Forex Trading: Can You Really Make Money Trading Forex?
The notion of trading foreign exchange (Forex) currencies may sound like a fairy tale. You’re doubtless asking yourself if there is any possibility that you can earn cash trading Forex?
If the prices on the Forex markets stayed the same all the time then you would think there would a definite winner and loser for each Forex deal that took place. But that view is way, way too simple. 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. Just look at the graphs and you’ll see how much movement there is in an hour, let alone a day. Then remember that whilst dealing Forex can be simply selling US Dollars to buy Canadian dollars. I could change my dollars into euros first, if the mood took me. Or if I thought making two exchanges would be better than making one. Even after the fees involved.
If you’re just starting Forex trading, it will pay you to go through at least one of the online Forex courses available.
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 just isn’t the same thing. 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). Feel free to open a demo Forex account and check this for yourself. Make sure you take note of what your stomach tells you whenever you make a currency trade. If it doesn’t tense up with worry in case you lose your fictional dollars (and it probably won’t) then ask yourself whether you’d have the same reaction with real cash. Unless you’re superhuman, my guess is that the deals you make with actual cash won’t be anything like the deals you make with play money.
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. A “stop loss” is set when you place a trade to make sure that you don’t lose all your cash if the trade goes against you. Like a bird in the hand being worth two in the bush, it pays to quit a trade when you’re ahead.
Find out more about automatically trading Forex here.
