Forex Trading – Before the Internet and online brokers leveled the playing field, private investors could not do any foreign exchange transactions at all – except in the exchange office on vacation.
Today, however, even small investors can trade currencies practically anytime and anywhere (provided they have an internet connection).
In principle, you can either trade foreign exchange directly on the spot market or via derivative financial instruments such as Contracts for Difference (CFDs).
The latter is particularly suitable because of the extremely high level of liquidity combined with moderate volatility on the currency market. Leverage in CFDs allows you to trade comparatively large amounts with relatively little capital investment. In this way, you can also participate in small fluctuations in exchange rates.
A calculation example of how leverage can affect your trading results can be found later in this article.
The foreign exchange markets are constantly in motion, influenced by factors such as interest rate changes, economic data or political events such as elections or wars.
If you acquire the theoretical basics of forex trading, keep an eye on the relevant current events, choose a reputable broker and reliable trading software, then your chances of profiting from currency rate changes are good.
But don’t forget: there are no opportunities without risks. As everywhere, the trader can also lose money in forex trading. As a beginner trader, you should take it slow. But with the right preparation and experience, currencies can become your new best friends.
Here are 5 Ways How to Become a Professional Trader
Whoever acts in the field of derivatives cannot avoid consistent money management. Because nothing is more fatal than running out of capital to expand or maintain positions.
Money management also includes never holding positions that are too large and thus either endanger further trading or strain your nerves so much that you start making mistakes out of nervousness.
The rules of thumb are:
- Never trade with money that you actually need for other purposes. Not even if that point in time seems a long way off.
- Reduce positions if you find the ongoing trades are making you so jittery that they are dominating your thinking.
- Never act under time pressure. Only trade when you are certain that you can monitor prices closely enough to buy, sell, and adjust stop prices.
- And, what should be clear: Never enter into a position that is not secured with a stop rate. Which means that you a) are clear in advance where the crucial point “X” is at which you have to book a trade as a losing trade and exit. And that you b) determine in advance how much you want to accept in loss in the “worst case” in such a trade … which in turn determines the size of the position, so that you cannot act with too much effort if you heed these specifications.