Do you want to know how to make money with Forex? Day traders ask this question every day.
Forex is the largest financial market in the world. If you look at the market you will see that it is run by big companies and day traders like you.
The difference between the corporations and the day traders? Only 4% of day traders make money. The others lose money and give up trading.
Related | The 10 best tips for successful forex trading
As a beginner trader, you need to know how to escape the bottom 96% of traders and make it into the upper echelons of day traders.
Read on to learn more about Forex basics and the top strategies used by the pros.
What is Forex?
Forex stands for foreign exchange. It is also known as FX in trading circles. This is how currencies from all over the world are traded.
You may have traded Forex without even knowing it. Have you ever traveled outside the country? You probably needed to exchange money, be it Euros, Pounds or Dollars.
This is part of forex trading and $5 trillion is traded every day.
When you exchange money, you sell the currency you have and buy another currency. Everything is bought and sold in pairs.
The value of each currency fluctuates and depending on the timing of your trades you can either make money or lose money.
For example, if you think the US dollar will continue to fall, you can now sell it and trade it for a currency that you think will rise, such as the euro. This trade is displayed as USD/EUR since they are pairs.
Forex trading goals
If you want to know how to make money trading Forex, you need to start with your trading goals. After all, if you don’t set goals, Forex is just another expensive hobby.
Don’t commit to dollar amounts at the beginning. Because there is so much to master in this process, set goals according to learning different processes.
As you gain more experience, you can set goals based on financial results.
You need a good broker
To start trading, you need to sign up with a broker or financial institution. The trading platform is available for you to make Forex trades.
When choosing your broker, you must have 24/7 access to the trading platform. Forex is always running and trades are constantly being made. Remember, it’s always 5pm somewhere.
The trading platform you choose will play a big part in how you can make money trading Forex.
It will be different from cryptocurrency software trading and there are many platforms to try. Most brokers have demos for testing and it would be wise to try a few before settling on one.
You want to be sure that you choose a broker that offers the account types you want, the way you can withdraw funds, and the amount you can deposit.
Some brokers offer no deposit bonuses where you don’t need to make a deposit but get a small bonus if you meet certain requirements.
Learn different forex trading strategies
Once you set up your brokerage account, you will want to practice and try different trading strategies before you start trading for real. These are the most common forex trading strategies that other traders will talk about.
#1. analysis trading
Analysis trading involves looking at and analyzing data to predict currency trends. There are two ways to analyze data: technical analysis and fundamental analysis.
In technical analysis, you look at currency trends. If a currency has slowly increased, determine whether or not it will remain on these runes. With this type of analysis, you assume that traders are buying based on emotional factors, not data.
A fundamental analysis deals with the economic fundamentals of a country. The unemployment rate and GDP are typical indicators that traders can use to determine whether a currency is overpriced or not.
#2. momentum trading
In momentum trading, traders examine a currency’s ups and downs. You will look at the number of trades and the price of the currency.
When a currency rises or falls, a trader assumes the momentum will continue. When this momentum begins to shift, the trader anticipates that the trend will reverse.
#3. position trading
If you want to make a long-term trade, position trading is for you. You carry out your fundamental and technical analysis and determine the trend of a currency over several months or several years.
It’s all about the long game here. Currencies rise and fall several times a day and you will if you are patient and wait for those moments when you might be tempted to sell.
Choose your account type
When you start trading forex you have three account options. These are standard trading accounts, mini trading accounts and managed trading accounts.
You need to know what the risks are for each account type. Some are better suited in situations where you spend a lot of time trading, others are good if you plan to invest small amounts of money in the market.
The success mentality
If you want to make money trading the Forex market, you need the right mindset for it. Anything to do with money can be emotional for people, and it’s not uncommon for people to buy and sell solely on emotion.
How do you remove emotions from trading? Make a system you can stick to. Know how much you can trade, how much risk you can take and how much loss you can take.
When making a trade, you need to know why your strategy and goals are and stick to them.
Otherwise, you might as well play slots at the casino.
How to make money with Forex
Learning how to make money trading Forex is one of the skills that traders would love to have.
It doesn’t happen overnight, but with time and practice, you can be a skilled Forex trader. You need to know the strategies in play and when to use them.
Check out our blog for more great tips on making money online.
