Forex for Dummies
In the cyber world, as in real life, there are available dozens of books, e-books, manuals and guides to successful forex trading. Certainly, an instruction manual or guide of any type can be invaluable, but it is only effective and useful if it is comprehensible. Think about how often you have attempted to learn the nuances or intricacies (or even just the basics!) of some new electronic gadget only to throw the instruction manual aside in disgust, bemoaning your lack of an engineering degree. You may have decided that you’d just “play” with your new toy a bit, and found that trial and error worked just fine. An instruction manual should be easy enough to understand so that “playing” doesn’t put you or your money at risk. In that spirit then, we offer these simple forex for dummies rules.
Forex for Dummies Rules
#1: Put your emotions aside. A newbie forex trader often follows his heart (or gut) rather than his head. While it’s generally right to follow your instincts, remember that instincts are not infallible.
#2: Create an effective money management strategy, define your goals, know your risk threshold, and stick with it… even if your instincts tell you otherwise.
#3: Use only your “mad” money. Never, ever, under any circumstances should you trade with money that you have earmarked for budgetary items, e.g., mortgage or rent, utilities, insurance, groceries, gas, etc. The money that you use for forex trading should be the money you’d fritter away on trivialities or frivolities – things you can afford to be or do or live without.
#4: See, hear and read everything. Consider forex trading as something not unlike comparison shopping; you learn everything you can about the product, compare it to like items and make an educated decision based on what you’ve learned. A good education is your best weapon.
#5: Don’t believe everything you see, hear or read. It’s very easy to get caught up in the forex trading propaganda; you see it flashing in bold bright banners on website pages, and even your social networking friend’s status update announced the killing he’d made while trading currencies. You will want to believe that it’s true. What is true is that, with very rare exceptions, it’s all a lie; the vast majority of forex trades are not successful.
#6: You can successfully trade forex. We’re not suggesting you ignore Forex for Dummies Rule #5. Absolutely not. Rather, let us offer you a caveat to that statement – you can successfully trade forex, over time. A single successful trade will not make you a millionaire, but over a period of time, successful forex trading can result in substantial profits.
#7: Watch where you put your eggs. You’ve heard it before: the egg and the basket concept. And it’s a good concept as it applies to forex trading; simply put, spreading your assets will minimize your risk and/or cushion a fall.
#8: Be humble, and don’t press your luck. It’s very easy to become conceited when you’ve had a string of successes; often that conceit becomes greed. Don’t let that happen to you. The forex markets are fickle – very fickle – and a bull trend can become bearish in a New York minute. If you’re sitting on a profit, take it, sit back and bask in the afterglow.
#9: Act responsibly. Nothing teaches you moderation like your first big loss (that is, if you can withstand your first big loss). Avoid testing your mettle by trading responsibly; though you shouldn’t consider investing (all at once) the same amount of money as you might on the purchase of a house or a new car, you should still give it the same due consideration. Think long and hard before you put your money down.
#10: Understand that it’s not personal. The forex market is not out to get you, but it can chop you up and spit you out in little bits. It’s the nature of the beast that is the forex market to take advantage of forex trader ignorance, stupidity or recklessness. Provided that you follow this and all of the other Forex for Dummies rules, you can succeed.