Investment Strategies For Beginners
- Date: 2008-10-17 - Word Count: 533
Share This!
Beginners are usually very zealous investors, but unfortunately also more often than not uninformed. This is a sad fact, because it is certainly no fun to lose all the money you have borrowed or save for the purpose of growing it.
Although there is much to learn about trading Forex, getting a good grasp on the basics is very important. In fact the key to making money is in the basics and not all the advanced stuff. For a new trader learning what works best is the single most important step to take.
In Forex there are different types of tools that help us traders define and interpret the market data. In this article let's explore the 2 most commonly used tools and their strategies.
First is Fundamental analysis, heavy weights like Warren Buffet and George Soros swear by Fundamental Analysis. Fundamental analysis is news, it is information that will sway the minds of people and cause them to behave in a certain manner. A savvy trader whop knows how to "read the wind" will know from which direction this "wind" is blowing and then trade accordingly. Fundamental Analysis helps define the trend and for all traders trading with the trend is always good as that increases your probability of a successful trade.
For example if the trend is on a downtrend, you should look at your set ups to go short. Since the trend is already falling, there will be more sellers than buyers, if you become a buyer; you basically give your money away to the sellers!
Unless you have a lot of money to spare my honest suggestion is sticking to trend trading regardless of the trading plans you use. A counter trend trade is always risky and frankly I would rather not lose any hair by taking such risk as the returns do not justify the actions.
The second newer tool is Technical Analysis, the fact that there are charts means that you are using technical indicators already! Technical analysis is defined as the study of past price actions to determine future movements. Pure technical analysts believe that history will repeat itself and look to the charts to show this as the case. In a way that is correct, as a trader you deal with people, and people tend to be fairly predictable if charted on a large scale. Individually humans are hard to guess, but when you start taking large groups of people and then track their actions over a long period of time you will see patterns emerge. That is what technical indicators do, they define these patterns and then based on what we know happened in the past, there is a high probability that it will happen in the future.
For example, you use 2 indicators on your candlestick chart, a stochastic slow and 2 EMA lines. When the stochastic hits a oversold position and the 2 EMA lines cross upwards you go long (buy) when it is in reverse you go short (sell)
Regardless of what sort of tools you decide to use, always integrate them with proper money management. For money management is the only way that will allow you to make consistent profits and grow your account steadily.
Although there is much to learn about trading Forex, getting a good grasp on the basics is very important. In fact the key to making money is in the basics and not all the advanced stuff. For a new trader learning what works best is the single most important step to take.
In Forex there are different types of tools that help us traders define and interpret the market data. In this article let's explore the 2 most commonly used tools and their strategies.
First is Fundamental analysis, heavy weights like Warren Buffet and George Soros swear by Fundamental Analysis. Fundamental analysis is news, it is information that will sway the minds of people and cause them to behave in a certain manner. A savvy trader whop knows how to "read the wind" will know from which direction this "wind" is blowing and then trade accordingly. Fundamental Analysis helps define the trend and for all traders trading with the trend is always good as that increases your probability of a successful trade.
For example if the trend is on a downtrend, you should look at your set ups to go short. Since the trend is already falling, there will be more sellers than buyers, if you become a buyer; you basically give your money away to the sellers!
Unless you have a lot of money to spare my honest suggestion is sticking to trend trading regardless of the trading plans you use. A counter trend trade is always risky and frankly I would rather not lose any hair by taking such risk as the returns do not justify the actions.
The second newer tool is Technical Analysis, the fact that there are charts means that you are using technical indicators already! Technical analysis is defined as the study of past price actions to determine future movements. Pure technical analysts believe that history will repeat itself and look to the charts to show this as the case. In a way that is correct, as a trader you deal with people, and people tend to be fairly predictable if charted on a large scale. Individually humans are hard to guess, but when you start taking large groups of people and then track their actions over a long period of time you will see patterns emerge. That is what technical indicators do, they define these patterns and then based on what we know happened in the past, there is a high probability that it will happen in the future.
For example, you use 2 indicators on your candlestick chart, a stochastic slow and 2 EMA lines. When the stochastic hits a oversold position and the 2 EMA lines cross upwards you go long (buy) when it is in reverse you go short (sell)
Regardless of what sort of tools you decide to use, always integrate them with proper money management. For money management is the only way that will allow you to make consistent profits and grow your account steadily.
Related Tags: retirement, currency trading, forex trading, investments, forex, money management, trading plan
Dr. Joshua Geralds is a successful investment specialist with over twenty years experience increasing the income of people world wide. For a limited time get his free Money Management to a Million Dollars e-course here: www.pipsalot.com Your Article Search Directory : Find in Articles
Recent articles in this category:
- Sbi Best Sip Plans 2010
SBI Mutual funds have introduced many mutual schemes. Each scheme has different limitations. SBI SIP - Icici Sip Plans 2010 - Best Sip Plans
ICICI Prudential offers many schemes. These fund schemes have SIP. What is SIP? SIP's expansion is S - Determining Where To Invest Money
There are several kinds of investments, also you will find numerous factors to find out where to inv - Retirement Plans A Necessity Of Life
A person works whole life to give a decent upbringing to his children and families. But while improv - Stock Market Timing Signals
Follow the PlanThis would seem a statement of common sense, but the fact of stock market timing sign - A Selection Of Financial And Investment Strategy Guidelines For Turning A Profit
Yet, we don't often have the money to leave work right at this moment. We need a constant salary to - Find Out The Profitable Way To Invest In Small Cap Stocks
Everyone wants to find a penny stocks list or other investment strategies that can turn your literal - Portfolio #4 - Watergate
IntroductionThe problem is not that the world is running out of water. No, the problem is that drink - Dulton Group: Information Content Of Dividends
Dulton Group helps you to analyze the information content of dividends, an important factor affectin - Coping With Fear In A Markets
The real fact is that all traders, investors as well as stock market investors, who feel afraid, occ
Most viewed articles in this category:
- Investor Stress: A New Approach
George Muzea is both an investor and a stock market advisor. In any given month, he will be paid $10 - Real Estate Investment Financing
1. Location: Your real estate investment's location is arguably the most important component of your - Canadian Oil Sands - Who Are the Major Players
The Canadian oil sands represent one of the most lucrative investment opportunities to oil and gas i - Why Bulk Preconstruction?
Bulk preconstruction is the latest trend in secure, high profit real estate investing. By buying wit - Investing - It Is Not As Scary As You Think
Many people want to have more money - OK everyone does. However, most people don't know how to go a - How Do I Know Which Programs Are Scams?
Although it is virtually impossible to tell if a HYIP is a scam until the moment when they stop payi - Currency Trading Success - 6 Tips to Increase your Profits
If you want to increase your profit potential and achieve currency trading success then the simple t - The Business Cycle
Investors who want to beat the market should be followers of the business cycle. The business cycle - Pros and Cons of Real Estate
Like any other profession, there are good and bad things about what are available. Each of the thin - The Fixer Upper
Real estate investing has become almost a national pastime. Millions are made every year on the buyi