5 Tips For Greater Profits With Forex Investing
Table of Contents:
· Choose a Forex investing methodology that has a consistent application
· Select a shorter time frame for entering and exiting and a longer time frame to conduct directional analysis
· Be sure that you analyse charts on the weekends
· While Forex investing, be sure to keep printed records
· Implementation and Management
After you have read a book about Forex investing or practiced on a demo account, the possibility of making $1000 can get you so excited that you do not even want to go to sleep, you just want to jump right in.
However, even though Forex investing has its advantages, with high liquidity in some of the world’s largest markets, you have to know the tricks to make successful trades.
Making a profit from Forex investments can be a lot harder than you realize, and when real money is at stake, you are going to want to increase your odds of making a profit, by any means possible. Success stories can inspire you, but here are five (5) more practices that you can use to help you increase your earnings.
Choose a Forex investing methodology that has a consistent application
Before you dive into Forex investing, you must have some idea as to how you will be making the decisions for executing your trades, and you must have the necessary information to make these decisions.
There are some who will make choices by focusing in the underlying fundamentals of the company and/or economy of a country, then they will use a chart to help them decide when is the best time to actually enter the trade.
One thing that you need to remember is that chart patterns tend to offer more short term trading opportunities and pointers, whereas for long term Forex investing it is the fundamentals that actually drive the trend.
Hence, whichever methodology you choose, ensure that it keeps up with the ever changing dynamics of whichever market you are investing in.
Everyday issues of a country will drive the direction its currency will move; likewise, a company’s internal works and changes will affect the direction of its stocks on the market.
Keep up to date!
Select a shorter time frame for entering and exiting and a longer time frame to conduct directional analysis
Most traders tend to get confused because of the conflicting information they see when they take a look at charts for different time frames.
What represents an opportunity to buy into the market on a weekly chart, might actually show up as a selling signal on a day chart. Hence, if you take pointers for market entry from a daily chart, but use a weekly chart for your basic trading direction analysis, then be sure that you synchronize the two.
Meaning, when the weekly chart says you can go ahead and buy, wait until the daily chart confirms the same signal, or you might end up losing a lot of money.
Be sure that you analyse charts on the weekends
When the markets are close on a weekend is the best time to study the weekly and daily charts, and look for patterns and coordinate with news events that could influence the direction of a trade.
Check if the news and pundits suggest a market reversal while the patterns a making double top. Or maybe the pundits are telling you that the market will explode, and it could be a case where they are trying to lure you into the markets so that they can then sell their positions to increase their liquidity.
These are the things you will look out for while analyzing on the weekend, so that you will go about Forex investing with an arsenal of information to support each trade you make.
This kind of objectivity will help you to be more patient and in turn increase your profit margin.
While Forex investing, be sure to keep printed records
One of the best ways to improve on your knowledge and learn from your mistakes is to keep printed records of your trades. This is by far one of the best learning tools a trader could ever invest in.
Ensure that you mark your entry and exit points on all your charts, and write the necessary comments that will later remind of your motivation behind making the investment.
Keep organized files so that you can go back and refer to them over and over again. Jot down all the emotions behind each trade, were you getting greedy or anxious?
It is only through objectifying your methods of Forex investing that you will later be able to develop the kind of discipline and mental control necessary to execute profitable trades.
Implementation and Management
Since ‘profitable trades’ literally do not exist, there is no Forex investing system or platform that will signal a 100% guarantee of success.
Even if the system is profitable with a 75% profit-loss ration, the chance of a 25% loss still exists. Hence, implementation, execution and management are the defining characteristics of the art of profitability.
Successful Forex investing is all about educated risk control.
You must learn to take small losses often and quickly where necessary, and always try to get into a trade at the correct direction right off the bat.
This is a practice that does require lots of discipline and patience, which is why it is important to do your weekend analysis and constantly review the hows and whys of your trading methods.
When you enter a trade in the right direction, you are able to trail your stops and this usually results in profits or even at the worst you tend to break even.
