What You Should Know About Forex Trading
How difficult is it to make money trading the Forex market? How much time does it take to actually be able to make a living trading the Forex market? These and other important aspects of trading are to be discussed in this article.
Trading the Forex market has many benefits over other financial markets, among the most important are: superior liquidity, 24hrs market, better execution, and others. Traders and investor see the Forex market as a new speculation or diversifying opportunity because of these benefits. Does this mean that it is easy to make money trading the Forex Market? Not at all.
Forex brokers agree that 90% of traders end up losing money, 5% of traders end up at break even and only 5% of them achieve consistent profitable results. With these statistics shown, I don’t consider trading to be an easy task. But, is it harder to master any other endeavor? I don’t think so, consider musicians, writers, or even other businesses, the success rates are about the same, there are a whole bunch of them who never got to the top.
Now that we know it is not easy to achieve consistent profitable results, a must question would be, Why is it that some traders succeed while others fail to trade successfully in the Forex market?
There is no hard answer to this question, or a recipe to follow to achieve consistent profitable results. What we do know is that traders that reach the top think different. That’s right, they don’t follow the crowd, they are an independent part of the crowd.
A few things that separate the top traders from the rest are:
Education: They are very well educated in the matter; they have chosen to learn every single and important aspect of trading. The best traders know that every trade is a learning experience. They approach the Forex market with humility, otherwise the market will prove them wrong.
Forex trading system – Top traders have a Forex trading system. They have the discipline to follow it rigorously, because they know that only the trades that are signaled by their system have a greater rate of success.
Price behavior – They have incorporated price behavior into their trading systems. They know price action has the last word.
Money management – Avoiding the risk of ruin is a primary subject to the best traders. After all, you cannot succeed without funds in your trading account.
Trading psychology – They are aware of every psychological issue that affects the decisions made by traders. They have accepted the fact that every individual trade has two probable outcomes, not just the winning side.
These are, among others, the most important factors that influence the success rate of Forex traders.
We know now that it is not easy to make money trading the Forex market, but it is possible. We also discussed the most important factors that influence the rate of success of Forex traders. But, how much time does it take to have consistent profitable results?
It is different from trader to trader. For some, it could take a life time, and still don’t get the desired results, for some others, a few years are enough to get consistent profitable results. The answer to this question may vary, but what I want to make clear here is that trading successfully is a process, it’s not something you can do in a short period of time.
Trading successfully is no easy task; it is a process and could take years to achieve the desired results. There are a few things though every trader should take in consideration that could accelerate the process: having a trading system, using money management, education, being aware of psychological issues, discipline to follow your trading system and your trading plan, and others.
Martin Chandra
http://www.articlesbase.com/finance-articles/what-you-should-know-about-forex-trading-81022.html
Forex (currency) market is the largest (most liquid) financial market in the world, with an average daily volume of more than US$ 1.5 trillion, which is more than all of the global equity markets combined. The busiest hours are early European mornings because at that time major Asian exchanges are still open and European afternoons because at that time major US markets are open at the same time as Europe. Therefore, wherever you live and whatever your work hours are you can always find some time to participate in forex trading as opposed to stock market where you are usually limited to the regular business hours.
Another property of forex market that makes it an excellent trading instrument is use of leverage. Many beginning traders don’t fully understand the concept of leverage. Basically, if you have a start up capital of $5,000 and if you trade on a 1:50 margin you can effectively control a capital of $250,000. However, a two percent move against you and your capital is completely wiped out. If you are a beginning trader you should not use more than 1:20 margin until you get comfortable and profitable and then and only then you can attempt to use higher margins.
What does 1:20 margin mean? It means that with your $5,000 you will control a capital of $100,000. Let’s say you are trading EUR/USD and by using our entry strategy you have decided to enter the trade on a long side. That means that you are betting that USD will depreciate against Euro. Let’s say current EUR/USD rate is 1.305. Again, if your trading capital is $5,000 and you are using 1:20 leverage you will effectively be exchanging $100,000 to Euros. If the current rate is 1.305 you will receive 100,000/1.305 = 76,628 Euros. If the trade goes in your direction the margin will work in your favour and 1% decline in USD will mean 20% increase in your start up capital.
So if EUR/USD rate moves from 1.305 to 1.318 you will be able to exchange your 76,628 Euros back to $101,000 for a profit of $1,000. Since your start up capital was $5,000 it is effectively a 20% increase in your account. However, if the trade went against you and USD appreciated 1% vs. Euro your account would be reduced to $4,000. That would not have happened as our strategy has built in hard stops to prevent such outcome.
References :
http://4xsystem.blogspot.com/search/label/Why%20should%20you%20trade%20forex%20online%20%3F
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References :
http://fapturbot.blogspot.com/
You’ve picked one of the hardest forms of trading to consider. There are brokers that will open an account for as little as $300.00.
I would take no less than 2 years to understand the basics of Forex and technical analysis…… before putting one penney into an account.
This can be very challenging. 96% of new traders destroy their account within the first 2 – 6 months. Most successful traders blowup their first account. Persistance, disipline and constant education may make this a rewarding pursuit.
try to read a new trading book every month…. for as long as you’re doing this………. CONSTANT EDUCATION!!!!!!!!!! Good money management & trader psychology skills are just as important as picking the right direction and stop.
References :
Forex trading and how to go about it from home?
Can someone explain in detail how forex trading can be done from home in order to earn some additional income? Too, what is involved or needed? How much is needed as an investment?
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