For the Foreign Currency Exchange (Forex) Market to be a good place to trade, certain rules must always be followed. A lot of investors have made questionable trades when everything looked so good. The investors and speculators I'm talking about have put good money into investments and lost it within days, weeks, or months. Some people have done their research and still lost money, but most people who turn what looks like a good investment into something a smart investor can smell from a mile away haven't done their research. This article talks about the Forex (Foreign Exchange) Market and lists the most important things you need to know to make money there.
The key is liquidity:
Believe me, I've lost good money after bad, and so have a lot of other people in my family. I keep telling myself it must be genetic. Playing the pink sheets, which are also called penny stocks, is one way to really get in over your head. These are the stocks that don't trade very often, and if you have enough shares, it's almost impossible to trade them without causing the price to go up or down a lot. And the more you buy or sell, the more you start to affect your own price. Those investments have been off my list for a few years, so that doesn't need to be said. They just don't have the money you need to get ahead of them. Sure, you can find that "needle in a haystack" stock, but for every successful penny stock, there are thousands that fail or don't give you much, if any, money back.
Now we can talk about the Forex Market. What better market is there to get the most money? Since I no longer trade penny stocks, which have low trading volumes, I am naturally drawn to trading that takes place in a market where liquidity is the name of the game. When a trading area is liquid, you can always trade your investment without affecting other positions you want to buy or sell. You don't have to worry about things like when you trade penny stocks and a small change here or there has a big effect on the price of the stock you are trading. The Forex Market is too big, and too many governments, organisations, funds, and people take part.
Make sure your plan works:
Some of the best Forex trading happens when a person perfects their strategy and follows it to the letter every time because they are sure it is the best for them. Most successful Forex traders have a strategy that they work on over time. They don't just follow every new "tip" or "potential strategy" that comes along. From time to time, it's good to try out new parts of other strategies to see if you can make a good thing even better. However, the most important thing is to know your strategy inside and out and be able to copy it. A good rule of thumb is to do nothing when you're not sure about a trade. Don't trade if you aren't sure if it fits with your plan. You should also focus on one market at a time. You don't want to be a "Jack of all trades and a master of none," as the saying goes.
Go Long:
To trade successfully on the Forex, you need to be able to last. The longer you can keep trading on the Forex, the longer you have to perfect your strategy and the longer you can stay in the game. It makes me think of the times I have time to play craps. Some of my friends can spend $1,000 in an hour or two, and then they have to take the rest of the day off to make sure they have enough money to try it again the next day. I do things in a different way. I can stay at the table all day with $500, and most of the time I can double or triple that amount and stay there all day if I want to. I want to have fun and make money at the same time. If I can keep myself busy for longer, I might be able to make more money.
I can play longer because I have perfected "my" strategy and don't try every new one I read about in the many craps books that my friends read. The point I want to make is that it's important for any investment to last. The longer you can "stick with it" to learn more and improve your strategy, the more you'll enjoy the Forex Market and the more money you'll make from it. And since we're talking about making money, you'll want to keep your winning positions open for longer than your losing ones. Let your profits run their course, and you will do better. Don't give in to the urge to get out of a position just because it's making you money quickly. Getting out of a losing position takes a lot of guts, but you'll be glad you did if things aren't going the way you want them to. When you trade in any market, you should always leave your pride at the door. Many of us don't want to admit that we've lost, but we have to if we want to succeed. It can really stop traders from making money.
Foreign Currency Trading, or Forex, is an exciting way to trade. With the tips and ideas above, you should be able to trade the currencies of the world's most powerful countries with ease. Forex Trading will work for you as long as you stick to your plan and make sure to let your profits run and cut your losses.
