Forex trading involves buying and selling of currencies. The dynamics of Forex trading are very similar to those of the stock market. If you experience trading in the stock market, you should be able to pick up quickly in Forex trading. The primary objective of the business is to exchange currency for another with the hopes that the price will soon change to favour you. At the end of the day, traders make profits. You can easily use the proceeds from Forex trading to fill your piggy bank quickly. This article analyses some of the ways you can adopt to make more cash from Forex trading and fill that piggy bank as soon as possible.
Learn to Trade on Higher Timeframes
In Forex trading, many traders tend to believe that the best time to make trades is when the time-frame chart is lower assuming that this is the best time to make profits. This is true to some extent but not all the time. The lower-time charts more often send false signals to traders thus making it harder to make money on the Forex market. You can turn around your fortunes by trading on higher time frames. For beginners, the higher timeframes are the times to trade. For instance, a daily chart is stronger than a one hour chart because of the time that goes into the signals.
Settle on a strategy that favours you
Make a quick business decision whether you want to go long or short. You should choose between buying and selling. Taking a long position involves buying the currencies and selling them back at a higher price. In this case, you are buying the base currency and selling the quote currency. Going short means you want to sell. It means selling the base currency and buying the quote currency. You hope that the base currency will fall in value so that you can repurchase it at a lower price.
Invest with an amount you can afford to lose
Forex trading is easy, but it can also turn out to be a risky venture. Unless you completely understand the market dynamics, don’t risk with all of your fortunes. In Forex trading, scared money is lost money because when you are fearful, you tend to make trading decisions that reflect your fear and in most cases, they shall be wrong decisions. As a trader, the only amount of money that should be risked in Forex markets should be the sum of money that you can afford to lose. Don’t risk the money that you wanted to pay school fees with or buy your family food. Many traders offer you with micro and mini accounts that allow you to trade in Forex marketing while risking only a few dollars at a time and you continue to use correct money management. You can build up on your investment, and once you start making profits on the Forex market, you can easily use the proceeds to fill up your piggy bank.
Avoid watching the charts all day
Once you have already made up the decision to trade on larger time frames such as a daily chart, it is time you stopped committing one of the deadliest Forex trading mistakes which is watching the charts all day. If you are going to look at the charts all day doing nothing it shall be okay, but from watching the charts all day, you are most likely going to commit one of the following mistakes:
- Take trades when you should not
- Enter trades when you should not
- Taking profits when you should not
If you are committed to trading on daily charts, you only need to look at the trade charts only once per day. Switch your charts and look for possible trade set-ups when the market closes. Additionally, keep looking for information on the current state of forex market from trusted online platforms such as CMC Markets to ensure you make informed decisions.
If you follow the tips above it should not take you long before you fill up that piggy bank with the profits you make from Forex trading.