The notion of trading foreign exchange (Forex) currencies may sound like a fairy tale. Is it really possible to make money with Forex trading?
If Forex prices stayed fixed then you’d expect there to be a clear win/lose for every currency deal made. But that is a far too simplistic view. Sure, if I was selling you actual cash dollars in exchange for dollar notes, there’d likely be a no-win situation. Of course, if you offered to sell me $500 for $400 then you’d lose $100 on the trade and I’d win the same amount.
Of course, since it’s real life, Forex trading isn’t quite as easy as in that example.
The exchange rate between any two currencies is a moving target. Take a glance at the Forex currency graphs and take a note of the amount they move in as little as an hour. Then figure that it doesn’t have to be as easy as me selling Dollars to buy Yen. I could change my dollars into euros first, if the mood took me. Of maybe it would make sense that two (or three or more) currency exchanges would benefit me more than just a single trade. Even after the fees involved.
If you’re a Forex beginner, take the time to go through one of the many excellent online Forex courses.
Next put your toe in the water. Make a real deposit in a Forex trading account.
Don’t waste your time or effort with the demo accounts you can get. It’s just not the same. If it’s not your own money it’s unlikely you’ll make the same decisions (think how your tax dollars get spent, for example). If you don’t believe this, go ahead and open a demo account. Make sure you take note of what your stomach tells you whenever you make a currency trade. If your stomach doesn’t churn when you stand to lose your make-believe dollars (and chances are that it won’t) then you need to decide whether or not you’d react the same with actual hard cash. My bet is that you won’t trade real cash anywhere near the same way.
Which means your first foray into Forex trading should be with real cash. As with any form of gambling (and Forex counts as gambling, at least to start with), make sure it’s cash you don’t care if you lose. But cash nonetheless.
Next up, unless you want to be glued to your computer screen 24 hours a day, get some Forex software to help you. At the very least, you want a program that will quit out of a winning or losing trade at a given level. It’s called a stop loss if the trade is losing. It’s also a very wise move to quit your Forex trade whilst you’re in profit.
Find out more about automatically trading Forex here.
