| Successful Currency Trading Techniques Can Be Taught And Learned |
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| Written by Cedric Welsch |
| Monday, 17 May 2010 19:17 |
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Many are looking for successful currency trading techniques. They've heard about FOREX (foreign exchange) trading and want in on the game. Often lured by the huge leverage available in this market, they think they might be able to profit in this type of trading but, all too often, approach it purely speculatively.
Many are looking for successful currency trading techniques. They've heard about FOREX (foreign exchange) trading and want in on the game. Often lured by the huge leverage available in this market, they think they might be able to profit in this type of trading but, all too often, approach it purely speculatively. For some new traders, trading currencies is like playing roulette in Vegas. Betting only on red or black, you have a nearly 50% chance of winning. With FOREX you also have a 50% chance of winning or losing. The currency you bet on is going to either go up or down. It's as simple as that. You've probably heard the old saying, "Buy low, sell high." In currencies, you can also sell high and buy low, which seems to be the reverse but really isn't. Currencies are always traded in pairs, one currency against another. Most of the more popular trades include the US dollar as one of the currencies in the pair. To be successful you have to correctly determine which member of the pair you're trading will go up and which will go down. Valid currency trading techniques will tell you four things... Which pair to trade, which direction to trade and when to open and close each trade. Take the Euro dollar/US dollar pair as an example. It's one of the most active couplings. The Euro, which is named first in the pair, is referred to at the base currency. A price quote on this pair will tell you how much one Euro dollar is worth relative to the value of the US dollar. The price quotes change continually, normally every few seconds. Let's assume the current price quote (or exchange rate) is 1.33. This says that one Euro dollar is worth 1.33 US dollars. If you believe the Euro is going up relative to the US, you want to BUY (go LONG) this trade. If you think the Euro is going to go down, you want to SELL (go short). Then, after the desired amount of movement in their relative values, the next step is to exit the trade. If you traded long and the Euro, in fact, went higher, you will win the trade. If the Euro goes down, instead, you will lose. The amount you win or lose will depend on how much the currencies have moved, relative to each other. Useful currency trading techniques will tell you the best time to exit your trades. This will include not only how much profit is enough (on the plus side) but also how much of a loss you're willing to absorb. To make a long-term profit, you simply need to guess correctly more than incorrectly. DISCLAIMER: This article is provided as information only and is not to be taken as financial advice. There are various online forex news providers. Don't loose your investment, forex reviews stories are there for guidance. |