Forex Trading without Leverage

One reason why Forex trading is a great way to invest, is that you can apply leverage to your trades in order to control a greater amount of capital than you actually hold yourself. This essentially increases the risk of your trades, which allows you to potentially reap greater rewards. This is how a lot of people make a lot of money quickly in the Forex market and many Forex brokers nowadays will offer quite extreme amounts of leverage to the average Forex trader. The problem with leverage is of course the fact that with greater risk comes greater losses. If you apply a lot of leverage to a particular trade and it goes against you, you will lose out more than if you had avoided using leverage altogether. What many Forex traders forget, is that you don’t actually have to use leverage. Leverage is simply a tactic that you may use in order to make more money, but there’s no real reason to use it if you aren’t experienced already and don’t truly know what you’re doing. The reason why many beginners end up blowing their accounts away and giving up early on, is the fact that they start off with loads of leverage, so even their first trade is capable of destroying all of their capital. Then you will get some of these beginners describing Forex trading as a scam on the internet and giving it a bad name, when it was really just down to them being¬†irresponsible¬†with their money. Before you start using leverage, remember that taking a professional approach to Forex trading is important. If...

Using a Safe Amount of Leverage When Starting Out in Forex Trading

Lots of beginners see leverage as a great opportunity to make loads of money in a very short time. Leverage is definitely something that you should take advantage of, but perhaps not in the beginning. Leverage basically allows you to work with more money than you actually hold in your account. It’s just like getting a mortgage or any kind of bank loan. With a mortgage, you can buy a house that is worth more money than you can actually put down. You then pay off the mortgage gradually until the day comes when you finally own that property. In Forex trading, leverage is similar in the sense that it allows you to place an order that you would not normally have the funds to place. It simply opens up opportunities for you as an investor. 400:1 would be considered high leverage and would allow you to control, for example, 400 USD for every 1 USD you have in your account. The problem with leverage is that, although it increases your potential rewards dramatically, it also increases your potential losses just as much. This is why in the beginning, you will probably want to avoid leverage altogether, until you are confident and educated enough to make strong decisions in the Forex market. A safe amount of leverage to use really, is no leverage at all, which is the reality. Leverage is not safe; the whole point of leverage is to increase the risk that comes with your trades. If you want to be as safe as possible, simply do not use leverage at all, as it isn’t compulsory. When...

Making the Most out of Long-Term Forex Trading Trends

The advantage of working with long-term trends is that you can essentially let your money work for you. Once you have placed an order in the Forex market, if you are looking to ride a trend in the long run, all you have to do is sit back and watch your profits rise over time. However, it is important to get out of long-term trends at the right time. You shouldn’t just relax and hope that your money will keep on growing, because it most likely won’t keep on growing forever. You should always make the most out of long-term Forex trading trends. In fact, you should try to make the most out of any kind of trend in the market for currencies, the goal being of course to make as much money as possible. However, you don’t want to push your luck too much. Always have an exit strategy and don’t just leave your money to accumulate over time, or you might be in shock one day when you find out that your account is in complete ruin. When riding long-term Forex trading trends, always be sure to place a stop. No matter what your Forex trading strategy, always be sure you have a way of getting out whenever things don’t go to plan. This doesn’t mean you have to cut your profits at all. Your profits might get cut a few times, but it will be worth it, as without stops you will find your losses will be much more significant. In fact if you don’t implement stops, you will most likely win losses that are simply...

Using Stops in Times of Greater Price Volatility in the Forex Market

Stops are used by Forex traders in order to try and increase their profits relative to their losses. There are different types of stops; fixed and trailing stops are both popular types of stops. Fixed stops can be used to cut your losses and trailing stops can be used to let your profits run. However, you must be careful when placing stops in times of greater price volatility, in the Forex market. When the markets are more volatile, the prices of currency pairs fluctuate more than normal. This can cause currency traders to get stopped out too soon, which can cause them to lose out a lot and deduce unnecessary losses. If you notice that the currency market is more volatile than normal, you should take this extra price volatility into account and place your stops accordingly. Of course you do need to be careful when doing this, because you could actually even end up deducing more losses if you don’t adjust your stops properly and effectively to suit the conditions of the market. Some Forex traders will even sit out and wait until the greater price volatility diminishes; this is fine to do, however, you should try to take advantage of greater price volatility as it can allow you to deduce more profits than normal. When placing a stop-loss in a market of greater price volatility, ensure that your stop is put back a little so that you don’t get stopped out so easily. Ultimately, you will have to decide yourself where you place your stop, but you will need to put it back more than normal. Your...

Reasons Why You Should Plan Your Trade and Trade Your Plan in Forex Trading

You may or may not have already heard of the saying “plan your trade and trade your plan”. This saying is often said by the wiser investors in the Forex market, since they tend to be more experienced and know exactly how important Forex trading plans are, when it comes to trading currencies. They are definitely of great importance and you won’t stand much of a chance of getting very far without one. Of course you need a Forex trading plan, but you also need to follow it too. If you have one but don’t follow it, there’s really no point at all in having one. This might seem obvious, but some investors have plans and simply ignore them. If you really want to benefit from your plan, then you must take note of it when in the market for currencies and you must follow it at all times. There are many reasons why you should plan your trade and trade your plan; here are three main reasons: 1) Forex trading plans can help you to eliminate the effects that your emotions have on your trading behaviors. The psychology of Forex trading is worth knowing about. Your emotions can greatly affect the way you place orders in the currency market. This is one reason why you need a currency trading plan, because without one, your emotions will most likely guide your buying and selling of currencies. In order to trade properly and effectively, you need a trading plan. 2) You will be able to maximize your profits and minimize your losses, by having a good plan. Trading plans are...

The Importance of Money Management in Forex Trading

Money management is definitely vital when it comes to trading currencies. Forex trading is all about making as many profits as you possibly can, while taking the least amount of losses you possibly can; money management helps Forex traders to do this effectively. Techniques of money management can be implemented to protect your profitable trades and allow them to run. They can also be used to cut short your losses though, too, which is as equally important. Your money management can be kept organized by having a good trading plan. All currency traders should have their own trading plan and they should follow it no matter what, so that they can ensure consistency in their trading and remain disciplined. Without a Forex trading plan, or without following one, you won’t be able to manage your available trading capital effectively. When you can’t manage your money effectively, you will struggle to become or at least stay profitable, in the Forex market. This is why money management is extremely important, when it comes to Forex trading. There are many different key elements of money management in currency trading. Stops are used to cut your losses and let your profits run. They are typical technique used by many traders to manage their money effectively. You can set fixed stops for each of your trades, so that if your trades go badly you can have them closed promptly and automatically, so that you can cut all of your losing trades short with ease and with no hassle at all. Stops can also be used to let your profitable trades run and grow, for...