Forex trading is a system developed to allow people to trade currencies in the various markets. For example if you bet $100 on the Yen to go up and it does, you make money. It has become incredibly popular over the last few years not because of its tranquility but because of its volatile nature. Seems sort of strange, but there is a good reason for it.
A volatile market can only mean one thing – a series of large spikes both up and down. This means the gains are much higher than in any other form of online trading and it’s not strange to see traders making up to 100 times the amount they initially invested.
The forex trading market unlike options and stocks is greatly affected by a number of variables, one of them being the news. During news time when an issue arises, a stir is created in the market. This is a time when some of the largest spikes may occur and a great percentage of people make both huge profits and huge losses.
Sticking To A Strategy
Some of the most successful online traders would agree with this technique – finding a strategy and sticking to it. There is nothing magical about forex trading, the prices go up and the prices go down. Whether or not you make money, completely depends on the predictions you make.
There is no room for gut instinct in forex trading. Emotions tend to get in the way of your desired outcome and is one of the biggest reasons why 90% of traders fail within the first 12 months. There are of course many scientific ways of helping to improve your odds when trading in forex.
The Simple Moving Average
One of these strategies is to use a simple-moving average. This is where we extract a set of averages from previous existing spikes. Once you have determined this average you can then make an assumption that whenever the price crosses this average in the future, it’s a surefire signal to buy. There are of course programs out there that can do this for you as it can be a fairly time-consuming job.
Some Tips For Beginners
Before you even think about forex trading, spend at least a week reading from people who know what they are doing. Then once that week is over, go back and analyze the information you just read to determine whether or not it was dependable. Then go and read for another week!
If there is anything to say to a beginner to the forex market or any other form of trading, it’s this – don’t trust anyone but yourself! Sure ask for advice, but make sure the final decision on your trade investments is solely yours. Measure up the investment to also determine whether or not you can afford to lose what you are about to place in and don’t ever go overboard!
Your goal if you don’t have one, should be to find a strategy that works and stick too it. Don’t go changing strategies just because you got a hot tip from some guy who fluked a trade and made a mint. Find a good strategy that works well and stick to it.
The Fox And The Hedgehog
We can say people are categorized as being one of two things – they are either a fox, or a hedgehog. A fox is a person that knows a little about a lot of things and therefore tends to jump from one strategy to another. In other words, they are very cunning and use a great deal of strategies to try and get the hedgehog. The hedgehog knows a lot about ONE thing. It knows that whatever the fox tries, all it has to do is crawl up into a ball and when the fox pounces, he gets a mouthful of spikes, and so the hedgehog survives.
Don’t be a fox, be a hedgehog. Become an expert of one strategy in forex trading and I promise you will reap the rewards.