Risk Management Is The Key Become A Millionaire In Forex
As all we know foreign exchange or forex is the largest market in the world. The biggest traders on the currency exchange market are governments, banks, and corporations. More money is traded on the forex in one hour than is traded on the New York Stock Exchange in one day. With all this money flying around it isn’t hard for some of it to land in your pocket. But, before taking action on forex, read first our four forex trading tips so we can more wise to treat our money.
I guess the dream of most traders is to become a millionaire trading forex. But is it really possible? Sure. Absolutely! It happens every single day. Although, if you want to be the percentages, I would for every new Forex trader that became a millionaire today, you’ve got 10 other people who have crashed their accounts. So why is there such as big difference?
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Well, to become successful in trading forex, you have to be able to think outside the box. That’s a problem for most.
Currency trading is very simple in comparison to the NYSE. FOREX only has about 30 currency pairs vs. the NYSE’s universe of thousands of stock offerings. In FOREX trading, currencies like the dollar and the euro are paired with each other in order to produce a buy/sell option to the trader.
Do you have any idea that you can become a millionaire just by trading in the Forex market alone? This story has been proven time and time again by a lot of people already. So if you want to join the FOREX trading bandwagon, there is no better time than now. You know, it does not take much for a person to make an account in the forex exchange trading market. Not to mention the fact that the members of the general public have the choice of making an actual or a virtual account.
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The fact of the matter is, that people who are looking to become a millionaire overnight are the most likely to fail at forex trading. Instead of taking the time to learn how markets behave, what the best trading strategies are, and how to make predictions about the future state of the market, these types of people are looking to make it big in a short period of time, and they are not as concerned about losing money as they should be. These types of cognitive biases lead people to make bad financial decisions that lose them a great deal of money.
1. How FOREX Trading works.
When you’re playing the FOREX market there are two choices: buy or sell. Since there are only about 30 or so currency pairs(for example: British Pounds vs U.S. Dollars or Euros vs Swiss Francs) the market isn’t very wide.
A normal trade goes something like this: Say that 1 euro is worth $1.30 U.S.. From this price you can either buy euros, hoping it will go up higher, or sell euros, hoping it will go lower vs the dollar.
When you make your trade you buy or sell in ‘lots’. A lot is a larger block of money that your brokerage is offering a piece of. The overall size of a lot is not relevant to trading FOREX accounts because you determine what price to put on a currency price move.
Since currency prices move very slight amounts the pennies are subdivided into ‘pips’. These are hundredths of a penny in the case of the EUR/USD pair. So using our example earlier; the Euro is worth 1.3000 and it goes up to 1.3025, that’s a move of 25 pips.
When you place your trade a pip can be worth 1 penny, 1 dollar, or even more. That 25 pips could be worth 25 cents, 25 dollars or more. When you close your order the money is yours. Simple right?
2. Setting up a FOREX account.
The are dozens of online FOREX brokerages. These brokers make trading FOREX simple fast and easy. I am a fan of one called ICMARKETS but most of the brokerages are the same with a few slight differences like deposit methods and minimum balance. I would look at a few before deciding to open a live money account.
Once you’ve decided on a broker you’ll download an account interface program, sort of like a control panel. These programs allow you to monitor all aspects of the currency markets from real-time charting to news headlines, to your trade execution. FOREX interfaces can monitor your trades and even automatically place them for you. Without these great programs trading online wouldn’t be as fun.
When trying out any FOREX online broker always open a demo account and get a full understanding of their software and client relations. I prefer my broker be located in the United States, that way I retain at least a slight amount of recourse-ability. Take action by opening a live account with our recommended forex brokers who have a good reputation and most importantly are fast on deposit and withdrawal processing.
3. Develop a system of Expert Advisers.
Expert advisors sound like people who tell you how to trade, but in reality, they are automated trading programs that execute a trade for you. Expert Advisers are computer algorithms that are programmed to read a certain market condition and execute a trade in response. They can be extremely profitable but you must understand that Expert Advisers are like golf clubs: They work as long as they are used under the correct FOREX market conditions.
Expert Advisers are easy to find. Many are published for free and available in your FOREX Interface program. There are also independent programmers who are perfecting entire systems of FOREX trading centered around these Expert Advisers, they charge hundreds to thousands of dollars for these simple programs. The idea behind the big price is the promise of big returns. Surprisingly some of them work extraordinarily well.
I am a firm believer that it is very easy to make money on the FOREX. The hard part seems to be keeping it once you’ve made it. Since FOREX accounts are based on how much money you put into them, there is always a chance that a bad decision can wipe it all out quickly. Very turbulent market moves can happen with major banking news, like an announcement of a government bailout. This can send a currency pair rocketing hundreds of pips. To avoid losing all your money you need to use money management.
Money management is the practice of not leaving yourself exposed to wipeouts on the FOREX. The easiest form of money management is to take your profits and move them into a separate FOREX account. That way if account A is wiped out account B still has your profits. Sort of like blackjack except in forex the odds that you’ll win are much higher so the same bet over and over is actually a smart idea.
Try a demo account for the forex. If you make money with the demo account, you will make money with a live account. I once put $250 into a Forex account and had $1600 within a week. Learn more about reading price action forex setup in a 5-minute time frame combined with candlesticks reversal patterns too. Solid money management and modest daily goals will make you a Forex millionaire in no time. You’ve to make a good commitment if you want to trade forex.
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I hope these four tips above will help to get consistent profit each month, because as we know forex is about how to make money consistent. This is the primary objective of professional forex traders. And for sure we need to test the best of the best forex trading strategy in a deposit bonus account for Free $ 30 USD with TICKMILL or ROBOFOREX CENTS to test whether our trading system works or not in at least 3 months.