Forex trading is a system developed to allow people to trade currencies in different markets. For example, if you bet $100 that the yen will rise and it does, you win money. It has become incredibly popular in recent years not because of its calmness but because of its volatile nature. It seems a bit strange, but there is a good reason for it.
A volatile market can only mean one thing: a series of big spikes both up and down. This means that the profits are much higher than in any other form of online trading and it is not uncommon to see traders earning up to 100 times the amount they initially invested.
The forex trading market, unlike stocks and options, is greatly affected by a number of variables, one of which is the news. During news time, when a problem arises, it creates a stir in the market. This is a time when some of the biggest spikes can occur and a large percentage of people make big wins and big losses.
stick to a strategy
Some of the most successful online traders would agree with this technique: find a strategy and stick with it. There is nothing magical about forex trading, prices go up and down. Whether or not you win money depends entirely on the predictions you make.
There is no place for instinct in forex trading. Emotions tend to get in the way of the desired result and is one of the main reasons why 90% of traders fail in the first 12 months. Of course, there are many scientific ways to help improve your odds when trading forex.
The simple moving average
One of these strategies is to use a simple moving average. This is where we pull a set of averages from previous existing peaks. Once you have determined this average, you can assume that any time the price crosses this average in the future, it is a safe signal to buy. Of course, there are programs that can do this for you, as it can be quite a 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’re doing. Then, once that week is over, go back and analyze the information you just read to determine if it was reliable or not. Then go read for another week!
If there is one thing to say to a beginner in forex or any other form of trading, it is this: trust no one but yourself! By all means, ask for advice, but make sure that the final decision on your business investments is solely yours. Measure the investment to also determine if you can afford to lose what you are about to invest and never go overboard!
Your goal, if you don’t have one, should be to find a strategy that works and stick with it. Don’t go changing your strategy just because you got some good advice from a guy who botched a trade and made a mint. Find a good strategy that works well and stick with it.
the fox and the hedgehog
We can say that people are classified as one of two things: they are a fox or a hedgehog. A fox is a person who knows a little about many things and therefore tends to jump from one strategy to another. In other words, they are very cunning and use a lot of strategies to try to catch the hedgehog. The hedgehog knows a lot about ONE thing. He knows that whatever the fox tries, all he has to do is crawl into a ball and when the fox jumps, he gets a bite of spikes, and so the hedgehog survives.
Don’t be a fox, be a hedgehog. Become an expert of a Forex trading strategy and I promise you will reap the rewards.