Trading foreign exchange rates is such a rigorous affair that it can’t be considered a hobby. In truth, if you’re serious about making a profit, it’s more like a second job. Prices are constantly moving in reaction to news and events spanning the globe. You need to keep on top of these changes. Since there are only 24 hours in a day, this means that you need to specialise in trading 1 or 2 currency pairs (preferably related to each other, like EUR/GBP and EUR/USD or AUD/JPY and AUD/USD). Whether you “day trade” or prefer longer-term trading is a matter of personal preference and how much time you want to spend in front of a computer. A little bit of experimentation should uncover what is the most comfortable situation for you.
Beginners need to pay attention to how and where they set their stop losses. If they’re too close, you’ll get whiplashed out of a good trade. If they’re too far away, you could lose more money than was necessary.
Keeping Your Eye On Changes In Foreign Exchange Rates As A Trader
Serious traders develop a set of habits that keep them on their toes during the trading week. Quite a few get up very early (i. e., 4:00 am, their local time) to check on trading that has just finished and to catch up on any news that they missed while sleeping. Then, while they are trading, they may have several screens (involving different currency pairs) going on at the same time. This is particularly true if they are trading a EUR-related currency pair, since most of the forces that push and pull the euro affect all EUR-related pairs about the same way. Most traders take a break in the afternoon; then, after dinner, they check up on currency pricing levels.
How Changes In Foreign Exchange Rates Can Help You To Make Gains
In order to be able to make a profit, in trading forex, you need to have pricing changes (i. e., volatility). The trick is to correctly judge the level of volatility – on any given day or week – as it relates to your trading plans. If you’re a short-term trader (like someone who is using an hourly chart upon which to base their trades), you probably don’t care that much about relative volatility levels. However, if you’re involved in a long-term trade, price spikes can kill your position, even though it was a good one. This is because the spike hit your stops, despite your best intentions. So, intelligent stop loss placement becomes a critical component of capturing a trading profit.
Tips For Profiting From Changing Foreign Exchange Rates
Some people are born short-term traders. Others only feel comfortable with long-term propositions. It’s essential that you figure out what kind of trader you probably are before you starting trading. If you’re having trouble deciding upon your “trading profile”, use some “demo accounts” (which are real in every sense of the word except they don’t use your money), placing both very short-term and longer-term trades at the same time. Then, watch how you react to what happens to those trades. The same thing can be said about currency pairs. Some people just love trading anything involving the euro; it feels “natural”. Others find contentment in trading Asian pairs, like the AUD/JPY or NZD/JPY. In all probability, some experimentation is needed.
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