Trading Currency? Make Money with These Tips

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!

Trading on the Forex Market

What is the Forex market? The word ‘Forex’ stands for the Foreign Exchange market. This is how it is known around the world. It is the largest market out there and trades something like a trillion dollars a day, more than all the other stock and bond markets. How do get started to trade on it? Using a Forex trading station.

Here are some guidelines:
In order to approach the Forex sensibly and try and make sure you don’t lose all your money in the first day, you should have a plan.
These are the criteria:
How much do you want to earn.
What percentage of profits will you put back into your investment capital.
How much is going into your savings, and
How much do you intend to take as a salary.
You will need a Forex trading station.

Next, you should know what you are getting into. This requires some research and studying trends in the Forex Market. There is absolutely no point in getting involved and playing risky games with your hard earned money. So you must learn what drives the Forex market and what can bring it to a dead stop.A Forex trading station is not enough. Spend time on this research – it will pay off. You will need to be highly disciplined and fully committed to succeed in this market. So set up your plan and make sure you stick to it. The quickest way to lose all your money is to start switching plans every time you hear someone else’s plan or get another tip.

There are two major currency trading avenues that an individual trader can choose from: Leverage and Ownership Currency Trading.
The Leverage option requires that you find an investor or broker and open up with a mini account. If your trading goes well, you can move up to a regular account and a Forex trading station.

In Ownership Currency Trading you open up bank accounts for every currency you intend to trade in. You examine the market carefully and you buy and sell currency accordingly. In this method you must have a significant amount of start up money as you will be buying the currency yourself as opposed to the leverage method where $1 is representative of $1,000 dollars, in 100:1 ratio leverage.

By trading in the Forex market, you will make money and come out ahead, but you have to use careful planning, be totally disciplined and make sure you know the market inside out.

Beginners’ Mistakes in Forex Trading

Novice traders consistently make the same error: They fail to deal with market volatility and place their stops incorrectly.

The novice trader watches his trade rising, sees it reach its programmed stop and then gets out - only to see the trade continue rising. He could have earned thousands of dollars had he stayed. It happens all the time because many novice traders have no understanding of how to place and trail stops correctly. Currencies exhibit long term trends and your aim must be to stay with the trend without being stopped out.

This is how you should deal with this:

1. Forget FOREX day trading.
You have no chance of winning in day trading. A day is too short.
Day traders do not make profits. Don't try it unless you want to lose money quickly.

2. Entering the trade and initial placement of stops.
The best way to enter a trade is on valid breakouts, putting the stop behind the breakout point.
Major currency moves start from new market highs. Buying breakouts can give a worthwhile risk to reward and help you nail the biggest trends and profits.

3. Always look for confirmation
Buying on a dip - don't predict and hope. Wait for confirmation. This increases your odds of success dramatically.
Use stochastics to do this – this is the ultimate timing indicator.

4. Don't trail stops too quickly
If you start trailing your stop too quickly, you will be bumped out by volatility. Hold your stop back and set a target that has to be reached before you even consider trailing your stop.

5. Courage
Discipline is important, but it takes both discipline and courage to hold a long term trend when pullbacks eat into your open equity. You need the courage to take short term pullbacks in open equity in order to catch the big trends that can bring you big profits.

In this tough and risky business I am constantly amazed by traders who trade the market without any understanding of the basic concepts of standard deviation. Make sure you know what’s going on before you start. Knowledge of volatility is essential to being successful in FX Trading

3 Things to Know About Online Currency Trading

It would be great if everything you need to know about online currency trading could be contained in 3 tips. These tips are just for starters and could be your first step to wealth and riches.

For the novice investor Forex currency trading presents a perfect opportunity to make money. It has few restrictions and is easy to get involved in. It offers both standard and mini versions for those who are not comfortable with putting $10,000 in account. The mini version requires only $500 to start. There are 3 basic things you need to know to get started.

1. You need a dealer - If you want to play on the Forex market you will need to find a currency dealer. The easiest way to find one is by using Google or some other search engine on the internet. Dealers are your key to currency trading as they will make your entry into the Forex trade market possible. They also know a lot abouit the subject. Don’t start trading with a whole lot of unknowns hanging over your head.

2. Knowledge about Global Currency Markets – Read up an learn all you can about global currency markets and make sure you understand them. There are many services available on the various online Forex trading sites. Invest some time in finding a good site.

3. Margin Trading - Margin trading is an important tool in currency trading. This is the leverage amount given to the trader to trade in the currency market and is one of the 3 critical things in Forex trading. Traders can trade foreign currencies with a very high margin. The stock exchange gives you a 1:1, the equity market gives you 2:1, the futures market gives you 15:1, where as the Forex will give you a whopping 100:1, 150:1, and even 200:1. This means you can control a lot of money using very little cash.

You now know the 3 most important points in online Forex trading. So log in and start putting this good advice to work for you!