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Learn How To Day Trade Forex

Posted by Ahmad Hassam | August 24, 2009 .
by Ahmad Hassam

You should learn to day trade forex. But before you embark on your journey of forex trading, I want to make a few facts very clear. These facts should be the foundation of any forex trading system that you develop and use daily for trading.

The first most important thing that you should understand and make very clear is that forex is not a get rich quick scheme. Skilled currency traders can and in fact do make good money in forex trading. However like any other business or career, success just doesnt happen overnight or in a few weeks. You should use this great formula for success: Patience+Practice+Persistence=Profits.

You should know that there is no substitute for hard work and diligence. Practice trading on a demo account. Pretend that virtual money is your own real money when you trade on the demo account. Do not open a live trading account until you become profitable on your demo account. Double you account first demo trading. You can only be successful if you stick to a system and a plan.

When you start trading forex, just choose two major currency pairs that you will trade in the start. It will become very difficult to keep tab on the all major currency pairs in the beginning. You should start with a major currency pair. The spread on the major pairs is the best and they are the most liquid. EURUSD pair is the most commonly traded pair in the currency markets and usually has the best spread because of its liquidity.

The USD/CHF is the most volatile and moves the most during the trading week. The USD/JPY moves a lot on the news out of Japan. GBP/USD is the most stable of the above three pair.

Follow and understand the daily forex news and analysis of the professional currency analyst. It is important to get a birds eye view of the currency markets and the news that affects the prices. It is also important that you know and understand what the key technical support and resistance levels are in the currency pair that you want to trade.

Support is the predicted level when buying pressure overcomes the selling pressure. It is at this point the currency pair moves up on the charts. Buy at the support level. Resistance is the predicted level when selling pressure overcomes the buying pressure. It is where the currency pair moves down on the charts. Sell on the resistance level.

Fortunately for you, all the best forex news and analysis is available freely online. Most of the brokers provide this information on daily basis. You can also go to forexnews.com and get 24 hrs news and analysis on the spot forex market. When you read the technical news and analysis, write down on a piece of paper the direction the analyst are saying about the currency pair you are trading and the key support and resistance level for that pair.

Learn how to use technical indicators and always trade with stop losses. It is worth your time to be patient and learn how to use technical indicators on the charts that you will be reading shortly.

It is important when you are trading to be disciplined. Stick to a plan. Dont just trade your gut feeling. Depending on your risk capital and strategy, set your stop losses accordingly.

About the Author:
Mr. Ahmad Hassam is a Harvard University Graduate. He is interested in day trading stocks and currencies. Know These Forex Broker Games. Learn Forex Trading!

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