Foundation 1 says you should always have a good understanding of what you're doing, what products you're trading in, and how the financial instruments really work
In their most basic form all markets are the same. There is always a bid-offer spread and the trader or investor is given the choice of whether to buy or sell on those prices. If you buy on the offer and the price goes up you'll make money and vice-versa. It's as simple as that, whether you're trading Vodafone shares, IBM, Gold, Corn or peanuts.
However every market has certain characteristics and it's therefore a wise move to do your research beforehand. The best research normally entails practical research of just trading them, getting a feel for how the market moves and trades as well as which contracts to buy or sell. For example, with foreign exchange spread bets should you trade the Rolling bets, daily markets, weeklies or monthlies? Also how does the financing work, is one market cheaper to trade than the other etc?
So as we've argued for a long time on the LearnMoney site the best way of learning about anything is doing combined with reading and studying from others already active in those markets. The message boards www.trade2win.com and www.elitetrader.com alongside some of the specialist FX message boards should help you a lot.
But risking very small amounts of money is the key. If you've got £10,000 to allocate to a market then open an account with just a few hundred pounds. Learn the ropes, perhaps even lose some small money (view it as tuition costs) and when you're comfortable with what you're doing and how things work bring out the main part of your capital.
And this is the main point from foundation 1. So much money is lost in the markets by new traders jumping in at the deep end, not really knowing what they're doing.
