Many of us dream of making money on Forex, masterfully playing on the stock exchange, but do not know where to start. As you know, the currency exchange does not forgive mistakes, does not give concessions to beginners, and requires traders maximum accuracy in making decisions. In order to feel confident, you need to undergo Forex training and know the basic principles of the foreign exchange market.
Many who know about the Forex market believe that it is possible to make money on it exclusively by trading, but this is not so. Let’s look at several options for trading in the Forex market.
So, trading is really the most popular, widespread, and quite an effective type of earnings on Forex. This type of trade is a transaction with a currency through a broker. The principle is clear: bought cheap – sold more expensive. It is finished at first glance; it seems that this is simple speculation. But in practice, it is much more complicated. In order to know the foreign exchange market, and understand when you need to buy, and when to sell, and do it successfully, you need to have the necessary knowledge and experience. In many respects, the right choice of a broker helps here, as well as knowledge of technical and fundamental analysis. Just have a look at the features of HotForex that will help you choose the appropriate broker.
A close option to trading Forex earnings is financial betting. The principle is the same, only here you do not buy currency but bet on changes in its exchange rate. For example, you bet $10 that in a couple of days, the dollar will rise by 7 points. If your forecast comes true, you get $10 and interest on the amount. If the forecast does not come true – the rate burns out.
Another option for making money on Forex is the use of automatic systems. The essence of this method is that you select traders with the highest percentage of successful transactions and subscribe to their signals. Further, all trade transactions that the trader of your choice makes will be automatically copied by your account, even when your computer is not working. It seems that this is an ideal option, since it does not require any special financial knowledge and experience, and all that is needed is the right choice of a trader, subscribe to it, and go about your business. Yes, this scenario is possible, but do not forget that no one is safe from mistakes, and if “your” trader makes a mistake and loses a large amount, the same will happen to your account. Therefore, here, constant monitoring and adjustment are necessary.
The next type of earnings on Forex is investing in PAMM accounts. This is a kind of trust management when a trader manages the total capital of investors. The main feature is that having given your money under management, you can no longer influence the trading process.
Definition of a trading strategy, and it’s testing on a demo account
In order to succeed in Forex, you need to develop a good trading strategy that will clearly regulate the conditions for transactions, avoiding a double interpretation of situations. It is such a tough approach that allows the trader to clearly plan the entry point to the market and the moment of closing the position with the highest possible profit. A competent trading strategy developed for specific time intervals (weekly, daily, intraday) allows you to always act in accordance with the plan, without committing unreasonable actions under the influence of emotions.
The right choice of a trading strategy is one of the most important components of success at Forex, since it allows you to minimize losses and achieve constant profit from any transaction.
Over the years of the existence of trading, a huge number of different strategies have been developed and described. However, when choosing your own strategy for Forex trading, it is essential to focus not on other people’s experience, but on the individual opportunities that you have – this is investment capital and the time you can devote to Forex trading. Next, you need to identify your financial goal and the period for which you want to achieve it. Based on this, the level of riskiness of the strategy is determined.
By the way, it is the presence of our own strategies that allow us to act effectively in any situation and distinguishes an experienced trader from a beginner.
To test the effectiveness of the chosen strategy, demo accounts are perfectly suitable on which you can test one or another option without risking losing money. Therefore, demo accounts are a tool not only for beginners but also for experienced traders who want to try out a new strategy without risk.
Automated trading methods include various Expert Advisors, scripts, and custom indicators. Advisers are perhaps the most common of them since it is they who account for all the routine work of technical analysis. In the MT4 trading terminal, advisers are special programs that allow you to automate analytics and trading: they conduct a technical analysis of markets, and on the basis of the received signals, give commands for performing operations, as well as manage open positions. Many traders use advisers in their work, while only a few of them achieve good stable earnings, while the rest face considerable losses. It is not that such programs work poorly, but that not everyone knows how to use them correctly. Therefore, trading with the help of advisers also needs to be trained.
Another way to automate Forex trading is through custom indicators, that is, programs that allow you to implement the technical analysis function. Creating a new custom indicator is not difficult at all – you need to launch the “Expert Advisor Wizard” in MT4, then select the category “Custom Indicators” as the type of program, then configure the parameters, and you can get started.
Another option is scripts – programs designed for one-time use, and then turned off. Most often, they are written in the programming language MetaQuotes Language 4 (or MQL 4) and can perform both analytical and trading functions. Unlike advisors, Forex scripts are executed only upon request. In other words, if the adviser works almost constantly, then the script, having worked once, independently completes the work. Scripts are a fairly popular product among exchange traders who want to increase the efficiency of their work.
Whatever you say, there are a lot of recipes for how to make money on Forex, and a lot of books and articles have been written on this topic. That is, there is plenty of theoretical information for self-education.
But in order to be ready for independent “swimming” in the open spaces of the stock markets, it’s worthwhile to undergo quality training from professionals who will help you understand all the nuances and intricacies of the Forex market.
For this, it is important to choose a good and trusted brokerage company that has already established itself in the market and can provide quality training and support to its customers. One such company is MTrading.