Regardless of how simple or complex your forex trading plan is you will always go back to the basics when it comes to determining how and when to execute the same. This article will discuss these basic considerations. The goal of the article is simple, provide a solid foundation for basic trading in order to produce effective traders.
Raw Data and Analysis
A plan is a finished product. Before you can make one you need all the ingredients. A significant portion of that ingredient is raw data, in depth and reliable analysis, as well as learned opinions from experts in the field. Conventionally you get some of this on television and in the newspaper. Nowadays you add to that the internet. For serious brokers, especially those who use short term plans this information must be complete and must be transmitted as close to real time as possible. Nowadays this means smart devices like cellular phones, laptops, tablet pc’s etc.
Know Your Basics
Formulating a plan of action, regardless of the fact that it may be based on someone’s work requires knowledge of the basics. This can only be achieved with education. This does not mean conventional education (i.e. college, vocational, short courses, etc.). This can refer to online courses, self-help manuals, audio visuals, etc. The important thing is to properly digest that knowledge in a systematic and coherent manner. In other words, read it twice or thrice and pay attention!
Driving a car is very different from reading about how to drive a car. It is the same thing with the foreign exchange market, you can read all you want but you really have no idea what you are doing until or unless you try your hand at actual trading. This being said, you can either waste money by trading live or sign up for a practice account and use actual market data to determine how near you can get to the best possible trade. The good part about this is that there are practice accounts that are free for a limited period of time.
The foreign exchange market is one wherein you trade with different currencies and then compare the relative strength of that currency vis a vis your profits with other currencies or commodities. Beginners are told to start with their local currency and pair the same with a major currency. This is in order to get the feel of forex trading in real life. From this point the trader can either choose to increase the amount of investment, change currency pairs, increase the currencies in which he/she trades, etc.
A trading platform is software that any individual can use to execute, their forex plan. As a general rule trading platforms are offered by providers/brokers initially for free (demo account) for a fee (basic paid account) with additional charges (premium account). A good way to find the proper broker and platform for you is to try different demo accounts and then select the one that best suits your requirements and preferences. It is also a good idea to look at the additional material accessible via paid or free accounts like e-books, newsletters, sms alerts, etc.