For most people who may be thinking of entering the Forex trading game some of the terminology can be confusing. In fact there are many who don’t really understand what Forex is about to begin with. In a nutshell, Forex or FX is a term that is used to describe the trading of multiple forms of currency all over the world. Some want to get into FX just because they like the idea of how exciting and exotic it sounds to be trading foreign currencies, but there are many risks and advantages involved.

For starters, the market for foreign exchange is enormous. There are over 100 times more trades than the New York Stock Exchange with nearly two trillion trades every day! In addition to the incredible volume, Forex trading is also almost entirely speculative, which gives it somewhat of a higher risk than some may be accustomed to. Still another large difference is that unlike trading through a central exchange like the NYSE, the trading occurs on the over the counter or OTC market. Trades like these are completed directly between the seller and the buyer via telephone or online. One of the biggest differences in my opinion that can be a positive or a negative is that the trading takes place 24 hours a day in major cities all over the world, unlike the major stock markets which close at specific times each day.

The main trading that drives the Forex market is called currency trading which is a trade where one currency is bought and another sold at the same moment. This act of trading is known as a “cross” in the FX movement. Some of the most traded currencies include the US dollar, the Australian dollar, the British pound sterling, the Japanese yen, and the European Euro, with the US dollar accounting for almost 90 percent of all currency trading. The next most popular currency is the Euro, which is involved in almost 40 percent of all trades and gaining popularity all the time.

The values of the currencies fluctuate daily in reaction to news reports on changes in inflation, interest rates, gross domestic product growth, trade and budget deficits and surpluses, as well as many other economic factors. This is the reason you will see those who are highly involved in Forex trading following the news reports very close and staying on top of breaking news 24 hours a day through the internet and 24 hour cable news channels.

As you can see there are many differences between FX trading and regular stock trading and it is very easy for a novice to lose a lot of money by not being informed. It is best to start out slow and learn the business before investing a large sum of money.

Gregg Hall
http://www.articlesbase.com/finance-articles/how-to-separate-hype-from-reality-in-forex-trading-94848.html

Where do I start?… What seminars should I attend? What accounts should I create for myself? What websites have most day traders found to be esp. useful? I am a newbie requesting legitimate advice pertaining to trading commodities or simply trading in general.
Thank You!

I watch this every day after market closing;

http://www.alphatrends.net/

Learning to trade (day or swing trading) can take on average 3-5 years. Reading a new trading book every month (for your entire career) is done by many of us.

Pick up a basic intro to technical analysis like;
Technical Analysis for Dummies

Move on to trading books like;
Mastering The trade, John Carter
Trading in The Zone, Mark Douglas
Technical Analysis Using Multiple Time Frames, Brian Shannon

See the book list (Essential Reading);

http://tradermike.net/

My favorite broker. Great charting. Great tools. Great Webinars;

http://www.thinkorswim.com/

https://www.thinkorswim.com/tos/displayPage.tos?webpage=onlineSeminar

Forex, Futurers, Options and Commodities are not the best place to start to learn trading. Stocks are the better place to start your quest.

If I want to become an investor as defined in the cashflow quadrant by Robert Kiyosaki, then I will need to learn from professional investors. Thus, I had signed up for a few seminars to learn. After attending a few seminars on option trading, stock trading and future trading, I realized that professional traders always have a trading system. And they always follow their trading systems. On top of that, I have learned that as a beginner, I should start off with paper trading.

What is the obvious difference between paper trading and live trading?

In paper trading, no money is involved. Transaction is done based on imaginary money. This means that I can afford to make mistakes in my trading practice using the trading system since no money is involved.

Some brokerage companies do provide an account that allows both paper trading and live trading. The advantage of such account is that it allows a realistic simulation of the live stock market. The share prices of all stocks are real but the transactions are false.

For example, I can setup my account with an imaginary amount of $10,000. Then, I will practice on how to filter and select the appropriate stock to invest based on the trading system. Next, I will decide at what price to buy the stock. Let say I intend to invest in a stock that is currently trading at $13 in the stock market. I will need to key in the buy order and wait for the share price to hit $12. If the share price hit $12, then my account will record that I have ‘bought’ the share.

Next I have to decide when to sell my shares based on the trading system. Let say I decide to sell at $15. I will key in my sell order and wait for the stock to really reach the price $15 in the live stock market before my sell order is considered to be successful.

After a period of practice, I will be able to learn from my mistakes and improve on my trading skills. Learning from mistakes is the key to success based on my understanding of the Rich Dad’s series by Robert Kiyosaki. After 3 to 6 months of practice, I will be able to make consistent profits. Then it is time for me to enter the real market.

This brings me the second main difference between paper trading and live trading, which is emotions. When I trade with real money, there is fear of losing money if the share price goes down. As a result, I will be reluctant to sell my shares if I am losing money. I may keep on holding to the shares even though the trading system tells me to sell. The share price may goes down further. In the end, I will end up losing more money.

When the share price goes up, greed will arise in me. Thus, I will end up not selling even though the trading system tells me to do so. The share price may reverse and goes down. Instead of making money, I will end up losing money. Poor management of emotions is the key to fail at stock investment.

The third main difference between papers trading and live trading is the risk of addiction. I realize that when I am trading real money in the live market, I always want to keep track of the share price. After keying the buy order, I will have the desire to keep checking every other minute whether I have successful bought the shares. If my buy order is successful executed, I will have the desire to keep checking whether the share price have gone up. If the share price goes up, I will feel excited and happy. If the share price goes down, I will feel depressed and sad. This is like an alcoholic addict who drinks to feel high. However, the next day, he will get hang over.

The next difference between papers trading and live trading is that it allow me to gain real experience. Real life experience is the critical component of success as learned from the Rich Dad’s series. I can learn all the theories about investment. I may even ‘paper trade’ investment. But if I do take actions to do the real things, I will never master the investment skills.

My purpose to share about paper trading and live trading is mainly to highlight that proper management of emotions is the key to success. If I can manage my fear and greed in investment, I will be in a better shape to win at investment. This is because I will be able to think better in a calm state.

* DISCLAIMER *
The author only provides the material and information as a layperson’s views about an important subject. The materials and information are from sources believed to be reliable and from his own personal experience, but he neither implies nor intends any guarantee of accuracy.

All the materials, information and procedure in this book are only the author’s personal opinion. You must consult your own professional advisor and other reputable sources on any matter that concerns you or others.

The author, publishers and distributors are not competent and do not profess to give legal, accounting, medical or any other type of professional advice. The reader must always seek those services from competent professionals who can review your own particular circumstances.

The author, publisher and distributors particularly disclaim any liability, loss, or risk taken by individuals who directly or indirectly act on the information contained herein. All readers must accept full responsibility for their use of this material.

Max Ng
http://www.articlesbase.com/finance-articles/difference-between-paper-trading-and-live-trading-104004.html