MAKING A PROFIT FROM THE FOREX MARKET
Most small scale Forex traders often tell the same story of loss having lost all the money in their account. It is crucial that research is done on any investment venture of which the Forex market is not an exception. Making a profit from the Forex market is not as hard as many think, you have to first come up with a frame work that best suits you and apply the strategies accordingly. Some of these strategies are mentioned in this article. In the Forex market there are basically three types of trading strategies and one or more trading strategies can be used simultaneously. We have the short term trader also known as the scalper who enters the market for short periods of time (about 1-10 hours) in order to make a profit, and would buy and sell independent of the trend. While scalpers have the advantage of getting almost immediate returns on their investments, they enter large amounts of money at a high leverage and stand the risk of losing everything even if the trend was going their way. It is not advised that persons new to Forex trading use scalping as a method, as the risks far outweigh the profits.
Mid-term traders hold their positions for a longer time than short term traders, reducing the risk posed by market volatility. The mid-term trader holds a position for one day to a month and the capital requirements are not as demanding as the short term trader. The third type of trading is the long term trade, which involves large capital to cover volatility and sees positions held for months or even more than a year. Long term trading is a low risk strategy that is advantageous to those that have the capital to engage in it Managing your money in the Forex market is very important in order to minimize risk. Forex is a volatile market with some currency pairs moving more than a thousand pips both ways in a single day. To trade in the Forex market and make a profit patience is the key, wait for opportunities to arise and they always do and enter you position. Before entering a position, set take-profit and stop-loss points. These points help reduce risk. Most Forex platforms come with tools that help analyze the chart, tools such as the Fibonacci retracement indicator, exponential moving average and many other tools are at your disposal. To minimize risk and increase profit, increasing the number of these indicators tell you when best to enter a position. Stop loss points are best placed close to resistance levels on the chart also using a trailing stop loss lets you make a profit even when the market turns against you.