Kathleen Brooks

Foreign exchange (or forex) markets are one of the fastest and most volatile financial markets to trade. Money can be made or lost in a matter of seconds; at the same time, currencies can display significant trends lasting several days, weeks, even years. Most importantly, forex markets are always moving, providing an accessible and target-rich trading environment.

Most online forex brokers function as the market-maker for your trading, meaning that the broker is on the other side of every trade — when you buy, you’re buying from the broker; when you sell, you’re selling to the broker. Brokerage firms that are market-makers typically provide both consistent liquidity and execution, which allows you to trade your desired amount at all times.

Forex markets function alongside other major financial markets, such as stocks, bonds, and commodities. Although these financial markets have seen higher long-term correlations with forex in recent years, short-term correlations are far less reliable. But there are still important fundamental and psychological relationships between other markets and currencies, especially the U.

News trading (buying and selling around high-impact economic data) is notoriously difficult, to the point that many traders intentionally close all their trades ahead of major news reports like nonfarm payrolls (NFP) or central bank meetings. To be successful with this style of trading, you need to have a predetermined, disciplined structure — you don’t want to haphazardly place emotional trades.

These "beginner" trading mistakes are made by everyone — from total newcomers to grizzled forex market veterans. No matter how long you've been trading, you're bound to experience lapses in trading discipline, whether they're brought on by unusual market developments or emotional extremes. The key is to develop an intuitive understanding of the major pitfalls of trading, so that you can recognize early on if you're letting your discipline slip.

There are thousands of forex strategies, but you need to choose the one that works best for you. At FOREX.com, traders are grouped based on personality types and developed specific strategies for each. They've identified three trader types: The scalper: A scalper is a trader who looks for short, minimally profitable opportunities in the market that can add up over time.

Online currency trading is offered by dozens of different retail trading brokerage firms operating from all over the world, so you have many options to choose from. Here are some key questions to ask when you’re choosing a broker: How good are trading executions? The key to evaluating any brokers is the speed and reliability of your trade executions.

Knowing the fundamental drivers of currency rates is the foundation of understanding price movements. This is very important to understand if you want to trade currency as an investment. Here are some suggestions: Get to know the major economic data reports from all the major economies. Understand the importance of expectations versus actual outcomes.