The Start of Your FX Trading Education | ForexGen

There is much to be learned for those wishing to trade in the FX market. A good place to start your foreign exchange trading education is with the concepts of support and resistance.The concepts of support and resistance are truly two of the most highly discussed facets of technical analysis and are quite often regarded as complex by beginning traders.

Now when you look at this support line connecting the low price points, you can see how it tends to act as a floor, preventing prices from going below that level. Rather than break through this line, prices are more likely to bounce off the support level. But when the price finally does manage to break through the support level, it is likely to continue dropping until it reaches another support level.

One can view the resistance level as being the opposite of a support level. At this level, the price tends to find resistance as it climbs higher. And just as with support, price tends to bounce off this level rather than break through it. But once price manages to break through the resistance level, even by the smallest of amounts, it will more than likely continue rising until it finds another resistance level

Let’s now look at some of the other risks in FX trading

When trading foreign exchange it’s important to realize that no matter how sure you are the market will move in the way you expect, anything can happen, at any moment in time. A good example of this was when the US Government made it common knowledge that they were going to bail out Fannie Mai and Freddie Mac, the dollar appreciated considerably. If you had an intra short on the dollar, you would not have been best pleased.

One option is to use stop losses to make sure you are always prepared for unforeseen events that could potentially move the market in a big way.Another important thing we can do is to practice our strategies and systems thoroughly on a demo account before trading them on a live account.In conclusion, no matter how you look at the forex risk factors, they are there and they are considerable. To be a successful trader, it important to fully understand and do everything possible to keep risk to a minimum at all times

ForexGen strives to give incomparable professional and individualized trading services.As a professional online trading service, ForexGen provides several facilities for all kinds of traders

FX Risk Factors | ForexGen

One of the first things most traders hear when they begin their foreign journey is the fact that forex trading is risky. Many new traders choose to pay little attention to all the risk warnings and continue. I was personally the same at the beginning because I so eager to get started!It is very important to fully understand the forex risk factors as to be a successful FX trader, you need to know how best to minimize them

Perhaps the single biggest risk factor in FX trading is the use of too much leverage! I have spoken to many traders who start trading with as little as $100 on a mini forex account. I always encourage these traders not to do it and to learn more about proper risk management. $100 with a mini account will almost always have just one single outcome, a margin call.Let’s look at why this is. If you have 100:1 leverage from your broker to open a GBP/USD position for 1 minilot is going to cost $10 in margin. This would leave $90 for trading. With a 1 mini lot GBP/USD position each pip is worth $1. This would mean that only a 90 pip movement in the wrong direction would mean result in a margin call.