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Forex is a lucrative business, and one can make real money in a short time if one knows how to trade wisely. Many Forex traders learn with time that, if they want to outweigh their losses, they have to employ different Forex strategies to turn more than 50% of their trades to profits. Different situations in the FX market require different techniques and strategies. The secret is to know when to employ which strategy.
Easy Strategies and Observing the Market
The simplest thing to do is to see how trends are developing on the daily or weekly chart. Just observe which trend seems promising and place your trade on it. Do not overdo it with large investments but try to set out a trading plan with small amount investments for starters. Of course, no one has the time to watch the market 24/7, so you can activate the Stop Loss and Take Profit options to reduce loss.
Carry trading is another simple trick, but yet it comes with a certain risk. It refers to buying a currency that pays high interest against another weaker currency. The interest difference is paid on a daily basis, and it can accumulate to a nice sum over the course of time. Of course, the risk is in proportion to the interest difference, so you could easily lose what you make in interest if the market changes, as well as your entire investment. For example, this kind of trading is affected by unusual and unexpected events which cause the strong currency to drop in value in no time which means that your money could be gone very fast.
More Complex Strategies
Fundamental trading refers to trading in markets one knows and understands. Fundamental traders do not rely on trend signals, but rather on their analyses drawn up from economic news. Calculating the risks based on a comparison of different economies can give positive results, but it requires a deep understanding of the market and proper interpretation of economic reports.
Automated trading is something every FX trader has heard of, but still, even if it sounds like something made for beginners who do not know the market and rely on the help of automated features, it is not. The misleading myth of automated trading is that everyone can win with the help of software and robots, but that is far from the truth. In reality, it only works when someone knows the market. Experienced traders know that automated trading options are limited in many ways, and they know what and how much they can handle. They will not hand over all of their trades to software, including account managers, but make an evaluation when it is the right time to activate robots.
Therefore, robots can be helpful, but only in certain situations and if operated by a market pro. Do not expect any robots to drive your trading career to its peak since they are not programmed to deal with unexpected events which are quite common in the Forex market.
Other Tips and Tricks
Hedging and scalping are two of the best-known tactics that provide a safety net for traders. Hedging is simply a risk-reduction measure by hedging one position with opening another one. Scalping is another safety measure which refers to going in and out of trades and profit from the spread differences. It requires an active trader who is able to devote a whole day to trading if they want to make notable profits.
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Forex is a lucrative business, and one can make real money in a short time if one knows how to trade wisely. Many Forex traders learn with time that, if they want to outweigh their losses, they have to employ different Forex strategies to turn more than 50% of their trades to profits. Different situations in the FX market require different techniques and strategies. The secret is to know when to employ which strategy.Read more