One of the easiest ways to make money is by trading currency, in other words, the buying and selling of foreign currency, or Forex. Here are 3 tips to help you:
1. Don’t diversify
Diversification spreads the risk, but it also cuts your profit potential. If you are a small trader, meaning that you are playing with less than $50,000, diversification means that you are diluting your profits.
When you see a worthwhile trade, risk as much money as you can. Many traders will tell you that you should risk between 2% and 5%. That will not make you any money. Risking 5% on a $10,000 account is only $500 and this will not get you very far in the way of open positions. So risk at least up to 10% if you want to get somewhere.
Many currency traders restrict risk by placing their stops close and they never make good profits. They lose out on good trends even though they have the direction right. This is a typical novice’s error. You must study standard deviation if you want to trade successfully; if you don’t know what this is, look it up.
Currency trading is a game of risks, but the more you know and understand, the lower the risks involved. If you cannot handle risk, don't trade currencies.
2. Be patient
Patience is the key to successful currency trading. Many Forex traders think the more they trade, the greater their chance of success, but this is not always true. You make money by making the correct trades, not by making many trades.
3. Trade in relation to what's in the bank
Check your success by what you have in your bank account. If you are having a good run and conditions are right, you can afford to be more aggressive and risk bigger trades. Alway invest a fixed percentage of your bankroll.
Try not to hold too many open positions. Once you reach your target, move on. This will keep you focused and help you build confidence. I like to have only one or two trades open at any one time. I then shift position, size and risk, depending on how well I am doing. Always risk profits you have already made rather than adding more cash.
I hope these tips help you make big profits in this risky but rewarding business!
Are You Beginner Read This Care Fully.
Thousands of online traders and investors trade the Forex market every day, and earn their living through it. If you are also aspiring to build wealth and take it up seriously for long term gains, here is a report that has simple essential tips on Forex trading.
Always Trade Pairs, Not Currencies - Meaning, try and gather in-depth knowledge and insight about both the currencies before trading. Success or failure in forex trading will largely depend upon being right about both the currencies. Only when you know how one impacts the other will you be taking the right decisions and make profits.
Remember Knowledge is Power - If you are starting out and are serious about pursuing a career in Forex trading online, it is important that you understand the basics of the market. It means keeping abreast of and a close watch on news and happenings in various economies.
Steer Clear of Un-ambitious trading & Over-cautious Trading - Many new traders will place very tight orders and take very small profits. This is not a sustainable approach in the long run. Likewise a trader who places tight stop losses with a retail forex broker is also heading for a doom. What I would recommend is that you have to give your position a fair chance to demonstrate its ability to produce.
Independence - If you are new to forex, you will either decide to trade your own money or to have a broker trade it for you. So far, so good. But your risk of losing increases exponentially if you either of these two things:
Interfere with what your broker is doing on your behalf (as his strategy might require a long gestation period);
Seek advice from too many sources - multiple input will only result in multiple losses. Take a position, ride with it and then analyze the outcome - by yourself, for yourself.
Lack of a Proper Strategy - A well laid out strategy is your map for how you plan to trade forex and make money with it. The strategy you have developed details the approach covering facets like, which pair of currencies you are going to trade, how you plan to manage your risk and so on. Without a proper strategy, you may be one of the 90% of new traders who lose their money and casually blame forex for it.
Likewise avoid greed, trying to make too much money too fast, don't trade too short, and avoid trading during non-peak hours. Don't let over-confidence or emotional temperament get better off you. And I cannot emphasize the importance of knowledge enough. Always be well equipped with knowledge and fine tune your technical analysis skills.
