Layman's guide to getting started with Forex (foreign exchange trading)?

Question

How should I get started with Forex (foreign exchange trading)? How should I prepare myself for it? Please give your answer thinking of me as a layman.

Answer 1

Unless you have a lot of money to get rid of you should spend at least a year trading with a dummy account.

It takes a long time to work out what is gong on and your training will get very expensive if you start using real money.

Don't start trading with real money until you :

1. Have a strategy. Never trade on a whim. Only trade if your strategy says it is time to trade.

2. Are able to stick to that strategy. It is amazing how easy it is to stray from your strategy just because you feel it is right or you have to try to make up some losses. You will lose money doing this.

3. You are making significant profits for at least 6 months using 1. and 2. with your dummy account.

Even after all this, you will probably still lose money. Make sure you only trade with money you can afford to lose. ie. Never trade with this months rent money.

Answer 2

Currency Trading For Dummies, no offense. The "For Dummies" series is well known for its expertise in every field one can imagine.

That said, what prompts you to want to get into this? The average person is very likely to lose money as the long time experts walk away winners. Do you have an urge to trade commodity futures? I sure don't.

While I offer the book as a guide, the real answer is "you shouldn't."

Answer 3

There are various indexes on the stock market that track the currencies. Though it is different than Forex (probably less leverage), you may be able to get the effects you're looking for. I don't have a lot of knowledge in this area, but looked some into FXE, to trade the Euro debt crisis. Here's an article on Forex, putting FXE down (obviously a biased view, but perhaps will give you a starting point for comparison, should you want to trade something specific, like the current euro/dollar situation).