The forex market is no longer a strange place for anyone as you can now become part of the market. If you look through time and carry out research you will come to find out that it was only the elites and large companies that could trade on the forex market because it actually require a lot of startup capital to trade on the forex market.
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But as time evolved and things changed with emerging brokers, individuals can now trade on the forex market with as little as $100. So the questions on the mind of potential investors revolves around “What is Forex trading and how does it work”? “How can I trade forex successfully”? “What is the best strategy for trading forex”?
So here in this article, we are going to look into all of these, if you are new to the whole forex thing, you will understand better after this article even if you have been into the forex market before. I believe there is still something you could learn here. So let’s clear things one after the other.
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What is Forex Trading and how does it Work?
Forex is simply Foreign Exchange. It involves buying and selling, in this case it doesn’t involve commodity but currencies, stocks, indices and so on.
It is one of the actively traded market in the world. So you can say Forex involves buyers and sellers who agree on a particular price and transfer currencies between themselves.
The sole aim of this transaction is to make profit. In the forex market, up to 5 trillion dollars is being released which make the market so volatile.
How Does the Forex Market Work?
Forex trading involves direct trading between two parties. The market is run by a global chains of banks spread across the four major centers in different time zones, which are; London, New York, Sydney and Tokyo.
Which makes it possible to trade 24 hours of the day because there is no central location but the market closes every Friday night by 10pm.
Traders make their exchange rate predictions to take advantage of price movements in the market.
How can I trade Forex Successfully?
Not many people have traded the forex market and they become successful, some traded and made the biggest loss of their life. In fact a high percentage of traders have made huge losses.
But in as much as people are making huge losses some others are making profits. The thing about forex marketing is simple, all you need is just to develop the best forex trading strategies that works best for you.
It’s not that easy to become a professional trader on the forex market but it’s possible to become a good trader and earn good profits in return.
I will give you some tips on how you can trade forex successfully.
Understand the Forex Market
You should know that on the Forex market, it is not just currency pairs that you can trade on, you can trade on futures, indices and what is called synthetics where you have the boom and the crash, and some others.
It is very important that you get familiar with the market and understand clearly what you are dealing on before taking the risks.
Open a Demo Account and Play With It
Most forex brokers offers demo account to beginners so that they can test the waters before putting real money into it. You get the chance to trade on either currency pairs or the synthetic market to gain mastery before investing real money into it.
Develop a Strategy and Work With It
After practicing a while, you must have come to noticed that there is a particular pattern of trade that works best for you.
There is a strategy I use to trade forex, I target a particular amount of profit I want to make in that day and when I hit that amount for the day, then I can say “bye-bye” for that day.
You too can try that, probably you may want to target hitting $1,000 every day or less. A trading pattern or plan as the case may be should include your profit goals, risk tolerance level, evaluation and methodology criteria. Keep practicing with this until you are ready to use it on your live account.
Be Psychologically Ready
You should know that the market is not going to favor you all the time. There are sunny days as well as rainy days. So you should be prepared mentally and emotional when the “not good times” hits you.
You shouldn’t let a small loss weight you down. There are better days ahead. Always stick with your original plan. As a beginner in forex, I made a lot of mistakes back then, on some minor loses because I wanted to recover quickly.
I would double the amount on a losing trading because I believed it would turn out good for me but at the end I ended up losing more. So in other not to fall in this category, you should be balanced emotionally when you are losing a trade and stick always to your original plan.
Don’t Be in a Haste
One real secret to trading successfully on the forex market is to trade consistently. Ever heard of the saying that slow and steady win the races? In forex that might be the case.
Many other traders have ran on big losses because they wanted to hit the big numbers just immediately. It’s a good thing to have your eyes on the big numbers but the real test is sticking to your original plans through discipline and patient which at the end you will live to testify.
Forex Trading Strategy (Bonus Tips)
So you must have been hearing this all the time and may be wondering what forex trading strategy is all about. Today you are going to find out what it actually entails.
Forex trading strategy, defines the pattern a forex trader uses to determine when to buy and when to sell. This includes technical and fundamental analysis. A good forex trading strategy allows a trader to analyses and carry out a trade with a good risk management technique.
There are different trading strategies that forex traders uses to trade on the forex market, I am just going to highlight them for you and not talking deep into them. To get more insight, check out this expert forex trading strategy for beginners and pros.
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Price Action Trading
This involves the study of historical prices to formulate technical trading strategy.
Trend Trading Strategy
This is a strategy that is mostly used by forex traders. Personally I started with this strategy. It involves studying the direction of the market.
This actually involves long term trading plan, it is focused mainly on the fundamental factor.
Range Trading Strategy
This includes identifying the support and resistance points where traders place trades on key levels. Technical analysis is the tool employed in this strategy.
This is a common term used to describe the process of frequently taking small profits. This can be achieved through opening of many positions and closing when the desired profits is achieved. This can be done manually or using a specific algorithm which dictates when to enter and when to exit a trade.
This is a speculative strategy where traders look to take advantage of rang bound as well as trending markets. Traders can enter long and short positions by picking tops and bottom.
Day Trading Strategy
Day trading is a strategy that is created to trade financial instruments within the same trading day. This means that all positions are closed before the market close. It can be single or multiple trade.
Carry Trade Strategy
This involves borrowing one currency at lower rate followed by investing in another currency at a higher rate. This is result in positive carry of the trade.
5 Best Selling Forex Books
The Forex market is a big market and no one can know it all. There are plenty of books written however to better help your understanding on the world of Forex. I am going to list out 5 best-selling forex trading books which may help your understanding on the whole forex market.
How to Make a Living Trading Foreign Exchange
This book is written by Courtney Smith which explains exactly how the Forex market works and it also provides unique strategies on how you can generate regular income trading on the forex market.
Forex Trading (The Basics Explained in Simple Terms)
This is another great book on learning the basics of forex written by Jim Brown. It provides a glossary for forex markets, strategies, psychology, trading pairs and tips on choosing the right broker.
Adventures of a Currency Trader
This book is centered on a fictional trader harry banes and his experience trading across the forex market. This is a great book written by Rob Booker
The Foreign Exchange Matrix
This great book is written by two authors Barbara Rockefeller and Vicki Schmelzer which combines a total of 50 years’ experience. It’s a great book about the whole forex market.
Trade your Way to Financial Freedom
This book offers a look at common mistakes that forex traders regularly make and how to avoid and overcome them in a realistic way.it is written by Van K. Tharp.
Getting into one or two online business is a very good idea but acquiring the knowledge and tactics on how the industry works is far more important.
What takes you a year to learn might took someone a month to mastered the strategy with just little investment in expert courses.
And that’s why most of our blog posts we focused on giving you a clear understanding of the subject matters. And also, recommending advanced courses for you on that particular topic.
In forex training, the risk of the investment is far dangerous than the little penny you will put to get all the ‘Damn’ secrets on how to play the game very well. What makes you great is how valuable you find every opportunity that comes across you.
Yes! You’re very kind of lucky to have access to this mind blowing content plus the expert course that will really solve your problem without facing all the trading HECK!
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