What do you think about forex trading, is it really profitable?

Friday, December 20, 2013 , Posted by Ryanita at 11:59 AM

forex 5 pips a day
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me


I want to try forex trading, I don't know how to start, I want somebody who experienced it to share with me his/her experience


Answer
Forex trading is profitable if you are able to abide by three simple rules:

1) Stick to one or two strategies that work year in, year out.
2) Apply good money management techniques. This means you should never expose more than 3-5% of your account to the market at any given time. This way, a losing trade will not damage your account irreparably.
3) Aim for a reasonable profit margin of at least 40% monthly. Some people say that aiming for up to 40% is suicidal. My experience has shown that if you have a good strategy (and I have seen a blog where there are more than 30 strategies to choose from), some of them can deliver up to 100 pips over 2 days of trading, if the trader makes the correct entry and follows the rules.

For me, I do not trade every day. This is my 6th year in the market. I have learnt that good strategies, applied with good money management, is what makes the difference between success and failure.

You need to get access to strategies, and use them. One of my favorites is using crude oil to trade currency pairs involving the USD, JPY and CAD. When you understand such relationships, you understand why things happen in the forex market.

When you understand why a credit rating downgrade in a Eurozone country causes the EURUSD to drop in value, you are already on your way to knowing how to trade forex profitably.

When you understand that the CHF is a safe haven currency and that when bad things are happening economically in Europe, a SELL position on the EURCHF can rake in 1000 pips (as happened in Nov 2010 because of the Irish debt problem), then you are on your way to trading profitably.

Forex trading is profitable. Just like a door has a key which locks and unlocks it, so also forex trading has keys. You need the keys to be able to unlock them.

What to consider when choosing a Forex broker?




Chris


I have $5000 and I'm interested in trading forex. What are the best brokers on the internet?
Also when they say minimum trade size micro unit (1k) does that mean I have to buy at least 1000 units which is for instance for a currency (1.05) $1005?
Also what is the lot size? Is that the range of profit/loss? Like instead of gaining $1 for 1 pip gain $10 if I change the lot size?

Thanks



Answer
Wow... you're on your way to an unbelievable surprise.

There are no good Forex Brokers... there are only Forex Brokers that are not as bad as most.

The first thing you want to consider is where is the corporate headquarters (what country?). Assuming you're from the USA... make sure they are licensed in the USA. Do not, for any reason, deal with a Forex Broker not licensed in your home country.

The next thing is to compare the "spread" charges. All these brokers advertise "no commissions".You'd actually be better off with a commission charge than the way they charge (by the spread). Make sure that the pairs that you'll be trading have comparatively smaller spreads than the competition.

No matter what you see on the web (especially from the brokers)... understand that it will take, on average 3-5 years to be profitable in any type of trading. Forex traders usually destroy their account in days, weeks or months.

The free "classes" taught by the brokers are a joke. They concentrate on the least important aspect of trading, which is Technical Analysis. The two fields of study, significantly more important are;
A. Psychology (yours and the markets).
B. Risk Management.

Read 6-12 books on trading and another 2-3 books on Forex Trading before you open a Forex brokerage account.

Good luck!




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