Demo Account Setup

The 5th lesson is finally here! I will show you how to get started trading the Forex
100% risk free. After this lesson you will start to experiment with Forex trading.
You will not be a master trader the first day. It is important that you persist in your
efforts. You have to keep trying until you succeed. There are a few things that I
want to explain that you should know before attempting to set up your demo
account.

I want to explain a little more about the currency pairs. Currencies are always
traded in pairs in the Forex. The pairs have a unique notation that expresses what
currencies are being traded. The symbol for a currency pair will always be in the
form ABC/DEF. ABC/DEF is not a real currency pair, it is an example of a symbol
for currency pairs. In this example ABC is the symbol for one countries currency
and DEF is the symbol for another countries currency.
Here are some of the common symbols used in the Forex:

USD - The US Dollar
EUR - The currency of the European Union "EURO"
GBP - The British Pound
JPN – The Japanese Yen
CHF - The Swiss Franc
AUD – The Australian Dollar
CAD - The Canadian Dollar

There are symbols for other currencies as well, but these are the most commonly
traded ones. A currency can never be traded by itself. So you can not ever trade a
EUR by itself. You always need to compare one currency with another currency to
make a trade possible. Some of the common pairs are the EUR/USD, GBP/USD,
EUR/AUD, USD/CAD, etc...

The currency pair looks like a fraction. The numerator (top of the fraction) is called
the base currency. The denominator (bottom of the fraction) is called the counter
currency. When you place an order to buy the EUR/USD, you are actually buying
the EUR and selling the USD. If you were to sell the pair, you would be selling the
EUR and buying the USD. So if you buy or sell a currency PAIR, you are
buying/selling the base currency. You are always doing the opposite of what you
did with to base currency with the counter currency.

If this seems confusing then you're in luck. You can always get by with just
thinking of the entire pair as one item. Then you are just buying or selling that one
item. Thinking like this will still enable you to place trades. You only need to be
aware of the base/counter concept for fundamental analysis issues. S o why is it important to know about the base/counter currency now?
The base/counter currency concept illustrates what is actually taking place in a Forex
transaction. I mentioned before that short-selling was restricted in the stock
market. Short-selling is where you sell a stock/currency/option/commodity first
and then try to buy it back at a lower price later. But in the Forex, you are always
buying one currency (base) and selling another (counter). If you sell the pair you
are simply flipping which one you buy and which one you sell. The transaction is
essentially the same.
This allows you to short-sell with no restrictions!

You want to be able to short-sell with no restrictions so you can make money
when the market drops as well as when it rises. The problem with traditional stock
market trading is that the market has to go up for you to make money. With Forex
trading you can make money in all directions.

Another important concept for Forex trading is the leverage. Leverage is when
you can use a little money to control a lot of money. The Forex market is probably
the highest leverage market in the world. There are different types of leverage
available in Forex trading. The highest leverage possible is 200:1. This means
that if you put up $1 margin, the trading provider will allow you to trade with $200.
So if the price of the currency pair goes up 1%, you make 200*1%=200%!

The margin for Forex trading is a good faith promise to the trading provider. Other
money in your trading account also insures your transaction. You only need to
know that the margin is the amount of money you need to place a trade.

Another important piece of lingo is the term "pips". Since we have the EUR/USD,
EUR/AUD, etc..., we need a way to talk about the number or price. When you see
a Forex currency pair price quote, the last digit of the price is commonly referred
to as a pip. So if you see a price quote of 1.6118 and then a price quote one
minute later of 1.6119, the price rose 1 pip. Similarly, if we see a price quote of
187.50 and then another one 5 minutes later of 187.58, the price rose 8 pips. The
pip is always the last decimal place of the currency price quote.

These lessons literally could go on for several years and you still would not know
everything. At this point, you are ready to start demo trading. Once you begin to
place demo trades, you will learn a lot about how Forex transactions are placed.
This is an important step for you to be able to learn how to become a trader.
Important Note: Just fooling around in a demo account can be a great learning
experience. You will not learn how to become a trader this way. You need to have
a trading strategy, like the ones at trend strategy store.

Here's how to get started with your own demo account.
Go to http://fxcm.com/mini-demo-registration.html

There you can sign up for a free mini-demo account. A mini account is just like a
real demo account, except the trade sizes are smaller. In a real account the smallest trade size is $100,000; in a mini account the smallest trade size is
$10,000 (this can be done with a $50 margin, the power of leverage!).

There are several other places online to sign up for a free demo account. I use
fxcm, because they have the best overall reputation online. Fxcm has built itself to
the premier Forex trading platform. I don't get paid anything to endorse them, but
they are currently the best.

Once you sign up for your mini-demo account, you will need to try out one of the
trial charting packages. Any of these will do because they all have the SMA. You
can then set up your demo account and use the SMA crossover method from
lesson #3. This is a good way to get used to how orders are placed. Once you
have a real trading system, you will already know how to place orders properly.

Everyone makes mistakes placing orders. You need to experiment in a demo
account to make your mistakes without losing money.
At this point you have to make a decision about how fast you would like to learn
how to become a trader. The truth is that the longer you wait to get in on this
market, the more potential money you are missing out on. You need to decide
what time frame is right for you to begin trading.

You need to decide if:
1. You want to place real trades within the next 3 months (or sooner, depending
on your desire)
2. You want to build your knowledge for several months before placing real
trades.
The choice is entirely yours. No-one else can make that decision for you. You
need to make a plan and stick to it. It is important not to put off your success.
Success requires action.

If you want to place real trades within the next 3 months, you should check out
4xtrend. There are some great resources at extremely affordable prices that can
get you trading in a very short amount of time.

At this point, I would like to congratulate you on completing the Insider Secrets of
Online Currency Trading course! You have already showed a level of
perseverance that most people lack.

I would also like your input on any aspect of Insider Secrets of Online Currency
Trading. I am interested in any parts you found helpful, insightful, confusing,
etc... Any feedback about this course would be extremely helpful for all of the
readers. This is largely a collective effort; by contributing you benefit yourself and
others. Simply post your questions to comments

Here is a recap of what you should be doing right now to pursue your Forex trading goals:
1. Setup a free demo account by going to:
http://fxcm.com/mini-demo-registration.html
2. Decide your time frame on when you want to enter the market. If you want to
get there as quick as your heart's desire, go to www.4xtrend.com. If you want to
take your time, sign up for the Forex system course.
3. Be persistent and never give up!