So you've come to the right place if your goal in day trading and swing trading forex is to become a consistent winner. When it comes to trading strategies, systems, and indicators, there are an overwhelming amount of choices available to forex traders.
Simply put, trading forex is an exciting way to invest your money.
As with anything worth doing, you must put in some work if you want to gain success. Below are five reasons why I trade forex (and it’s the same reasons why you should too).
1. Forex trading offers monetary leverage. Even though we get far lower leverage of 1:30 in Europe it is still pretty good. Of course not as good as 1:100 and 1:200 which is still available in countries like Australia and the east in general.
Meaning that you can trade with a low capital outlay to control a large currency position. You can trade a standard of $100,000 currency lot by investing with a small capital of only $1000.
However, some Forex brokerage firms permit even less than that by giving you up to 200 times the leverage. This is not available for us in the west but the east is still great for forex traders. That is, with only $100 capital outlay you can control a 200,000 unit currency position.
2. There are no restrictions to your forex trading. You can trade freely without worrying about a broker or a bank that controls any aspect of your forex trading.
4. You can trade forex from any location at any time because it is global in nature. Flexible time is one of the advantages of Forex trading. The Forex market never shuts as it is an incessant electronic currency exchange taking place globally. In this regards, you can trade whenever you have the free time and as long as there is an internet available anywhere.
5. You can trade by buying or selling in the Forex market in either direction, i.e. when it is going up or down. There is unlimited earning potential when you participate in Forex trading for it has a daily trading volume in excess of 1.5 trillion. That makes it the largest financial market worldwide when compared with the equity and futures markets of 50 billion and 30 billion respectively.
What's the Catch?
Day trading or swing trading forex is a great way to make a living from the comfort of your own home. However, it is not easy money. There are many traps and pitfalls that await the beginner. On top of that, making consistent profits through forex trades takes time and effort which make this form of investment very similar to working on one’s day job. The only difference is you get to pick your own hours!
But if you are in it for the long haul, trading currencies can help you make a living no matter how old you are and no matter what your circumstances are. You can even do this from the comfort of your own home by setting up your very own home office.
How to Be Successful in Forex? Avoid These Top 3 Mistakes that Forex Traders Make.
To be a successful forex trader, you need to have the right mindset and be prepared.
The top three mistakes that forex traders make is
1. Not planning,
2. Not having a strategy and
3. Noot having the right tools both technical and mental tools.
As a trader, whenever you buy or sell an investment, you’re taking a position. As with any asset, forex prices fluctuate on a daily basis. It is impossible to tell exactly how much currency will cost in the future. Even the most experienced traders often have different views on where prices will move. This isn’t a matter of opinions; it’s just how the market works.
The forex market’s low transactional costs provide opportunities to save money. Forex traders need to pay very little commissions, taxes or fees when they trade with brokers.
”But is it really convenient to trade forex—a time when I normally get home from work?” Yes, forex trading is conveniently done online from anywhere in the world. You can basically open your computer and go straight to your trading platform at any time of the day or night, including weekends.
The forex market is highly sophisticated and the traders who master it are often viewed as experts in their respective fields.
Mastering forex trading is just like anything else; it will require you to study, watch and learn from actual market movement. With time and experience, you can earn a living from forex.
Is it Really a Very Simple Way to Make Money?
Trading forex is a complex business. A number of technical and psychological skills are required.
Forex trading is a skill and yes a big one. The reason might be complicated and could take some time. But, you’ll understand if you read along.
I am a trader who shares my knowledge and expertise about the forex market and has covered many resources for traders in blog posts.
For new traders, it is difficult for them to devise their own trading system since they do not have too much knowledge about the Forex market. However, even a neophyte trader can devise a trading system that will fit on his personal preference and needs—in just five easy steps!
3 Main Characteristics of a Successful Forex Trading System
Before we discuss the five easy steps towards a profitable Forex trading system, you need to learn first the three main characteristics of a successful Forex trading system. These are as follows:
1. A successful Forex trading system is simple. There is no need for a complicated trading system with too many rules. It is a proven truth that simple systems work better than complicated ones, and they have higher chances of success despite of the “brutal” characteristic of Forex trading.
2. A successful Forex trading system cuts losses and runs profits. Keep in mind that you need a trading system that gets the huge possible profits and eliminates losses quickly, if not instantly.
3. A successful Forex trading system follows long-term trends. You will never cover your losses if you are just generating small profits. Keep in mind that the Forex market is worth $2 trillion U.S. dollars, thus there is no point in trading in exchange for just small profits if you have the opportunity to make trades for larger revenues. Focus on long-term trends and you will be able to see better results.
5 Easy Steps in Building a Forex Trading System
Now, here are the five easy steps in building a profitable Forex trading system:
1. As previously mentioned, your trading system must be as simple as possible. Integrate few yet essential rules and an extensive investment management system.
2. Always look for long-term trends (preferably on a weekly basis), then shift to daily charts and to time entry. This will help you analyze market trends efficiently.
3. The ideal way of trading foreign currencies is through breakout method.
4. Always watch for any break that you will note on your chart, which is commonly confirmed by stochastic crossed with bearish divergence. This will be your great timing tool whether you will enter a certain deal or not.
5.You must integrate effective time management within your system. Time is gold and is one of your precious resources. Design a trading system that is time-efficient—where you can maximize the potential of your time resources to generate huge profits.
Get away with complicated systems; it will just ruin your entire Forex trading career. Build a simpler one and see for yourself how profitable it is. The one I like the most is our own trading strategy called The Setup. Download your FREE COPY HERE