Successful Forex Traders - What's Needed to Become One of Them?
Today's forex trader no longer has to work for one of the world's financial centers. They now can trade from his or her own home or from anywhere else they choose as long as an Internet connection is available.
Forex trading allows people to make extra money in their spare time, or, if they want, make a full-time income from it. But what exactly is forex trading, and how does it work?
The foreign currency exchange market involves traders dealing in, you guessed it, foreign money. The idea is to sell one currency that's falling in value for another one that's increasing in value. If traders want to buy dollars, they must have another country's currency to make the swap possible. Two currencies are always involved in a trade.
For the inexperienced trader, it's best to work with just one currency pair at a time. Most people start with the EUR/USD market, the euro versus the US dollar. These two constitute the largest forex market. Information abounds for this market; it also tends to have lower costs and, considering forex's volatility, is reasonably stable.
Volatility in the forex market means that prices rise and fall sharply, creating high risk. It's the high risk that causes the potential for loss. You must be able to absorb a loss without it affecting you bottom line. If not, you'll quickly go broke. Some losses are going to happen; there is nothing that can be done about it. Managing your money in such a way that you don't risk too much on any one trade is paramount. Fortunately, your broker can use stop losses for you if the price goes in a certain way against you. The aim is not to have no losses, but to make certain that your profits outweigh your losses so that in the end you have a net profit.
You will need access to a computer with a high-speed Internet connection any time that you want to trade. Unless you use a robot to control your currency trading, you will also need time where you can be alone and concentrate on learning a profitable system and then on trading itself. You pretty much need to be able to lock yourself away in a room to do this, at least for a couple of hours a day. It's no good trying to trade from your desk at your full-time job with co-workers interrupting you, or using a computer in the spare bedroom with kids climbing on your knees wanting to play. You must be fully concentrated on the movements in the market. You don't want to miss the right moment to either open or close a trade.
If you're one who prefers a solid investment with predictable low returns, then you shouldn't become a currency trader. Forex traders typically enjoy the risk and the thrill of this fast-paced market.
It's easy for a newbie trader to lose focus of goals and allow emotion to control his or her decisions. If you want to become a successful trader, it's of paramount importance to set goals and maintain focus on them. Likewise, keep your emotions in check and don't allow them to control you. Also, pay attention to the financial news coming out of the world's major powers as well as the news in your own country, since a nation's events can and will have a bearing on the forex market. Maintaining these characteristics and having an effective trading system in place allows a beginner to be well on the way to making financial gains in the foreign exchange market. - 23196
Forex trading allows people to make extra money in their spare time, or, if they want, make a full-time income from it. But what exactly is forex trading, and how does it work?
The foreign currency exchange market involves traders dealing in, you guessed it, foreign money. The idea is to sell one currency that's falling in value for another one that's increasing in value. If traders want to buy dollars, they must have another country's currency to make the swap possible. Two currencies are always involved in a trade.
For the inexperienced trader, it's best to work with just one currency pair at a time. Most people start with the EUR/USD market, the euro versus the US dollar. These two constitute the largest forex market. Information abounds for this market; it also tends to have lower costs and, considering forex's volatility, is reasonably stable.
Volatility in the forex market means that prices rise and fall sharply, creating high risk. It's the high risk that causes the potential for loss. You must be able to absorb a loss without it affecting you bottom line. If not, you'll quickly go broke. Some losses are going to happen; there is nothing that can be done about it. Managing your money in such a way that you don't risk too much on any one trade is paramount. Fortunately, your broker can use stop losses for you if the price goes in a certain way against you. The aim is not to have no losses, but to make certain that your profits outweigh your losses so that in the end you have a net profit.
You will need access to a computer with a high-speed Internet connection any time that you want to trade. Unless you use a robot to control your currency trading, you will also need time where you can be alone and concentrate on learning a profitable system and then on trading itself. You pretty much need to be able to lock yourself away in a room to do this, at least for a couple of hours a day. It's no good trying to trade from your desk at your full-time job with co-workers interrupting you, or using a computer in the spare bedroom with kids climbing on your knees wanting to play. You must be fully concentrated on the movements in the market. You don't want to miss the right moment to either open or close a trade.
If you're one who prefers a solid investment with predictable low returns, then you shouldn't become a currency trader. Forex traders typically enjoy the risk and the thrill of this fast-paced market.
It's easy for a newbie trader to lose focus of goals and allow emotion to control his or her decisions. If you want to become a successful trader, it's of paramount importance to set goals and maintain focus on them. Likewise, keep your emotions in check and don't allow them to control you. Also, pay attention to the financial news coming out of the world's major powers as well as the news in your own country, since a nation's events can and will have a bearing on the forex market. Maintaining these characteristics and having an effective trading system in place allows a beginner to be well on the way to making financial gains in the foreign exchange market. - 23196
About the Author:
If you're just entering forex trading, be sure to check out Peter Bain's excellent forex training program ForexMentor.com, the most trusted name in forex training.
posted by X - Men @ 6:35 AM
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