You have traded currencies before and like ninety percent of people who have traded forex you lost money quickly. Or you had profits and rode them into losses. For you Forex became a five letter word.
Is there a way to make money trading currencies? How do the big banks and hedge funds do it? While there are no guarantees, there are a number of things you can do that will increase your chances of becoming a winning Forex trader.
It is not an easy path to success. Some stories of overnight riches are true but they come with years of preparation and a great deal of tolerance for risk taking.
First you need to decide if you are going to be a fundamental trader, a technical trader or a combination of both. If you choose the former you must pay close attention to the markets. You cannot wake up in the morning,place an order to buy or sell and expect to make money. You must do your research. You should have some working knowledge of the fundamentals of major countries. That is you need to know both long and short levels of interest rates, GDP and growth potential, inflation and of course a the employment situation of a country.
If the charts are what you fancy you should take a course and read a couple of books on technical analysis.Then decide which area is right for you. Will you be a long term breakout trader or will you follow pivot points. Will Fibonacci be your thing or will you stick to RSIs.
Once you have that down you must examine your financials. How much of your net worth are are you willing to risk. What is the maximum amount of money you can lose and not impair your lifestyle.
It is probably a good idea to open a demo account with an online broker. That way you can practice entering the various types of orders. You can see in real time how much profit or loss you would have and you can adjust your style accordingly. You need to become proficient in stop orders, limit and market orders so when the real thing comes you will not be nervous or anxious. You can think about one thing only. Trading.
Next work on controlling your emotions. This is a huge factor in Forex trading. It is much different trading real money than some demo account. I have seen it happen too many times where people lose their cool and turn profits into losses. Or much worse,losses into bigger losses. You are not going to make money on every trade.
That is just the way it is. But if you keep your emotions in check and are disciplined in setting your stop levels, and sticking to them, you give yourself a much better chance of success.
Finally, risk control is the key to your trading career. Making the right decisions on how much to risk on a currency or how large of a position you should carry is of paramount importance in Forex. This way you can stay in the game so that when the big move comes you can catch it. And then Forex will no longer be a five letter word. It will be a six letter word: Profit