FOR FOREX TRADER

If you think that knowing the mechanics of Forex trading is all you’ll need to build a success, you’ll be disappointed. The know-how you need involves more than just learning a set of mechanical skills. To truly master this rich and constantly changing market, it’s also necessary to understand some of the background involved in currency trading before you’ll ever begin to earn big money.

Simply knowing how to trade currencies and being familiar with the major currencies traded (US dollar, Euro, Japanese Yen, etc.) is only a start. It’s also essential to really grasp when to trade and which currencies to trade.

In other words you need to develop a number of trading strategies. So, what are typical Forex trading strategies? Below are a few money making strategies to help guide you when trading.

If correctly used, these strategies can earn you very large sums of money relatively quickly. And to get the most from these suggestions, you must first “get” that Forex trading is very unlike stock trading, meaning that the strategies will be quite different. So if you have experience with stocks, you’re going to have to partly unlearn what you already know.

The first strategy is the leverage trading strategy. In the leverage strategy, you as a currency investor borrow money to power up your earning potential.

This strategy makes it possible for you to leverage your money at a 1:100 ratio. Be aware, though, that there’s risk here. This is why you should learn to use stop loss orders to minimize the risk as well as to minimize losses. The leverage strategy is one of the most commonly used strategies among Forex traders for maximizing profits.

Next is the stop loss order strategy. As a Forex trader, you will select a predetermined point in the trade beyond which you will not trade. You’ll use this strategy to minimize both your risk and your losses. This strategy can sometimes backfire on you, however. For example, if the value of the currency rises higher than you expected, the stop loss order can interrupt what would have been an even more profitable trade.

Of course it’s up to you to decide if you will be using this strategy. Hint: the risk in NOT using it is almost always greater than the risk if you DO use it.

Here are a couple of other tips to remember for earning good profits in the market:

The first and the last ticks are usually the most expensive. The rule of thumb is to get in a little late and to get out a bit early.

Never ever throw more money into a losing position. If you’re losing, simply get out – right now – and go find another trade.

Bet with, not against. Select trades that move in the same direction as the prevailing trend. This minimizes the risk of losing money while maximizing your chances of profits.

A number of tools are available to guide your decisions when trading in the Forex market. One is Forex charts. Charts are probably the most important tool you can use to visualize market trends and project the most likely future value of a currency. Although charts aren’t 100% accurate, you can use them as a guide to grasping what’s happening in the market.

You’ll need to learn how to read the different charts involved in the Forex market. There are daily charts, hourly charts, 15 minute charts… and even 5 minute charts when you want a really closeup look at the action. You can compare the data in each of the charts to spot potentially profitable market trends.

This can also help you minimize the risk when trading currencies. Learning how to read charts effectively and rapidly will put you well on your way to success as a Forex trader.

Keep these strategies and tips in mind and you’ll stand a better chance of minimizing the risks in trading and maximizing your profit potential. Depending on your skills and how you apply your strategies, you really can make large profits in the Forex market.

Ironically, however, to be a truly successful Forex trader, you must first accept the fact that sometimes you’re going to lose money. The trick is to take it in stride, as a normal part of Forex trading. Master that “trick” and you’ll never get discouraged when it happens.

Analyze any mistakes you make, think how you’ll avoid it happening again. Then get back in, recoup your losses, and go right on trading.