Forex Trading: Can You Really Make Money Trading Forex?

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Forex Trading: Can You Really Make Money Trading Forex?

Monday, September 29th, 2008 Subscribe To Our Feed

The notion of trading foreign exchange (Forex) currencies may sound like a fairy tale. You’re doubtless asking yourself if there is any possibility that you can earn cash trading Forex?

If Forex prices stayed fixed then you’d expect there to be a clear win/lose for every currency deal made. But that view is way, way too simple. Sure, if I was selling you actual cash dollars in exchange for dollar notes, there’d likely be a no-win situation. Of course, if I was dumb enough to sell you $100 for $99 then I’d lose a dollar and you’d win one.

Forex trading is no way near as easy to understand as that example though.

Despite what you might think from the signs in a travel agent’s window, the exchange rate between currencies is almost always changing. Take a glance at the Forex currency graphs and take a note of the amount they move in as little as an hour. Then remember that whilst dealing Forex can be simply selling US Dollars to buy Euros. I could change my dollars into euros first, if the mood took me. Of maybe it would make sense that two (or three or more) currency exchanges would benefit me more than just a single trade. Even after the fees involved.

If you’re just starting Forex trading, it will pay you to go through at least one of the online Forex courses available.

Then dip your toe in the water by placing some money in a Forex trading account.

Don’t waste your time or effort with the demo accounts you can get. It just isn’t the same thing. You won’t make the same decisions if it’s not really your money. If you don’t believe this, go ahead and open a demo account. Make sure you take note of what your stomach tells you whenever you make a currency trade. If it doesn’t tense up with worry in case you lose your fictional dollars (and it probably won’t) then ask yourself whether you’d have the same reaction with real cash. Unless you’re superhuman, my guess is that the deals you make with actual cash won’t be anything like the deals you make with play money.

Which means your first foray into Forex trading should be with real cash. Cash you can afford to lose. But cash nonetheless.

Next up, unless you want to be glued to your computer screen 24 hours a day, get some Forex software to help you. At its most basic, you want a software program that will take note of your win and lose limits and will end the trade at one of those points. A “stop loss” is set when you place a trade to make sure that you don’t lose all your cash if the trade goes against you. It’s also a very wise move to quit your Forex trade whilst you’re in profit.

Find out more about automatically trading Forex here.

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