Trading the Forex Market can seem complex to the novice investor. But there is a certain skill set that a person must acquire to be successful trading in the Forex market. Read on to learn some of the Secrets of a successful Forex Trader.
1. Only Trade Money You Can Afford to Lose
One approach that newer retail traders generally take towards entering the Forex market is to start off trading with spare cash. This trading strategy can yield phenomenal profits you can add a stream of income that pays handsomely from spare cash that you probably would have otherwise spent without receiving a return of investment.
But keep in mind this is a high risk high reward investment venture. So while you can profit very well rather quickly at the same time you can also destroy your trading account just as fast.
So only invest money that you can afford to lose.
The first thing to understand and acknowledge about Forex investing , is that such an investment should not be attempted, if the you do not look at the money being used to trade with, as cash that if lost would not present any hardship to your financial situation.
Having understood and accepted this very important fact will then allow you the freedom to speculate and take the necessary risks that this style of investment opportunity presents. The Forex market is very volatile and the movements are not predictable. This is the reason some people think of this market as basically gambling. If the trades are done on a smaller timeframe then there is more of a chance the trade could go either way as the bigger players have more influence over market price.
However there are some great advantages to getting started in this form of investment and it is possible to build your capital rather quickly. These may include advantages such:
- as no commissions charged for such exchanges
- 24hour 5 ½ days a week trading
- trading can be leveraged
- you can profit while focusing on a few pairs as opposed to many as with stocks, options or commodities
- not a lot of initial capital is required
The basic processes involved in trading Forex is basically the same as most other market trading opportunities. The only notable difference is that one currency is being exchanged for another currency.
2. Knowing the Fundamentals Gives You a Trader’s Advantage
Currency trading basically presents the investor with the opportunity of making money through leveraged platforms. It also gives the retail trader the access to play a small role in dictating to some extent the factors that lead to the decline or rise of a country’s entire economy.
In the past there has been evidence of such trading styles actively contributing to virtually destroying some economies, and though there are some controlling elements in place to prevent this from happening again it is neither full proof nor discouraging.
Determining the fundamentals of any particular country’s economy would require the understanding of a variety of data, such as:
- gross domestic product projections
- import and export projections
- employment ratios
- unemployment’s percentages in relation to the working population’s availability
- estimated growth
- debt incurring mechanisms and
- any other factors that would affect the country’s financial and physical growth as a whole
Collectively and sometimes even individually, depending on the severity of the changes, these elements effect the economy of a country making it a great trading strategy for speculating currencies. Like any other market movements, the value of the currency responds in some ways to the changes in the supply and demand factor tagged to it.
Interest rates are another factor that contributes to the influence of the Forex market. Besides its obvious effects on the economy, the changes in the interest rates to higher percentages would effectively lower the currency trading movement in one country which is providing the higher interest rates and lower the value of the currency trading in the other corresponding country. The same would happen if there was a reverse, in the currency movement of the other corresponding country.
3. Determine the Conversion Rates
Currency conversion programs can be beneficial on many levels and for many seemingly non corresponding reasons. This can range from serious investing opportunities to simply going on a shopping spree in a foreign country.
There are many portable style currency converter tools that will conduct currency conversions in real time with the simple use of software programs provided. These can be done virtually anywhere and everywhere with the simple installation of the software into your favorite trading platform.
The download will show the latest conversion rates when needed by the trader. The domestic currency can be set into the software program which will then calculate and show the opposing currency pairs rate that is being frequently traded by the trader.
The pairing can be changed according to the trader’s needs and at the frequency the trader choses. All the information shown will be in “real time” and based on the international trading platforms.
This tool is very useful to investors and traders, but such a program is also beneficial to all internet users, internet shoppers, tourists and any other users who may need the currency conversion information at a moment’s notice.
This is where the conversion information from the domestic currency value to the foreign currency value is accurately shown and will assist the trader on the decision making and its profitable projected target.
Most compatible currency convertor systems should include features such:
- as all the known currencies of the world
- the latest real time currency rates
- being user friendly,
- can be easily stored for use in offline circumstances
- can be customized for domestic currency use
- can be saved and viewed as desired pairings
- limited installation or even better no installation needs
- administrator privileges.
Having it run on a USB thumb drive as rates saved is also advantages for the convenience of being able to access stored information easily.
4. Choose Your Automated Trading Software Wisely
There are a lot of seemingly very reliable reputable currency trading programs available in the market today. These programs are supposedly designed to enable the trader depend on the elements within the software to trade on the trader’s behalf without the trader having to be hands on all the time.
This may seem like an ideal situation, where the tool actually works for the trader without the trader having to spend time monitoring the various markets and then having to make the necessary informed judgments as to when to buy and sell. However, as in all things, there are benefits and draw backs that are very visible when it comes to the using of currency trading programs.
Let’s discuss some drawbacks to be aware of…..
For one the programs are not capable of dealing with any glitches that may cause discrepancies or changes within the trading market at any given time. Such unexpected movements may not be detected and the trading program will continue to make decisions on behalf of the trader and this can cause negative repercussions where loses incurred will not be realized until it is too late.
Some currency trading programs are not easy to set up. There is always a possibility to use the software without actually capitalizing from program. When this is the case this is definitely not to the advantage of the trader. So, if the program is not running efficiently and using all its benefits properly, the trader can end up losing money instead of making profits. This is because the program will only respond to the elements dictated to by the trader and it will not work to complete benefits while overriding the initial program. Even if the program can detect its incompleteness, it will not be able to make the changes without the trader initiating the action.
Use this information when using such services to your advantage. Automated trading services (algorithms and signals) can be a great benefit to traders but being aware of the situations that can sabotage your trading efforts will help you to be prepared to resolve any such issues that may arise.
5. Your Trading Broker/Platform Can Make or Break Your Account
There are quite a few Forex brokers available for use and with such a wide selection it may be rather hard to make the decision on which one to choose. The best way to choose a trading broker is to try out a few until the most suitable one is identified to suit your trading style.
The following are some of the more popular currency trading softwares available:
MetaTrader is one of the most popular trading platform software that facilitates the real time analysis and direct order routing that comes with a certain amount of flexibility. The power enhancement it depicts is also supported by other data vendors and brokerages.
Trader’s Way was established by a group of financial market professionals dedicated to spreading the values of free, limitless trading globally. Tradersway promises to provide their clients with the most opportunities available in regards to financial markets. They also claim to have collected the best products, technologies and services, so that the needs of every trader are fully satisfied. The great thing about Tradersway, is that you can find everything to trade the way you like, without boundaries and limits all under one broker.
You can choose any financial market from the wide range that is offered on the platform. You can trade currencies and and other financial instruments using the most famous and user-friendly MetaTrader 4 trading platform.
This broker also offers what they refer to as the Trader’s Way Web Trader. This feature will let you stay connected to your trading account any time, any place, from any computer, with any system.
Also available is Mobile Trader this feature also allows you to work without location and time limits, on the go, providing access to trading accounts all from your mobile devices.
You are can choose the account type you like: fixed or variable spreads, starting with low risk minimum deposits or directly on the interbank market, trading huge sums, with minimum spreads and fast order execution. ECN trading is also offered. They guarantee transparent and customer-oriented trading.
They also offer:
- high accuracy in prices
- no restriction on trades
- wide choice of trading opportunities
TradersWay Mission: to bring you maximum trading with maximum opportunities and freedom
Tradersway Philosophy: Maximum trading with maximum opportunities and maximum freedom
Protrader was established by a team of highly qualified specialists that claims to have implemented cutting-edge technologies when they were developing their trading software for a wide range of financial markets.
The company currently serves different market such as USA, Canada, Australia, Japan, India, New Zealand, China, Turkey, Russia, Great Britain, Poland and South Africa.
The main feature of Protrader is the perfect teamwork with their clients that creates the perfect platform. If you have an issues they simply say "just tell us and we'll fix it".
- multi-asset trading
- market analysis
- developing and running of algorithms
- risk management
LMFX is an innovative online foreign exchange broker that offers advanced institutional and retail trading conditions. They have a belief in the importance of building strong, secure foundations.
LMFX mission: is to provide the full spectrum of cutting-edge trading tools and services that their clients require to succeed in the world’s most liquid market.
LMFX mission: is to deliver an unparalleled trading experience that offers the most competitive trading conditions available to each and every client, allowing a variety of trading investments.
LMFX provide a comprehensive range of mobile and desktop MT4 platforms to ensure that traders never miss a market movement. In addition to an advanced trading environment, traders also have full access to:
- exceptional educational resources
- advanced trading tools (that have been designed to improve trading performance)
LMFX delivers what traders in today’s financial markets need the most!
- Fast execution and deep liquidity
- automated withdrawals of trading profits
- ensuring funds are deposited securely in segregated accounts
- on call 24/5 to help our clients with their trading needs
6. Protect Your Capital
The following are some to the elements that should be avoided if the investor does not want to end up losing money:
- Avoid trying too many different systems. Trying too many systems without actually giving any of them a real chance to produce results is not something that will bring in the revenue the trader initially anticipates.
- Avoid switching platforms, even if the first few initial trades end in losses. Therefore sticking to particular platform or broker for a decent amount of time to try and learn the software until the desired results are achieved is much better an option.
- Avoid over analyzing. The inability to capitalize, when the opportunity presents itself due to over analyzing, will eventually leave the trader losing out on great trade setup , which will end up causing undue frustration.
- Avoid hesitation. Being quite a volatile market, the trader needs to be able to respond without too much hesitation or questioning. With experience this instinct is easily developed.
- Avoid being too hasty. Learning to exercise patience and concentration is another way to ensure there is no unnecessary loss of capital due to careless trading. Learning to make informed observations that bring forth successful trading will ensure that losses are kept at a minimal amount.
- Avoid trading just for the sake of trading. Sometimes the trader feels desperate enough to act on what seems to be a trade setup, simply because there has not been any good market movement that is conducive of a good trade, which creates anxiety and worry for the trader. Learning to read the chart properly and identify good market signals will allow the individual to practice patience giving the trader the ability to make better more profitable trading judgments.
It is already an accepted fact that currency trading is quite a risky way of making money but if there is some level of understanding for how to properly trade the possibility of making phenomenal sums of money within a relatively short period of time is very real. Use these Secrets to your advantage and make well informed trading decisions.
A crucial issue for every investor is the safety of their funds. You need to be sure that your financial services provider will pay you your money and profits in full and in a timely manner.