In order to be a successful forex trader, you have to have a head for numbers, a good set of organizational tools and a feel for the markets. People who keep up with current global events also tend to be good forex traders, as currency prices tend to be affected by the things happening in the world at large. Most of all, however, successful forex trading depends on practice, practice, practice. As with anything, you can’t become an expert overnight.
One positive aspect of forex trading, however, is that even beginners can start making profits in the foreign exchange markets. All it takes is an understanding of how it works, knowledge of basic market indicators and an entrepreneurial spirit unafraid of taking risks. Successful forex trading begins with your first trade, and the steps to success involve teaching you the skills you need to know in order to be confident enough to make the plunge.
Pip Mechanics: How Forex Success is Measured
In order to be successful, you first have to learn how to think about success. Succeeding at forex trading means that you buy low and sell high. You will be buying a particular currency pair, which means that you are buying one set of currency with another. You want to buy a currency when its price is low compared to a different currency and sell when it’s high compared to that currency.
Currency is measured in pips, which is a fancy way of saying 1/100th of the lowest denomination, which may be cents or yen depending on what you’re trading. A particular currency pair may be trading at 1.2423 with expectations to rise. As a successful forex trader, you must take advantage of this.
Invest as much money as you feel comfortable into the pair. Typically forex brokers allow you to leverage much larger sums of money than you actually need to invest, so if you invest $1000 you may have access to a currency lot worth $100,000. This is important to know, because currency pairs typically only rise 100-200 pips, or one to two cents at most in a single transaction. If a currency pair rises a full cent in trading, you will need to invest the full $100,000 in order to make $1,000 on the trade – this is considered an extremely successful trade. More standard trades may only net you between $100 and $200.
Once a rally starts to level off and a currency pair shows signs of reversing course, you should sell in order to make a profit.
Day Trading: The Foundation of Successful Forex Trading
Forex traders typically trade from their homes or offices every day, making many trades of a few hundred dollars each every day. Some earn a profit and some lose money, but the goal of a successful forex trader is to make sure that the profits exceed the losses enough to make a living. More and more individuals are getting into forex trading due to its flexibility and self-reliance. Consider taking a class or signing up for a forex account at www.lucrorfx.com today!
