With worries about the rising cost of living on our hands, it’s no wonder that many of us are searching for auxiliary ways of making money.
Trading forex is one such way and many investors have turned to trading foreign currencies in recent decades. But if you’re just starting out in forex, how can you improve your chances of making money?
In this short article, we’ll be answering this question by looking at three principles that will help you fast-track your forex trading career. But first, a quick refresher on the basics.
What is forex trading?
Forex traders exchange capital between currencies to generate profit.
There are considerable benefits of trading forex rather than other financial instruments.
For starters, it’s easy to begin trading since the forex market is open 24 hours a day, 5 days a week. You can set up quickly online, with most trading platforms providing access to real-time pricing, tools and strategies.
Additionally, forex prices are relatively transparent and are often determined solely by bid-ask spreads. By contrast, other financial instruments such as bonds or even the best equities funds contain hidden fees and commissions that eat into your returns.
However, like all forms of trading, it has its risks. If you’re looking for quick and easy profits, you may well find yourself disappointed by unforeseen market volatility. Yet for those who are in for the long haul, forex trading can be a lucrative investment.
So, just how can you set yourself up for success?
Find the right pairs to trade
Even though the market is open 24 hours a day, that doesn’t necessarily mean that you can sell your position at any time. It’s easier to do this when the market is more active – and peak activity throughout the day occurs at different times depending on your given currency pair.
So, it’s crucial that you choose a currency pair that works with your schedule. In particular, you probably shouldn’t trade multiple foreign currency pairs that have different peak times and require more sophisticated knowledge, especially if you’re a part-time trader.
Apply Disciplined Decision-Making
As we mentioned earlier, things move quickly in forex markets and they’re often volatile. Because of this, it’s vital that you don’t overextend yourself while trying to chase huge profits. Instead, you should stay disciplined and take profits when they appear instead of holding out in the hopes of making more.
Of course, this is easier said than done. But fortunately, there’s an easy way that you can take your emotions out of the equation.
Automate your trading
Many new traders think that they have to do all of their trading manually. However, this simply isn’t the case. There are many automated trading programmes available that can assist you, making unemotional and logical decisions for you when you’re busy elsewhere.
All you’ll need to do is establish the parameters that you want to guide the programme’s decisions so that they represent your own. After that, you’ll be able to monitor prices, identify opportunities and place orders without even touching your keyboard.
Which principles have helped you to fast-track your forex career? Share your best tips with us in the comments section.