Recently I started a similar thread in the 1KT Room and now I realize the thread will better serve new traders, so I've decided to post my thoughts here along with some sources to help new traders as they develope. This will also enable everyone a chance to respond or contribute to the topic.
First I would like to say a few words about the thread title. I believe like many others, that everything has a reason. Many questions can be answered with a reason. For example: Why do you want to trade in the retail Forex market? Why do you want to buy EURUSD at the current price? Why did the USD just gain value over the past few weeks? The list goes on and on and new questions should be asked every day.
As a new trader one of the first questions we ask ourselves is, "What am I getting myself into?" Imagine the Forex is a giant game of monopoly. If you don't have a clear unbiased view to this question you should Go to Jail...Do Not Pass Go...and Do Not Collect $200. The alternative IMHO is far worse. Without a true sense of what you are up against you will in effect be landing on one high rent square after another and soon become frustrated, exhausted and broke.
It might sound like I'm trying to talk you out of trading. Quite the contrary. We are here because we want to learn and I believe that every trader should start with a good psychological foundation before getting too wrapped up in technical or fundemental analysis. In other words, you should know why you are here and what you can expect.
To begin with I would like to recommend that you read about the nature of the retail Forex market, unless of coarse you are able to start with 100K or more of money you can afford to lose. While there are many good threads here at FF on this subject, I would like to recommend an easy read from Wikipedia entitled "Forex Scam". It summarizes the true nature of the retail market very well and quotes some reputable sources as well.
http://en.wikipedia.org/wiki/Forex_scam
Please don't get over alarmed. Instead try to realize that very few new traders will read such articles before trading live accounts and that gives us an edge we can work with. They will fall into many of the traps set by brokers and hopefully we can recognize the traps in time before the lunch crowd falls prey.
So what's my reason for starting this thread? Simple. Writing these thoughts down will reinforce them in my mind and there's always the chance that someone will contribute something to the discussion that I am unaware of.
First I would like to say a few words about the thread title. I believe like many others, that everything has a reason. Many questions can be answered with a reason. For example: Why do you want to trade in the retail Forex market? Why do you want to buy EURUSD at the current price? Why did the USD just gain value over the past few weeks? The list goes on and on and new questions should be asked every day.
As a new trader one of the first questions we ask ourselves is, "What am I getting myself into?" Imagine the Forex is a giant game of monopoly. If you don't have a clear unbiased view to this question you should Go to Jail...Do Not Pass Go...and Do Not Collect $200. The alternative IMHO is far worse. Without a true sense of what you are up against you will in effect be landing on one high rent square after another and soon become frustrated, exhausted and broke.
It might sound like I'm trying to talk you out of trading. Quite the contrary. We are here because we want to learn and I believe that every trader should start with a good psychological foundation before getting too wrapped up in technical or fundemental analysis. In other words, you should know why you are here and what you can expect.
To begin with I would like to recommend that you read about the nature of the retail Forex market, unless of coarse you are able to start with 100K or more of money you can afford to lose. While there are many good threads here at FF on this subject, I would like to recommend an easy read from Wikipedia entitled "Forex Scam". It summarizes the true nature of the retail market very well and quotes some reputable sources as well.
http://en.wikipedia.org/wiki/Forex_scam
Please don't get over alarmed. Instead try to realize that very few new traders will read such articles before trading live accounts and that gives us an edge we can work with. They will fall into many of the traps set by brokers and hopefully we can recognize the traps in time before the lunch crowd falls prey.
So what's my reason for starting this thread? Simple. Writing these thoughts down will reinforce them in my mind and there's always the chance that someone will contribute something to the discussion that I am unaware of.