Did you know that over 85% of all Forex investors eventually lose every penny of their investment? This happens for one reason and one reason only: An overall lack of knowledge in currency trading. Learn how to trade and profit by reading and applying the tips from this article.
Success in Forex trading cannot be measured in a single trade. Keep good records of what you have traded and how well you did on those trades. Stop once a month to see what the numbers look like. You will not know for some time if you are going to be successful with Forex or not.
It is a pretty smart idea for beginners to start by trading in the currency pair of your own nation. The reason for this is due to the hectic and diverse nature of the foreign exchange market. If you prefer not to do this, then the next best thing you can do is trade in the most widely traded and liquid currency pair.
Know the rules. The Forex market is not run by any central government, because it is international. Remember that your government’s guidelines may be different than those in the Forex market. Learning the rules of the market itself can help you avoid any hardships that you may experience should you accidentally break one.
The most important part about trading in the FOREX market is to keep in mind that you should never trade with any money that you cannot safely afford to lose. This is no guarantee that you will make money, you may lose money! So, only use money that you do not really need to live on.
Start your trading by focusing on just one currency pair. The forex trading world is complex, even with just one pair. Each currency pair has its own characteristics and it is tough to master any, unless you focus on just one currency pair at a time. If you choose not to do this, then at least choose the currency pairs with the most liquid, active trading.
Forex trading Asia
When trading in the forex market on the English pound, understand that a majority of the pound transactions take place in London. The volume decreases significantly in the U.S. market, and slowing down to a trickle in Asia. Therefore, in the New York market, many banks have to stop quoting the pound at noon.
Forex trading Tokyo
Know when the currency markets are active for the positions you are trading. The largest moves in the U.S. Dollar vs. the British Pound and the Euro happen when the New York and London markets are both open, between 8:00 and 11:00 AM ET. The Australian Dollar is most active vs. the Japanese Yen when the Sydney and Tokyo markets are both open, between 7:00 PM and midnight ET. It’s easier to close out a position, and trading spreads are usually lower, when markets are the most active.
In order to maximize your chances of successful trades, conduct your FOREX trading during the high-volume trading hours. Because price doesn’t move enough during the after hours, it’s important that you make your trading moves during the associated foreign market’s open hours, when volume is high. For example, if your currency pair is Yen/USD, you want to trade while the Tokyo market is open.
Keep in mind that the major markets are London, New York, and Tokyo. There are some smaller markets, such as Singapore, Germany, and Switzerland, but the main ones are London, New York, and Tokyo, so your trading style would benefit from using those markets. The time zones involved with them and their conditions should help you with your trading.
Pick one of the big markets when you start trading with Forex. New York, London, Tokyo, Singapore and Germany are all big players in the Foreign Exchange Market. Try to avoid the really small markets. The smallest you should deal with is a market like Hong Kong, holding roughly 4% of the market.
Learning how to properly trade with currency pairs is going to put you in the best possible position to profit. You might not instantly begin to see a profit, but if you’re applying what you learned here and continue to hone your strategy, you can become one of the 15% and make a decent living with Forex.