Trade like a professional. Learn the rules, use the tools and techniques. Start small. Use your head and not your heart. Learn the entry and exit points, go for medium-term trades, and not be glued to the screen.
Making money from trading “forex” trading requires skill, strategy, spare money, and nerves of steel. Why? Because of the sheer volatility in the market. Simply put, there are too many unpredictable variables, and any one of them could affect the position of a chosen trade. It is not all doom and gloom. Anyone can make money provided they use their head and not their heart. In addition to that, they must follow and adhere to some simple rules. An example of a simple rule which one particular trader followed was “I come into the market to make $500 per day. And, as soon as I have made my $500, my work for the day is done”. He goes home. Don’t be greedy. Always have a clear head.
Here are the tools and techniques to help you trade: -
Learn to read the charts and understand the implications of currency movements
Graphs give you an invaluable insight into any given trade, its history, and some indication of its future movement. For example, if the charts show an upward trend of 2% per day for the past five days. That is a good signal.
At what point should you take a position?
A normal rule of thumb is when the trade has moved higher than the previous high. Or lower than the previous low. A fifty-two-week high is also a good indicator for a position. Conversely, 52 weeks low is a good indicator. How can I learn about charts? That is very simple. Read a book by Martin Pringle. Martin explains charting to you using videos, so nothing is left to chance.
Taking a position means betting on the trade movement, either up or down
If you take the view that the trade will go up, then buy a 50 pence per point movement. What if the trade goes against me? Yes, that is likely and can happen to anyone in the market. To prevent incurring big losses, put a stop loss point some 10 or 15 points below your trade price. Say $/Euro is your trade; the price of your trade is 1234 for the sake of illustration. Then your stop loss point will be 1219, meaning at point 1219, you will be taken out of the market, and you will have lost £7.50 in total as opposed to unlimited loss. On the other hand, if the market follows your prediction and moves up 300 points, you will have made £150. You can bank that money by moving the stop loss point 15 points below the new position.
Am I still baffled?
Trading requires an understanding of the market, charts, and tools. Some tools are internet based so being familiar with the internet is a must. To understand trading, one needs to go on a training course on a weekend.
The other option is to learn by trial and error. All the spread betting companies offer you a free trading trial run with a fictional account. What happens in practice is a make-believe account with, say, $100,000 for you to play with? You go and try your luck until you have either made a decision to open a real account or you have spent all the money but did not make any progress. The other advantage of opening a real account is that you have access to a big learning resource consisting of audio and video presentations by experts of courses etc.
Finally, trading like a professional is not being glued to the screen but enjoying the experience. Therefore, the tips and words of wisdom from professionals are medium-term trade trades instead of day trades. Last but not least, Market Wizard is a great book to read because all the traders: rich and poor, are interviewed for you to refer to and learn from. Good luck.
