Currency Trading Tutorial: Where To Begin

You no doubt know someone who is making a full-time living from currency trading. When these traders talk about what they do, they often make it sound terribly complicated. What follows is a brief currency trading tutorial to make you familiar with the basics.

What exactly does the term 'currency trading' mean? It's all rather simple. A stock trader is someone who buys and sells stocks. A currency trader is someone who buys and sells currencies for a living.

Why would someone choose forex trading as a career? The answer is not difficult: if you know what you are doing, you can make good money from currency trading. Traders very often double their money in a matter of a few hours. Of course they often lose a lot of money in a short time as well.

Where and how can someone become a currency trader? There are numerous websites where you can sign up for a free forex trading account. You will be able to start trading without investing any money by using a demo account.

Does a demo account simulate a real account in every aspect? Normally the answer to this is yes. The only difference will be that you aren't trading with actual money, so you can't lose anything.

When should you buy a currency and when should you sell? If you had the answer to this, you would be making millions on the currency markets every day. The rule is simple: buy when prices are at their lowest and sell when they are at their highest. There are many free software packages on the web which will help you make a decision in this regard. They use technical indicators to trigger buy and sell signals.

What is a technical indicator? This is simply a statistical formula (there are many) that traders use to help them decide when to buy or sell a specific currency. A well-known example is the moving average. Traders often use a price movement above the moving average as a buy signal.

Does one have to be a statistician to use technical indicators? Not really. In fact you need to know fairly little about statistics, since the software packages referred to above will display all these technical indicators in graphical format. So you can see at a glance whether you should be buying or selling.

Is it possible to get free live price quotes? There are a number of currency trading sites which give their customers access to live currency prices. Some of them charge for this privilege and only give delayed prices at no charge. Delayed prices are not updated in real time, but every few minutes, hours or even days.

This brief currency trading tutorial only covers the most important questions. There are numerous free online trading tutorials on the web and you should get familiar with all the terms mentioned above before trying your hand at currency trading.