Education and Mentoring Programs - Are They Worth It?
The benefit of online or live courses over books, newspapers and magazines is that you can get answers to the questions that perplex you. Hearing or seeing other people's questions can be extremely valuable, since no one person can think of every possible question. In a classroom setting, either online or live, you can also learn from the experiences and frustrations of others. As for a mentor, he or she can draw on personal experience and hopefully teach you to avoid the mistakes he or she has made in the past, saving you both time and money.
What About Trading Systems and Signals?
Many traders wonder whether it is worthwhile to buy into a Forex signal system package. These packages allow traders to make trades using a variety of inputs. Systems and signals fall into three general categories depending on what they target: trend, range or fundamental. Fundamental systems are very rare in the FX market; they are mostly used by large hedge funds or banks because fundamental strategies tend to be long term in nature and do not give many trading signals. The systems that are available to individual traders are typically trend systems or range systems - it is rare to find a system that is able to exploit both markets, because if you do, then you have pretty much found the holy grail of trading (which doesn't exist).
Even the largest hedge funds and Forex traders in the world are still looking for the software that can tell them whether they are in a trend or a range-bound market. Most large hedge funds tend follow trends. Generally, range-bound systems will only perform well in range-bound markets, while trend systems will make money in trending markets and lose money in range-bound markets. So, when you buy into a system or a signal provider, you should try to find out whether the signals are mostly range-bound signals or trend signals. Although this advice seems straight forward, seasoned traders can attest that it is easier said than done (To learn more, see Identifying Trending & Range-Bound Currencies.)
Trading Setups - Finding What Works Best for You
Research And Testing
All traders are different, but a good trading style is probably a combination of both technical and fundamental analysis. Fundamentals can easily throw off technicals, while technicals can explain movements that fundamentals cannot. Smart traders are the ones who are aware of both the fundamentals and technicals behind every trade they make; combining both will keep you out of as many bad trades as possible, and it works for both day traders and swing traders. Most free charting packages have everything that a new trader needs, and many trading platforms offer real-time news feeds to keep you up to date on economic news as well. (For further reading, see Devising A Medium-Term Forex Trading Strategy.)
Learning to trade in the FX market can seem like a daunting task when you're just starting out, but thanks to the many practical and educational resources available to new traders, it is not impossible. Learning as much as possible before you put actual money into the markets should be number one in your agenda. Print and online publications, trading magazines, personal mentors, online demo accounts along with our Investopedia Forex indepth walkthrough can all act as invaluable guides on your journey into currency trading. Now that you've got your feet wet in the Forex market, let's take a look at the role leverage plays in the fx market.