How to Trade Forex Online

Trading forex (foreign exchange) is highly risky. Due to the leverage available, with very little money down you can have big gains, but also big losses. In addition, there is financial friction, since you are paying fees in the form of the spread. Only highly sophisticated investors should trade forex -- and if you're not sure what you are, then you're probably not highly sophisticated. Whatever you do, don't trade more than you can lose -- because odds are, you will lose everything.

• Research the best ways to invest. Forex is the biggest financial market in the world. It's bigger than the US stock market, because the daily turnover has now exceeded 4 Trillion US dollars. First understand that you, the retail investor are not going to move the market, the banks trade in multimillion's, most retail traders won't be doing so.
• Consult a trusted broker. You need to trade through a broker who will not deal against your trades with human dealers or electronically. Most retail FX brokers take the other side of your trade because they are the market makers. The forex market has gotten big enough and regulations have gotten tight enough that most brokers are playing by the rules. You can search the US Government's website to determine if your potential broker is playing by the rules. Visit www.nfa.futures.org/basicnet/ and enter the name of your broker, you can find out all types of details on their business practices.
• Understand world currency and its fluctuations. Currencies are traded in pairs. Choose a single pair to learn how to trade and stick to it until you get to know the personality of the pair. The most heavily traded pair is the EUR/USD and the pair that many traders like because of high volatility is the GBP/JPY. -> LearnExchangeRates
• Get a charting package which allows you to see the current price as it happens and make technical analysis. Almost every broker will give you free charts like the popular Metatrader 4 software.
• Your next Step is to decide which Forex Trading platform to use. For beginners let me say that by Forex Trading, means foreign currency exchange trading. When I say a platform I mean how your computer screen looks when you will be trading - the current buy and sell prices of the various currency pairs, how the currency pair which you bought or sold is doing (is it gaining or losing), how to keep track of your funds, etc.
• Learn a system which gives you an indication of when to enter and when to exit trades. Following the markets price action is a popular method that professional traders have been using for over a hundred years before charts, candlesticks, indicators inception.
• Start using a demo account and not real money. When you are confident and consistently making good trades, go live. When you go live, trade with money you can afford to lose and learn to manage the emotion of risking and losing or gaining money.

And Finally :  Enroll in a financial education course. You can find free education from most brokers on trading basics and you can find free information on almost any trading style on the internet. Just beware of the source of the information you find. The old saying those who can't do teach is true so find real traders who are really trading. A good place to start is to use social networking apps such as twitter which has become a popular resource where traders share real time trade ideas.

• Open a FOREX trading account. You will usually have the option to trade with free money or real money. Learn to trade with the demo/practice account before you start using real money.
• Don't feel discouraged because you performed poorly with the demo account, it is very difficult to create a realistic situation when you are using demo money. The way you think and analyze will change when you start trading with your real money.
• Learn the basics of Forex trading, keep an eye on OIL, GOLD, STOCK Market prices, these are some of the few factors in currency fluctuation.
• Stick to just one pair. The most commonly traded pair is EUR/USD and USD/JPY. If it's good enough for the banks, it's good enough for you.
• Learn money management! This is the most important thing you can do, learning what amount should be used on a specific trade can save you from losing your bankroll.
• Try to focus on using only about 20% of your total cash. For example, if you decide to invest $1000, try to use only $200 to invest in the currency pair. The prices in Forex are extremely volatile, and you want to make sure you have enough money to cover the down side.
• Please note, trading currency is different from trading stocks. For example, if you bought $1000 worth of stocks and if the stock prices become $0, you will lose your $1000. In Forex, you can lose more than your investment so make sure you use only a portion of your cash to invest and keep about 80% of cash to cover the down side.
• If your currency pair goes against you and you don't have enough money to cover the duration, you will automatically canceled out of your order. Make sure you don't make this mistake.
• Limit your losses, but don't be too conservative, lets say that you invested $200 in EUR/USD, and today, your total losses are $50, if you limit your losses to less than $50, you would have lost money. This is why it is important to use only about 20% of your funds, since you can set the stop loss to more than your investment which can be $200-$300, however much you are willing to risk. Having enough capital to cover the downside will allow you to keep you position open and see profits. Please note: Loses aren't losses unless your position is closed. If your position is still open, your losses will only count if you choose to close the order and take the loses.
• It will only be matter of time until you get your money back and start seeing profit. Be patient and don't get too emotional about what happens to the prices. They are out of your control and the only thing you can do is to research estimate the direction of the market.
• There are softwares to help you analyze the risks and losses which will help your trading experience lot more consistent and profitable.
• Be smart with your money and don't create a casino environment. You can be successful if keep track of the financial news and control your losses.
• Look for useful tools and analytical reports online regarding the economy, etc and use helpful softwares to control your risks.
• Remember that trading with Forex is highly risky, you may lose your hard earned cash, therefore never use money you can't afford to lose.

These are the the biggest and more important tips that you must to know before entering this world! ;=)