The Forex trading market is the largest market in the world by far. In fact it is bigger than all the stock exchanges in the world combined. Trading goes on day and night seven days a week and there are millions of individuals, companies and even governments using the Forex to make money every minute. However, do not let this trick you into thinking that trading Forex is easy money, because it is not.
Most Forex traders trade on a long term basis, but others trade much more frequently, buying and selling the same position within 24-72 hours. These traders are called ‘day traders’. In order to trade Forex profitably you will have to learn the ropes.
One of the best methods of doing this is to open a practice Forex trading account. Most of the online Forex trading companies offer a practice account and the best ones offer free accounts and free practice accounts too. Again, the best Forex trading companies offer free technical and fundamental analysis along with access to all historical financial data and current financial information.
If you have never traded Forex before, you will almost certainly lose money, unless you are fortunate, but you do not want to be relying on luck when you use your own, real money. You will want to be relying on ability and information, although hoping for a bit of luck too is not unusual.
At the same time as you are learning to use all the financial and analytical tools at your disposal, you should try to develop a sense of detachment from your trades. Never become emotionally involved with one of your trades. It sounds daft, but people do become attached to a trade and lose touch with reality. This is a big mistake and one that professionals do not make.
So, when the statistics tells you to sell, just sell, do not attempt to fool yourself into thinking that everything will be all right next week. This may work for long term trading, but it does not work for day trading, it ties up too much of your capital. When you have developed a system that you think you can trust, say, one that uses the results from a combination of charts, you should stick to it unerringly. This is the only way that you can tell if your scheme works. This is why you need detachment from your trades.
Fear and greed are treacherous emotions, but they play a big part in the strategies, or lack of them, of many day traders. People are frightened of losing money, so if their choice goes down, they hang on praying that it will rise again. This is a dangerous game. You could lose a lot more than if you had got out in the first place.
Likewise, if your judgment was correct and the currency rises as you forecasted, get out when it reaches your goal, do not hang on in there hoping to make more. Greed will get the better of you in the end, if you do. Following a rapid rise, there is often a correction in the price. ‘Correction’ is a euphemism for ‘fall’ and you will be kicking yourself for not selling when you knew you should have.
So beware greed and fear, do not become emotional and stick to your system. However, if your system does not work, even when you follow it to the letter, then change it and test it again. This is the only way that you will be able to progress and make some decent money at Forex trading.