Basic of Forex Trading: Introduction

Trading is an active design of participating in the financial markets, which seeks to outperform traditional buy-and-hold investing. Rather than waiting to make money from long-term uptrends in the markets, traders seek short-term price moves in order to profit during both rising and falling markets. As a trader, you may be your own boss, work at home, set your own schedule and have the opportunity to reach unlimited income potential. These factors, combined with the ease with which someone can enter the field, help make trading attractive. 

While it's not too difficult to begin trading - in the end, you do not need any advanced degrees or specialized training - it's extremely tough to become good at it and to become successful. It's not uncommon for anyone who wants to trade for a living to overlook the financial, emotional and time commitments which can be required to create a fruitful trading business. Consequently, about 90% of day traders fail within the initial year. Having a proper approach, both in terms of your current business and your actual trading activity, is an important element of becoming a profitable trader. 

In the initial element of our beginner trading series, How To Start Trading, we emphasized the necessity to approach trading as a business and much less a hobby. Additionally, we explored: 

• Trading styles - position, swing, day and scalp trading 
• Trading technology - computers, trading software, market analysis, testing and order execution 
• Order types - market, limit, stop, stop loss, conditional and duration 
• Trading plan development - market, chart interval, indicators, position sizing, entry rules, trade filters and exit rules 
• Testing your trading plan - backtesting, in-sample and out-of-sample testing, and forward performance testing 
• Live trading performance - trader errors, fills, technical problems and unique trading conditions 

Here, in the 2nd element of our beginner trading series, we introduce additional concepts that are very important to traders, including: 

• Charting 
• Leverage and margin 
• Popular trading instruments 
• Risk Strategy automation
• Record keeping and taxes