There’s really no comparison between forex trading and share trading. Forex is the world’s largest capital market (in terms of average daily turnover), with prices changing all day and night. Accounts can be leveraged higher than Mount Kosciuszko and “all-in” execution costs are almost negligible. That’s not to say that forex is easy. It’s not. But, once you get the hang of it, you have learned a very valuable skill for life. If you’re unsure whether or not this is something that you want to pursue, sign up for a “demo account” and practise some trading. Hopefully, you will get a charting platform that has a “Williams Alligator” on it, as the “Alligator” is a fun way to learn how to trade forex profitably.
Newbies need to specialise. There’s just too much to absorb in your first year of trading for you to try to be all things to all people. Pick an AUD-related pair and become an expert in it. After a while, it’ll all become old hat.
Navigating Forex Markets
Contrary to popular opinion, diversifying the number of currency pairs that you’re trading at the same time is not a good idea. Each currency pair has unique trading attributes and these can change as each regional trading session opens up. For example, American banks usually sell the AUD/USD during the North American session because they need “more American dollars”. Banks in Sydney, however, usually need “more Australian dollars”, so they generally buy what the Americans just sold off. Sticking to 1 successful trading strategy is also a good idea. There’s no sense inventing the wheel a second time if the first wheel is still going strong. Instead, reduce your average trading losses. This will improve your overall profitability.
How Forex Markets Can Affect Your Trading Success
The potential for making a significantly larger profit in forex, compared to any share market, during the same period of time, is significant. Forex is open around the clock; share markets are not. Forex execution costs are minimal; share trading costs are not. Forex lets you sell with the same ease that you can buy; most share markets do not. Forex accounts come with leverage that can exceed a ratio of 100:1; share account margin ratios generally max out at 2:1. Depending upon the colour of your passport or where you live, taxes on your forex trades can be negligible. It’s unlikely that will be the case with a share trading profit. Lastly, share markets don’t have 24-hour carried interest.
Generating A Return On Your Capital From Forex Markets
If you’re lazy and just want a carried “positive interest rate” position, do the following. Open up a daily chart of the AUD/JPY and place a “Williams Alligator” on top of it, along with a standard period volatility stop indicator. Whenever the “Alligator’s” shortest time period line crosses upwards and over all the other lines, go long. Stay in that position until the shortest line moves downward and crosses all the other lines, signifying that it’s now time to exit. You can also do this kind of trading shorting the EUR/AUD (which makes you long the AUD). The mechanics of the “Alligator” remain the same (i. e., a trading signal is only generated when the shortest line crosses all other lines).
Get a free Forex PDF PLUS:
- 14 Video Lessons
- Free One-on-One Training
- A 5000$ Training Account
- In-House Daily Analysis
- Get FULL ACCESS