Forex Walkthrough

AAA

Level 2 Markets - Research And Testing

When trading anything, you never want to trade impulsively. You need to be able to justify your trades, and the best way to do that is by doing your research. There are many books, newspapers and other publications with information about trading the FX market (but none better than the Invetopedia Forex walkthrough you're using right now!). When choosing a source to consult, make sure it covers:

-The basics of the FX market
-Technical analysis
-Key fundamental news and events


Because the FX market is driven primarily by technical indicators (which we will discuss in detail later in the FX walkthrough), the most important topic a new forex trader should study is technical analysis. The better you get at technical analysis, the better you can trade the FX market. (For further reading, see our Introduction To Technical Analysis.)

When it comes to newspapers, seasoned foreign exchange traders typically refer to publications which contain a heavy helping of international news. Trading FX involves looking past simple economics, since politics and geopolitical risks can also affect a currency's trading behavior, so it's important to keep up with major non-financial news from across the globe. To build a solid foundation in FX trading it is important to keep up to date with key fundamental and technical developments in the forex market.

Test Drive
Once you've found a broker, the next step is to take a test drive. The best way to test a brokerage's software is by opening a demo account. The availability of demo or virtual trading accounts is something unique to the forex market and one that you'll want to exploit to your advantage. The goal is to learn how to use the trading platform and, while you're doing that, to find the trading platform that best suits you. Most demo accounts have exactly the same functionalities as live accounts, with real-time market prices. The only difference, of course, is that you are not trading with real money.

Demo trading allows you not only to make sure that you fully understand how to use the trading platform and become comfortable with its ins and outs, but also to practice some trading strategies and to make money in a paper account (virtual account) before you move on to a live account using real money. In other words, it gives you a chance to get a feel for the FX market. (To learn more, see Demo Before You Dive In.)


Leverage


Related Articles
  1. Forex Education

    3. Test Drive Software

    Thanks to the resources available to aspiring traders, getting into FX is now easier than ever.
  2. Forex Education

    Forex: Demo Before You Dive In

    All trading platforms have benefits and drawbacks - master the fake trade before making a real one.
  3. Options & Futures

    Demo Accounts A Good (But Imperfect) Indicator Of Investing Skills

    Scoring huge profits in a demo account doesn't mean you can expect this performance in real trading.
  4. Forex Education

    Practice Makes Perfect

    Here we will cover the preliminary steps you need to take to find your footing in the FX market.
  5. Forex Education

    4. Do Your Research

    Thanks to the resources available to aspiring traders, getting into FX is now easier than ever.
  6. Options & Futures

    Getting Started In Forex

    Before entering this market, you should define what you need from your broker and from your strategy.
  7. Forex Education

    5 Steps To Becoming A Forex Trader

    The climb up the FX trading learning curve can be steep, but by making use of the many available resources, you’ll reach the top more easily.
  8. Forex Education

    Forex Tutorial: How To Trade & Open A Forex Account

    So, you think you are ready to trade? Make sure you read this section to learn how you can go about setting up a forex account so that you can start trading currencies. We'll also mention other ...
  9. Forex Education

    Top 7 Questions About Currency Trading Answered

    Whether you're puzzled by pips or curious about carry trades, your queries are answered here.
  10. Forex Education

    10 Ways To Avoid Losing Money In Forex

    When approached as a business, forex trading can be profitable and rewarding. Find out what you need to do to avoid big losses as a beginner.
RELATED TERMS
  1. Demo Account

    A trading account that allows an investor to review and test ...
  2. Forex Account

    The type of account a forex trader opens with a retail forex ...
  3. Currency Trading Platform

    A type of trading software used to help currency traders with ...
  4. Currency Trading Software

    Trading software to help the currency trader with forex trading ...
  5. Forex Charts

    A charting package that allows a trader to view historical currency ...
  6. Forex Forecasting Software

    An analytical tool used to help currency traders with forex trading ...
RELATED FAQS
  1. What types of accounts are available for forex trading?

    There are many different types of forex accounts available to the retail forex trader. Demo accounts are offered by forex ... Read Answer >>
  2. What should I look for when choosing a forex trading platform?

    A trading platform is a piece of software that acts as a conduit for information between a trader and a broker. A trading ... Read Answer >>
  3. How much money do I need to start trading?

    The step toward becoming an active trader is a big one, because the world of active trading is quite different from that ... Read Answer >>
  4. What is the best method of analysis for forex trading?

    Types Of Analysis Used In ForexForex analysis is used by the retail forex day trader to determine whether to buy or sell ... Read Answer >>
  5. Where is the central location of the forex market?

    There is no central location of the foreign exchange market, often referred to as the forex (FX) market. Transactions in ... Read Answer >>
  6. How do I pick the best method for forex system trading?

    Discover how to identify the best type of forex system trading style for you based on your available time, your trading preferences ... Read Answer >>

You May Also Like

Hot Definitions
  1. Law Of Demand

    A microeconomic law that states that, all other factors being equal, as the price of a good or service increases, consumer ...
  2. Cost Of Debt

    The effective rate that a company pays on its current debt. This can be measured in either before- or after-tax returns; ...
  3. Yield Curve

    A line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but differing maturity ...
  4. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
  5. Keynesian Economics

    An economic theory of total spending in the economy and its effects on output and inflation. Keynesian economics was developed ...
  6. Society for Worldwide Interbank Financial Telecommunications ...

    A member-owned cooperative that provides safe and secure financial transactions for its members. Established in 1973, the ...
Trading Center