Starting with practice account

The best way to start and learn trading without loosing to much money is with practice accounts. Every forex or stock broker enables you to trade with virtual money. With practice account you are instantly in the action. You can test your trading strategy, your technical analysis and following the trading plan. You start to trade without fear of loosing money. Practice accounts are great to get you started but they cant replace experience on trading with real money. When dealing with real money emotions come to play.

With practice accounts, you can learn about different terms like stop loss, market order, limit order, trailing stop-loss orders...You can see how the system is working and you can learn from brokers help library, almost every broker has one. So spend some time trading with practice account and learn about technical analysis in the process.

Choosing trading style

In technical analysis we have different trading style which all vary depending how much time you will spend for trading. There are a lot of different trading styles but we can form three main categories.

Short term


Short term trading in stock markets means that positions are usually held from one day to several days. Shorter time frames are used for technical analysis of stock or currency pairs. In forex markets it means holding position from a few seconds to maximum one hour. In stock market timeframes used for short term trading are usually five and ten minutes up to thirty minutes or one hour.

Medium term 


Medium term position in forex markets are held for duration from a few minutes to a few hours. In stock market it means holding a stock from one day up to a week. Time frames used for medium term trading are one, two hours and up to one day time frame.

Long term


Long term trading in forex markets means holding position for weeks or months. Its is based on macroeconomic events. There is a lot of volatility and price fluctuations. In stock market it means investing like Warren Buffet. If you are a long time investor you hold your stock for weeks and months. Time frames used for long term trading are weekly and monthly time frames.

Bids, offers and spreads

When you are in front of a real time feed of markets quotes you will see two prices for currency pair. There are two prices you see on your trading screen. Bid price is the price at which you can sell your currency pair. If the currency pair is liquid it means you can sell your currency pair without impacting the price. Otherwise big traders or trading algorithms can  move prices.

Offer price is the price at which you can buy currency pair. Spread is the difference between the bid price and offer price. If gap is bigger it  means that when you will want to sell or cover short position you profit will be lower for that gap, or your loss will be even bigger because of that gap. So be carefull which currencies you trade, that there is enough liqudity and small gaps.

Currency pairs

To simplify matters, forex markets means that currencies are

being traded in pairs. Symbol are combined of two currencies that are

traded against each other. Major currency pairs include most important

world currencies. Major currencies pairs are: EUR/USD, USD/JPY, GBP/USD,

USD/CHF, AUD/USD...

Majority of trading goes to american dollar pairs, although other currencies pairs

are also traded. Forex markets consist of a lot of different currency pairs,so news and

other factors affect every currency pair different. You can exploit some major news,

like FED meetings, economy news for each currency pair indepent of each other.

Forex

The foreign exchange market is most often called the forex

,or simply the FX market has the biggest financial turnover in the world.

Forex is the juncture for international capital, the intersection through

which global commercial and investment flows move.

Today, global financial and investment flows master

trade as the primary non-speculative source of forex market. Whether it’s an Austrian pension fund investing in U.S. Treasury bonds, or a German insurer allocating assets to the India equity market, or a French conglomerate purchasing

a Canadian manufacturing facility, each cross-border transaction

passes through the forex market.

Forex market is a trader’s market. It’s a market that’s open around the clock six days a week, enabling traders to trade.

It’s a market where billion dollar trades are executed in a matter of seconds and dont have much effect on the prices.

If you buy or sell billion dollars of a stock, prices would change dramaticly.