education and think about the equations significance, you can learn currency exchange the right way and enjoy currency trading success.

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If you study finance or have a career in a finance related field, chances are you have had some interaction or knowledge of the foreign exchange trading market. The sheer volume of trades in the foreign exchange market makes it the single largest financial market in the world. This is not a market for the timid or occasional trader. This is a very competitive market with players from global financial giants, retail currency traders, and governments of most countries in the world. To stay competitive in this spirited market you need to learn about forex currency trading.

Unfortunately, it’s not as easy as it looks. The huge amount of information resources available regarding foreign currency trading can be daunting. For people who are new to the field, it’s extremely difficult sorting the good information from the bad. Before relying on forex information you’ve found, determine if the source of the material is reliable.

You certainly don’t want to bother with the sites that appear as search results simply due to search engine optimization. The major firms in the currency exchange industry provide on their sites a number of charts, graphs and other forms of analysis of foreign exchange information. These are international monetary corporations which maintain their good reputations by providing correct data and explanations. As you start to learn about forex currency trading, you will want to make their sites your initial locations.

If you are not just a student of finance curious about the foreign exchange market; and you foresee yourself earning a living trading forex, a structured course in foreign currency trading becomes inevitable. There are reputed financial institutions such as investment banks, stock exchanges etc. who have tied up with the leading universities and colleges in creating such structured courses in foreign exchange trading.

It would be wise if you don’t restrict yourself to these structured courses alone. You can test yourself in order to obtain a certification in foreign exchange trading after you learn about forex currency trading. These certifications will also assist you in getting a job in financial institutions which specialize in currency trading.

There are prerequisites that must be met before you are ready to learn about forex currency trading. You must be firmly grounded in the basic principles of economics and capital markets.

If you are studying finance or are already working in the financial field, you must learn about forex currency trading to keep up with your competitors. Saying that is one thing, but it’s much more difficult to actually do. The volume of data out there about this trade is enormous, and it can be confusing. To be certain of the credibility of forex information make sure that your information comes from a reputable source. If you foresee yourself earning a living trading forex, a structured course in foreign currency trading becomes inevitable. Financial institutions have tied up with universities and colleges to create structured courses in foreign exchange trading.

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