For newcomers, this world can seem like a financial utopia with seemingly limitless possibilities to make a hefty profit in this market or that one. But, as many of those newcomers soon find out, this particular art of making money is as crafty and risky as it is complicated. The key to staying on the right side of the profit margin, in this business is to have a sound and effective strategy. But forex strategies don’t just fall out of the sky and it’s very easy to pick one, thinking it’s the best one around and then watch it become a sink hole for your pocket. So let’s look at what has proven to be the best forex trading strategy for hundreds of currency traders around the world including ‘your’s truly’, (well of course i am forex trader myself).
Many traders refer to it as the proverbial mother of all forex strategies and no, it’s not called big momma money, it’s trend trading. This particular trading tactic has been tried and tested by some of the most successful forex traders and even stock traders around the world. Trend trading is basically a forex trading strategy that aims at making a profit by careful analysis of a particular asset’s momentum in a particular direction. Basically, for this strategy to work you need to be able to identify the direction or trend of global currency markets. Now, this is easier said than done. There are literally tons of chart indicators that can help you do just that. But, the simplest and probably most effective way of following trends is visual observation (from left to right) of the raw price action of a market. There are also several trend following systems available at a cost, but the jury is still out on whether these systems make following market trends easier or more complicated.
REMEMBER: Knowledge is power!
Currency trading is becoming one of the fashionable trading activities all over the world. However, for you to become a profitable and proficient currency trader you need to have some knowledge on how to trade effectively.
Here are currency trading tips to help you prosper in this industry:
1. Trade pairs not currency
Like in any other business relationship, you have to know both sides. Success or failure in currency market depends upon having ideal information about both currencies and how they impact one another. Don’t concentrate on only one currency!
Margin trading is one of the best advantages of currency trading as it allows you to trade amounts that are larger than your total deposits. However, this can be dangerous to new traders as it can appeal to greed factor that ruins many currency traders. What you should do is to increase your leverage in line with your success and experience.
2. Have a strategy
A strategy is a map for how you plan to make money and it determines the approach that you are going to take, the currencies you are going to trade, and how you will manage the risk. Without a strategy your business will not have a direction and you may end up losing your money.
3. Over cautious trading
Just like a trader who tries to take little incremental profits all the time, a currency trader who places tight losses with a retail currency trader is doomed. You should give your position a fair opportunity to prove its ability to produce. If you fail to put stop that allows your trade to do so you will end up limiting yourself and losing a piece of deposit in each trade.
4. Be real with goals
Have set goals and give yourself a reasonable time to achieve them. However, there is no perfect time frame to set currency trading goals. Your willingness, commitment and hard work will determine how you will achieve your goals.
Confidence comes from successful trading and with these currency trading tips you will succeed. However, if you happen to incur some losses as you trade you cannot get it back. What you need to know is that you should not go off half cooked, learn how the business runs before diving in.