Ten Things You Should Know About Forex Trading

A Novice's experience of financial trading:

In these days of global economic recession, a high number of people are looking for ways of earning extra money.

Inevitably the folk who are trying to flog their latest sensational money making or home business opportunity, are to say the least having a whale of a time, as they take advantage of people's misery and desperation.

The promise

As one who lost my job and the chief source of income, I fell into this category and I was fascinated when I received a sales letter, declaring confidently that spread betting or trading the financial markets was the answer to all my prayers.

The enticing sales letter

The sales letter would go something like this: 'This morning the price of pound sterling £ increased by 20 points against the US dollar $. Having spent half an hour behind my laptop, I walked away and spent the rest of the day playing golf. Having checked my account at the end of the day, very much to my delight, I discovered that I had made £200 profit'.

Wow! Sounds great, if only life was that easy. Well call me a sucker but it was enough to make me reach for my credit card and place my order. In fact I eventually ended up with a handful of these systems. Well let's face it, they did say that the latest system was the simplest to operate and promised great profits.

Effectively what I discovered was that they are basically very much the same. While some of the information is good and offers you the chance of making money, I do feel that they are conservative with the truth and don't give you the whole picture.

With this in mind, what I would now like to do is to share with you, what I consider to be vital information before you decide whether to get involved in this opportunity.

10 things you should know about financial trading:

1. As with any form of gambling which this venture is, whatever amount of money you set aside for trading should be money that you are prepared to lose, should things go horribly wrong.

2. Take any claims or promises with a pinch of salt!

3. Remember that the markets, whether it be the foreign exchange, commodities or shares market can go up or down in terms of price.

4. In it's simplest form you are betting that the price will go up or down. There is no selection system that guarantees you will be correct in your prediction 100% of the time.

5. It is so easy for the creators of these systems to say, 'had you placed a bet of £10 per point on the FTSE rising this morning, you would have made £200 profit before lunch'. What they forget to tell you is that had you guessed wrong and the price of FTSE had gone down, you could just as easily made a £200 loss before lunch. Painful!

6. As with any business, it will take a great amount of time and effort in order to be successful.

7. You must be prepared to put in the effort, in order to learn the basics of this business.

8. Don't expect fantastic results in the beginning as you learn the ropes. You will have to be prudent in the early days, as you make use of the stop loss system, in order to protect your capital.

9. Some systems will claim a success rate of 90%! I once heard a successful trader say that if he was correct in his predictions 50% of the time, he would be more than happy and wealthy at the same time.

10. In a sense you need a special kind of mentality and attitude in order to succeed at this game. You may have seen the BBC's excellent series 'Million Dollar Traders' which you can watch on the BBC's i-player service. You must not get upset over your losses, because probably you will make a loss on half your deals! The secret is to take steps using various instruments to limit your losses. When you discover winning trades, these should more than make up for your losses and ensure a healthy profit.

I hope you enjoyed reading my report and found the information beneficial. Please feel free to pass on this report to other people who might be interested, providing my contact details are included.

My name is Aled Evans and I trade the financial markets in my spare time. I am constantly trying to learn more about spread betting on forex, commodities and shares. I have set up my own web site in order to share my findings with like minded people. Feel free to visit me at:http://forextradingplan.blogspot.comor I would be most interested in any comments or advice on this fascinating subject. Please e-mail me at:aled@cwmhalen.freeserve.co.uk Article Source: http://EzineArticles.com/?expert=Aled_Evans