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Are you thinking of trading on the Forex money market? If you are new to trading it makes sense to deal in the more popular currencies. There are two main reasons for this. Firstly you do not want to be left with a currency where there is little interest and you may have difficulty selling. Secondly the spread between the bid/ask price is likely to be narrower, making it easier to make a profit.
There are seven major currencies, the US dollar (USD), Euro (EUR), Japanese yen (JPY) British pound (GBP), Swiss Franc (CHF) Canadian dollar (CAD) and Australian dollar (AUD).

The US dollar is the most traded currency followed by the Euro and the Yen. The Euro is the relatively new currency of the European Union although some member states, including the UK, have not changed their currency.

Obviously if you are buying a currency you must also be selling(using) another and therefore prices are always quoted in pairs, the USD/EUR being the most active. The more active a pair the narrower the difference between the bid/ask price is likely to be, with a possible spread of just two pips for the most actively traded. A pip is the smallest unit of price for a currency. Most currencies are traded to four decimal points after the first digit, so that a pip is 0.0001 or 1/100 of a cent. This may seem a minuscule amount until you realise that on a trade of $100,000 that is $10. As each trade involves both selling one currency and buying another, the difference in the spread is the cost of the transaction. If there is a 2 pip spread you must make that profit to break even. The exception to the four decimal points is the Japanese yen which is normally traded to two decimal points.

If you live in a country using one of the major currencies, when you first start trading it makes sense to begin with that currency. Not only are you familiar and comfortable with the currency, but you are in a better position to judge its strength. The internet has a wealth of information on the financial climate of a country, but if you live there you have access to all newspaper content, as well being in the unique position of experiencing first hand changes at the consumer level.

Trading on the Forex market is a high risk investment not suited to everyone. You can lose money as well as make a profit. Never risk more than you can afford to lose.

This article is for information only, any action you may take on the Forex money market is your sole responsibility and the author accepts no liability.

Margaret Tye runs the Forex Trading Articles website.
You are welcome to use this article as long as the author is acknowledged and a link to http://www.forex-trading-articles.com included.

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As hundreds and thousands of articles have been written on the subject of trading the markets, and with the emergence of new financial instruments every day, I feel compelled to put together a dissertation on the most important element of trading, the emotional effect.

Before detailing the key elements, I will offer to you the thoughts of two prominent individuals. They do not need any introduction, as their work is known and appreciated all over the world. I am sure you will love their insight into the human psyche.

“When dealing with people, remember you are not dealing with creatures of logic but creatures of emotion“. Dale Carnegie (1888-1955)

“Let’s not forget that the little emotions are the great captains of our lives and we obey them without realizing it“. Vincent Van Gogh (1853-1890)

In a world apparently dominated by logic, it is very interesting to find such “heretic” ideas. There is nothing more debilitating than the thought of us acting not on our heavily trained conscious, but rather on the unknown subconscious impulses.

I would like to add just one more fact to my presentation, in order for you to fully grasp the importance of this new approach to trading and in general to any business activity.

The Institute for Health and Human Potential, with offices in U.S.A., Canada and Australia is a research and learning organization that uses Emotional Intelligence to leverage performance and leadership. Fortune 500 companies, the world’s top business schools, professional athletes and Olympic medallists seek their expertise.

According to their studies, “Research tracking over 160 high performing individuals in a variety of industries and job levels revealed that emotional quotient was two times more important in contributing to excellence than intellect and expertise alone” Shocking? Not at all. It is our way to act on impulse, without questioning the triggers.

It is well known already that the two emotions dominating trading are GREED and FEAR. What is less grasped is the extent to which these emotions influence our decisions.

While amateur traders are greedy when they lose and fearful when they win, professional operators have an exactly opposite attitude, being fearful when losing and greedy when winning.

While simple psychological training could help you discipline your impulse reactions, it is the experience you get “in the ring” that makes you understand how to play with these primal emotions.

We all hate to lose, not necessarily money. The sentiment is very powerful. ALL professional operators are well versed in dealing with it day in and day out. Although they have been through tense moments due to financial losses, they have learned the most important rule in trading the markets: losses are the COST OF DOING BUSINESS.

They have a high emotional management procedure and are trained to implement it no matter how hard their “ego” may suffer.

This is easier said than done, as emotions kick in and all theory crash and burn together with any trading plan.

Here you have some easy steps to help you start taming your emotional horses.

- What you see is NOT what you get, as opposed to what you have been taught all your life. The way you act is just a consequence of years and years of education and interaction with others and not your genuine attitude. You are the product of an outside education, not necessarily positive.

- In the long run, your FOREX business is just PART of your whole life, together with your family, friends, hobbies, long-term projects and various other activities. I personally use a very powerful “mantra” when in pain following a loss. LIVE TO FIGHT ANOTHER DAY! - Never lose sight of the general picture. That is your primary goal. For a professional FOREX operator, the primary goal is the PROTECTION of his or her trading capital. Keep a trading journal and learn from your mistakes.

- If you want to get a pretty accurate picture of your trading prospects, take a look at your daily emotional decisions. Most of the time, you will repeat all emotional behavior in your professional life.

If you take your time to sit back and observe your daily routines, the picture will emerge with greater clarity, helping you foresee hurdles along your trading career. Do you have a swinging mood? Do you change your mind very often? Are you capable of keeping a commitment? Do you lose your temper easily? Are you on the “half-full glass” or “half-empty glass” side of life?

These traits will not change just because you start trading. That is why you have to be very careful with your expectations. Base them both on your assets as well as liabilities, in order to obtain an accurate picture.

That is just the beginning, but a very resourceful one on a journey few of us have started yet.

I have seen traders taking NLP (Neuro-Linguistic Programming) lessons, practicing the Tai-Chi art or simply meditating. They try to get in touch with unseen forces at work deep inside, vectors of influence that rule our inner world.

The way to succeed in life has infinite variations but one common start, superbly crystallized in the following aphorism, inscribed in golden letters at the entrance to the Temple Of Apollo at Delphi and attributed to Socrates, among several other ancient Greek philosophers: NOSCE TE IPSUM,(Know yourself).

The magic of success is within our grasp. We just need to find the wand!

Bogdan VASILE

For in-depth FOREX trading education and analysis, visit www.forex-arena.com.