Is There A Trick To Forex Trading?
- Date: 2010-09-30 - Word Count: 516
Share This!
Anyone claiming to have a sure fire trading strategy for the Forex is either lying or truly a genius because none exists-period. The Foreign Exchange market, or Forex, is the single largest market in the world. Actually, the Forex has no centralized market location but instead exists as an informal trading network where banks, governments, and retail investors can all come together and exchange currencies. Retail investors trade on the Forex via a software platform typically supplied by their broker. Nearly 2 trillion dollars are exchanged every day (the Forex is open 24 hours per day in between Sunday and Friday) giving investors ample opportunities to profit from the volatility and liquidity of the Forex.
But in truth, while the Forex offers a very simple and attainable path to sustainable investment income-it is extremely volatile for the retail investor. The standard transaction size on the Forex is $100,000 and would be very prohibitive to the majority of investors were it not for leveraging. The typical margin on a Forex trade is 1%, or $1,000. Highly leveraged positions definitely give investors more access to potentially profitable opportunities-but they also are very susceptible to losses. That is why Forex investors need a solid investment strategy to find the best currency pairs and entry/exit points.
Unfortunately, there just is no sure fire system but that is no reason to come to the market unprepared. Dow Theory states that long-term, identifiable trends exist with respect to price movements. These trends can be identified using technical analysis. There are a number of Forex investment strategies that involve the use of technical indicators to identify and capitalize upon these pricing trends. Once you find the best strategy for your particular investing style, here are a few tips to help improve your odds of success on the Forex currency market:
1. Never move your stops-these are in place to prevent losing more than you are comfortable with and investors typically move them when emotions are guiding their decisions.
2. Trust your charts-charts are everything to a technical trader and you must trust your investment strategy and interpretation of the charts in order to succeed. Don't allow short-term price fluctuations distract you from the bigger trend-because that is where the profits lie!
3. Back testing is critical! You back test an investment strategy by creating a hypothetical investment portfolio performance history of a currency pair you are interested in. Then, apply your current asset criteria to the hypothetical portfolio and see how accurately your strategy predicts movement. You want to find a strategy with a 70% success rate or higher in order to be profitable on the Forex.
4. Never over trade! Short-term investors lose their money to the long-term investors. You can make more profit with 5-6 great trades than by using some scalping strategy which is very vulnerable to loss due to the highly leveraged positions common to the Forex.
While there is no sure fire system for trading on the Forex, these simple steps will greatly improve your odds of success and help you develop a reliable strategy that will consistently produce profits-even when it does miss occasionally!
But in truth, while the Forex offers a very simple and attainable path to sustainable investment income-it is extremely volatile for the retail investor. The standard transaction size on the Forex is $100,000 and would be very prohibitive to the majority of investors were it not for leveraging. The typical margin on a Forex trade is 1%, or $1,000. Highly leveraged positions definitely give investors more access to potentially profitable opportunities-but they also are very susceptible to losses. That is why Forex investors need a solid investment strategy to find the best currency pairs and entry/exit points.
Unfortunately, there just is no sure fire system but that is no reason to come to the market unprepared. Dow Theory states that long-term, identifiable trends exist with respect to price movements. These trends can be identified using technical analysis. There are a number of Forex investment strategies that involve the use of technical indicators to identify and capitalize upon these pricing trends. Once you find the best strategy for your particular investing style, here are a few tips to help improve your odds of success on the Forex currency market:
1. Never move your stops-these are in place to prevent losing more than you are comfortable with and investors typically move them when emotions are guiding their decisions.
2. Trust your charts-charts are everything to a technical trader and you must trust your investment strategy and interpretation of the charts in order to succeed. Don't allow short-term price fluctuations distract you from the bigger trend-because that is where the profits lie!
3. Back testing is critical! You back test an investment strategy by creating a hypothetical investment portfolio performance history of a currency pair you are interested in. Then, apply your current asset criteria to the hypothetical portfolio and see how accurately your strategy predicts movement. You want to find a strategy with a 70% success rate or higher in order to be profitable on the Forex.
4. Never over trade! Short-term investors lose their money to the long-term investors. You can make more profit with 5-6 great trades than by using some scalping strategy which is very vulnerable to loss due to the highly leveraged positions common to the Forex.
While there is no sure fire system for trading on the Forex, these simple steps will greatly improve your odds of success and help you develop a reliable strategy that will consistently produce profits-even when it does miss occasionally!
Related Tags: money, finance, loan, mortgage, stocks, self help, business, investments, savings, bills, checking
Your Article Search Directory : Find in Articles
Recent articles in this category:
- The No. 1 Rule For Projecting Confidence - Speak With Authority
One of the most important characteristics a person can project in a business setting - or any situat - After the Autumn Checkout European Debt Crisis and U.S. Brewing Rebound
In the commotion caused by the Fed on interest rates come to an end, the "disastrous" for the euro a - Advantages Of Arcade Game Rentals
There are many different advantages to arcade game rentals. Most people need something to release th - A General Primer on Truck Cargo Nets
In modern highways it is quite rare to see truck cargo nets in action, this is because they are usua - The United States Will Burst More Severe Financial Crisis
Not long ago, suddenly announced that the central bank to raise interest rates, the interest rate hi - Niche Marketing Profits - 3 Easy Steps to Finding a Profitable Niche Market Income in 10 Minutes
Like most beginners I was having a very difficult time trying to find a niche market to earn extra m - The Importance of Hospitality Management Consulting Firms Toronto
Businesses and the managers that help guide any business are in a constant state of improvement and - New Keynesian Theory Label
2010 winner of the Nobel Prize in Economics three theories have been labeled as "New Keynesian" labe - Federal Reserve Pouring Money QE2 Unpredictable Fortune
U.S. economist Milton Friedman proposed a "throw the cash from a helicopter" view, while the practic - Fiscal Consolidation Should no Longer Delay
British Chancellor of the Exchequer George Osborne today announced fiscal consolidation policy, shoc
Most viewed articles in this category:
- Common Financial Problems to Avoid
One must first change their habits and not procrastinate. American Consultants Inc at offers key fi - How a Bad Hire Can Hurt Your Business
What's worse - hiring the wrong person or not hiring anyone at all? Companies can become almost des - Joel Comm Is Dr. Adsense
What is Adsense? If you are new to making money online and net marketing, you may not know what Ads - 5 Steps For A Dynamic Wealth System Online
Recipe: Opportunity + knowledge + Dynamic Wealth System + Your Action = Massive Success!!! Step 1 - How To Stop Foreclosure
Losing your house to a foreclosure can be very scary. There are times when circumstances are ou - How to Always Pitch A Strike
As business owners, we are always working on new ways to convince people to become customers, client - Membrane Diffuser Solutions for Wastewater Treatment Systems
In the aeration basin of a typical wastewater treatment plant there are both organic and inorganic m - Another Year Hating Your Job or Loving Life?
Copyright © 2007 Mary Foley I've come to the conclusion that to be successful - really successf - Dyestuff Industry In India And China
World demand for dyes and organic pigments to touch $10.6 billion in 2008According to a study on dye - Cma-cgm Case : the Series of Lawsuits Continues in Syria, Lebanon, Egypt, France, England and the United States
Damietta company case : The series of lawsuits continues in Syria, Lebanon, Egypt, France, England a