Newbie Trader's Lounge

There are many but breaking down into simple areas it would be the trader himself and the industry/market.

1) The trader competence requires a lot of time, money and effort invested in order to become successful. The learning curve is long and it requires many changes in personal life and habits to overcome shortcomings. Getting down to it, the trader will be his worst enemy in becoming successful.

2) The industry has full of ideas for all participants, marketing schemes to entice the trader to come and make it look easy. Smoke and mirrors promising quick riches without much effort and money. Overcoming this perception and belief requires brainwashing before the road to successful really beings. As for the trading itself, getting to the nitty gritty, the barrier to success is the spread, the commissions, slippage and of course the market action itself. Even if the strategy and method is sound, these will eat profits more quickly than anyone cares to know until year end.

Each speculator will go through periods of finding the indicator that suits his style, be it short term like scalping to daytrading, or longer term such as swing trading (several days) or longer.

Some indicators work well with short timeframes while others better on daily charts and higher.

It must be remembered that combining two different indicators are best. Check out this article to get a better understanding:

How to Combine Indicators to Get Better Results

By using a market timing indicator (such as Stochastics, RSI, etc) with a directional indicator (MACD, DMI, etc) would give a better result.

Remember that two or three indicators should be more than enough. Any more would be overkill and will only cause more confusion and frustration. Just remember KISS (Keep It Simple Stupid), it's the best in the market.

Two areas the speculator must possess: 1) Thorough knowledge of the market, the platform and 2) Mental fortitude and discipline to engage and survive harsh and stressful periods of losses.

Acquiring knowledge of the markets may takes months or years depending on the dedication and time devoted to learning and experience in it. The markets is very complex and understanding technical and fundamental analysis that affect and influence the markets are a must.

Being mentally prepared to take losses and at the same time being aggressive at time when winning is on the speculator's side. Dealing with these two periods require an enormous amount of discipline, even life and habit change is required to succeed.

No. This is the cause of many unscrupulous brokers to devise ways to deceive by falsely advertising their products and services and no intervention had taken place to correct their behavior. They use methods unaware to the account holders to deprive them of any advantage to profit from the system other larger account holders enjoy (i.e. hedge fund, institutions with large capital). This is the risk of speculating in currencies.

However, if careful time and effort is taken in researching and scrutinizing by asking questions to users and brokers alike, you can find honest brokers out there.

There are two concepts essential to trade currencies with success: fundamental and technical analysis.

Fundamental analysis involves all the economic news that affects the state of the economy, either forecasting it stronger or weaker, thus affecting the currency of that particular country. These news include interest rates changes, employment number changes, foreign debt to name a few. Basic understand of how these news affect the chain of events that can affect the direction of the currency.

Technical analysis involves an understanding market timing where to get in and out through chart and indicator readings. This is purely based on price and indicators and no fundamental analysis is used.

Combining these two will give a good preparation to forex speculation.