3 Tips For Trading Currencies Profitably
Trading currencies profitably is something a lot of people want to know how to do. The reality is that it can make you some good money when done right. If you are looking to get started, here are 3 tips to become more profitable with Forex:
Pick A Strategy
There are 2 ways to make money with Fx trading - technical and fundamental analysis. Both options are effective, and which you pick really depends on your goals. The former focuses on making money short term with currency pairs, whereas the latter targets long term profits.
Technical analysis uses Forex charts to predict the price movements of pairs. The idea is to use the recent history of the pairs to make money short term on the movements. However, this requires constantly surveying the market to make money, and can be time consuming.
Fundamental analysis, on the other hand, is a more long term approach. This one looks at the underlying factors that affect an economy such as the interest rates, unemployment rates, inflation, etc. These will all influence how the price will do in the long run.
Of course, most people know about fundamental analysis in the stock market. However, this analysis is much more difficult with Forex investing, because it is more difficult to predict the long term stability of a county than a company. But it can be very worthwhile to find long term pairs you can make money with, as this will help you earn passive income.
Have Stop Losses
Having a set point where you will sell the investment after it starts going down is very important. Many investors wipe themselves out because they hold onto a particular pair for too long. The key is to ride your winners and cut your losers as soon as possible. The reality is that many of your investments will lose money. The key is to get rid of the losers as soon as you can.
Be Leery Of Software
If you absolutely do not have the time necessary to invest, you can use software. There are applications that make trades for you based on predetermined variables. Therefore, if you want to make money on autopilot, these programs are something to consider.
Of course, these trading currencies robots are never as profitable as a human investor. They will make you some money (assuming you pick a good one) but will never make you rich. They are basically an alternative to a bond or another low risk, low reward investment. Therefore, make sure you are realistic when using software, and do not expect to make a huge return.
by: Cedric Welsch