This post is for those of you that are getting involved in online currency trading for the first time. Even a well designed trading strategy can go bad if you aren't careful. So please read the following.

In this introduction to the forex market I will try to explain exactly what Forex is and how it works. And since you are just starting out in FX online trading I have some useful tips for the beginner. They should help you to keep your mistakes to a minimum and your profits high.

To start with, for all of you novices, the word "Forex" (which you have probably heard a million times) is simply an abbreviated term that is short for Foreign Exchange. The Forex market that you will be trading in is an international currency exchange market. In this market currencies from different countries are pitted against one another. In other words, if you believe the Dollar is going to be strong and the Euro is going to be weak you would short the Euro (using US Dollars). This would be only one of many ways to make a profit from this currency price move. When this market first started trading in the 1970's, the traders in the foreign currency market were actually the ones that drove the relative value of global currencies with respect to each other. Normally these values were determined by conventional supply and demand, but there were rare instances where the prices were affected by manipulation (some person or group trying to drive the price of a currency down by dumping vast holdings into the market). With trades capable of one and a half trillion Dollars the Forex market is the world's largest financial market, and it is a fast moving market (you don't have to wait to find a buyer, even for large volume trades).

1. To start with you will need to open an Online Currency Trading account. Any reputable broker will do and they are easy to find (just search Google keywords : forex broker). When you have found one and filled out the application, you will enter into a margin agreement. This will determine how much risk the broker is willing to take before closing a trading position. Then all you need to do is fund your account and you are set to trade.

2. One thing that I recommend for beginners (and even experienced traders) is to have a demo account along with the regular account. Demo accounts are great for learning to trade (since you are not using real money) and to experiment with different strategies. This way you won't have to learn your lessons "the hard way".

3. You need to find a trading strategy that works with your style if you want to become a successful trader. Every trader has to develop an approach that is their own, since there isn't a single strategy that will work with all traders. You can trade using fundamentals or pur technical analysis or eventually some technique that ses both. This is the value of the practice (demo) account mentioned earlier.

4. One huge mistake that the novice trader makes is to make multidirectional trades rather than folling the market trend. In other words, prices move in trends and learning how to recognize these trends is one of the first things that a trader needs to learn. The importance of these trends cannot be over stated since they need to be understood before any strategy will make sense. There are many FX online trading courses on the market that can teach this along with many other trading techniques.

5. Although you can trade at 30 and 15 minute time intervals (when you have become experienced), you should make sure to watch the daily, 4 hour and 1 hour charts for the currency pairs that you are dealing with.

6. When starting out you should trade the major currency pairs : Euro/USD, USD/Yen, Eruo/Yen, Pound/USD and Swiss Franc/USD. It is a lot safer since there are fewer surprises.

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