What Is Forex Training?

Forex training is a type of specialized instruction or mentorship that provides skills and information about forex trading tactics, methods, and successful practices.

Forex, or the foreign exchange market, is the market where banks, companies, brokers, hedge funds, investors, and other participants can buy, sell, exchange and speculate on the relative values of various world currencies.

Key Takeaways

  • Forex training educates and imparts skills related to trading in the global currencies markets.
  • This training can involve hands-on one-on-one mentorship, or be as distant as an online tutorial.
  • Beware of scams or unethical pitches about training programs guaranteeing profits, or producing skilled traders in record time.

Understanding Forex Training

Forex training refers broadly to instructional or educational guides intended for retail forex traders. Forex trading courses are often certified through a regulatory body or financial institution. In the United States, the SEC, the Chicago Board of Trade, the Chicago Mercantile Exchange, the Financial Industry Regulatory Authority, the National Futures Association, the Futures Industry Association and the Commodity Futures Trading Commission are some of the boards that certify courses.

Forex training can be delivered in-person or online. Mentors in forex training courses often help explain different strategies and risk management, as well as going through and placing actual trades. Online courses can be compared to distance learning in a college-level class. An instructor provides PowerPoint presentations, eBooks, trading simulations and so on. A student will move through the beginner, intermediate and advanced levels that most online courses offer. For a trader with limited foreign exchange knowledge, a course like this can be invaluable. These courses can range from as little $50 to well into the hundreds or even thousands of dollars.

Trading courses will often require a solid commitment (if individual mentoring is involved) or can be as flexible as online podcast classes (for internet-based learning). Before choosing a course, carefully examine the time and cost commitments as they vary widely. If you don't have several thousand dollars budgeted for one-on-one training, you are probably better off taking an online course. However, if you plan on quitting your job to trade full-time, it would be beneficial to seek professional advice—even at the higher cost.

Forex Analysis and Forex Trading Strategies

The global forex market is massive in size, and it is the largest and most liquid financial market in the world. Because of this, there is a wealth of information available for traders who are looking to enhance their trading knowledge.

There are many different forex trading strategies and traders generally use forex signal systems to determine whether they should buy or sell a currency pair at any given moment in time. A variety of sources including currency pairs, bond prices, commodity prices and stock prices can influence signals.

While some systems and strategies are based on technical analysis, others are based on chart analysis or news-based events. Some traders develop their own strategies while others might use strategies that can be found on the internet.

Additionally, some forex trading strategies use automated methods while others choose to implement manual systems. A few different elements that forex traders consider when they build an effective forex trading strategy are: selection of a market, position sizing, entry points, exit points and trading tactics.

There are a few different types of forex analysis. Traders look at prices of currencies over time in technical analysis. In fundamental analysis, they consider economic indicators including inflation rates, interest rates and GDP. And when forex traders use sentiment analysis, they look for larger investments in a currency which could point to more future sellers of the currency.

Different types of traders use different types of forex analysis. Short-term investors, for example, might use technical analysis, whereas long-term investors might prefer fundamental analysis.

The Reputation of the Course

A simple Google search shows roughly two million results for "forex trading courses." To narrow the search, focus on the courses that have solid reputations. There are many scams promising giant returns and instant profits (more on this later). Don't believe the hype. A solid training program won't promise anything but useful information and proven strategies.

The reputation of a course is best gauged by talking with other traders and participating in online forums. The more information you can gather from people who have taken these courses, the more confident you can be that you will make the right choice.

Training Certification

Good forex training courses are certified through a regulatory body or financial institution. In the United States, the most popular regulatory boards that watch over forex brokers and certify courses are:

Not all course promoters are required to be members of the National Futures Association or registered with the CFTC, but most of the reputable ones are, and they adhere to these bodies' code of ethics.

For those thinking globally, be aware that each country has its own regulatory boards, and international courses may be certified by different organizations.

Staying Away from Scams

"Make 400% returns in a day!" . . . "Guaranteed profits!" . . . "No way to lose!" -- These and other catchphrases litter the internet, promising the perfect trading course leading to success. While these sites may be tempting, beginning day traders should steer clear, because absolute financial guarantees in the world of foreign exchange just don't exist.

Unfortunately, the rise of online trading, electronic platforms, and open-access marketplaces have fueled a parallel rise in scams. The Commodity Futures Trading Commission (CFTC) has long been concerned about dubious courses designed to prey on the unsuspecting. "The CFTC has witnessed increasing numbers, and growing complexity, of financial investment opportunities in recent years, including a sharp rise in foreign currency (forex) scams," it warned in a release, as far back as May 2008.

To ensure a trading course is honest, read its terms and conditions carefully, determine whether it promises anything unreasonable, and double-check its credentials and certification for authenticity. In particular, beware of sites that prominently display hypothetical returns, or that show actual returns without the stipulation to the effect that "past performance is no guarantee of future results."

If you think you've been defrauded, contact the CFTC. The Commodity Futures Modernization Act of 2000 (CFMA) made clear that the CFTC has jurisdiction and authority to investigate and take legal action to close down a wide assortment of unregulated firms offering or selling foreign currency futures and options contracts to the general public."