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Forex Trading - An Excellent Trading Education

Back in the day, those starting out trading in the Futures and Commodities markets had to make a choice; either we start off trading regular sized futures and commodity contracts, or look to trade the Mid-American exchanges and their pint size contracts.

When starting out in trading, risk of loss looms large. Most traders start out with accounts that cannot take too many losses before getting pushed out the door. Yet, most will continue to trade the regular size contracts because those markets offer much greater liquidity than their smaller cousins. Liquidity is very important, as it allows for greater assurance that if your price is hit, that is the price that you will be able to enter or exit. A market lacking liquidity often has the worse fills called "slippage". And of course, more liquidity means more traders means more price action, etc.

Today, more people have access to the ultra-large and liquid Forex markets than ever before. What used to be the exclusive club for large banks and monetary institutions is now assessible to anyone, anywhere. All you need is an account and internet access.

But accessing these markets is more than just having more choices for currency trading, which is what the Forex markets are (short for Foreign-Exhange). The Forex markets offers trading 24 hours a day from Sunday afternoon to Friday afternoon (as viewed from the US). And what is truly an opportunity for new traders today is an opportunity to trade contract sizes that is just a 10th of the full size contract.

For years traders have been taught to start off paper trading before using real money. While this helps with the mechanics of trading, it does little in the way of preparing the trader for the real difficult task associated with trading; the psychology of trading with real money.

 


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Trading successfully requires being indifferent to how the market behaves. The trader must learn to accept whatever the market dishes out and not take it personally when losses occur. Also, the trader must learn to avoid any feelings of invincibility in the event he hits a few winners early on. Fear and greed is usually found at the center of all unsuccessful traders that eventually are forced out due to heavy losses to capital or emotions.

Traders still working towards trading with any consistency, confidence and poise can find great benefit in opening a forex account and selecting what some forex houses call their "mini" account. With the mini-account, the trader has a choice as to whether to trade the full contract size (100,000) or some multiple of 10,000. Having this flexibility allows the new trader to trade with real money while being able to survive many losses without the devasting results that would have come from trading the full size values.

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