Is There Really a Safe Way to Trade Forex?

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To answer the question, “is there really a safe way to trade Forex” you will have to define “safe”. Keep in mind that the word “safe” is highly subjective. What may seem extremely safe to one trader may appear extremely risky to another.

First, we must remember that trading Forex is a speculative activity. That simply means that it is risky in comparison to other types of investments. What does that mean to someone that wants to trade Forex? It means that it should only be done with money that you can afford to lose. Money you can afford to lose is defined as “money that if lost will not affect your current lifestyle”. This is also known as your risk capital.

Let’s look at a “safe” Forex trading in another way. Safe can be defined based upon risk versus reward. Here are some examples. If you risk 1 to 3% of your Forex trading account for trade that could be considered conservative and safe. Risking 50% of your account on each trade is considered extremely unsafe. So the meaning of “safe” Forex trading is extremely subjective. Clearly how you trade Forex determines its level of safety.

The only safe way to trade Forex is through the use of a dependable Forex trading system. The bad news is that the vast majority of inexperienced Forex traders do not have a dependable Forex trading system. That leaves the beginning Forex traders with two choices. The first choice is to purchase a commercially available trading system and the second choice is to develop your own trading system. Whichever route you choose it is important to learn Forex trading and get as much Forex education under your belt as you possibly can. By doing your homework and educating yourself you begin to increase your probability for success. Effectively the better you become at Forex trading the “safer” you will feel.

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Is Forex Scalping a Practical Way to Trade Forex?

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Forex scalping is a popular way to trade for many of today’s Forex traders. Scalping is the process of taking small profits from each trade. This scalping is done on an intraday basis. This means that traders open and close the trades within the same trading day.

Both beginning and experienced Forex traders use Forex scalping as their preferred method of trading. Scalping can be a labor-intensive way to trade if you have to sit in front of your computer and manually place your trades all day long. These days traders have the option of using automated Forex trading systems to make scalping a hands-free activity.

There are several things to keep in mind when considering Forex scalping. The first is that your profit on each trade will be small. With this in mind you’ll need to focus on your risk control in order to be profitable. Remember that since each profit is small traders who scalp must remain mindful of the frequency of trades and the transaction costs they incur.

One of the biggest mistakes that inexperienced Forex traders make in scalping is that of poor risk control. Since smaller sized profits are easier to grab a than huge profits scalpers often experience numerous winning trades. The danger for risk control is that the profit from these numerous winning trades can easily be wiped out by risking too much per trade. That is why it is infinitely important to have your risk in line with your reward. It simply would not make good sense to risk 500 pips in order to only gain five pips. Such actions are the equivalent of trading suicide.

Once you have the hang of Forex scalping and become successful at it your account equity will grow. As your account equity grows you will then be able to trade more and more contracts as your account equity grows larger and larger. This is when the real beauty of Forex scalping shines through. With multiple contracts even though each profit may be small it then becomes multiplied by the number of contracts. With proper money-management and discipline Forex scalping can be extremely lucrative.

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What Is the Most Powerful Way to Trade Forex?

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Traders are looking for the most powerful way to trade Forex are typically looking for the most profitable way to trade Forex. In reality traders are looking for not only profit, but comfort level as well. Although many traders will not admit that comfort level is important to them experienced traders will tell you that comfort level is important when choosing the best way to trade.

You see a trading method that is not comfortable for you is one that you will not stick with. Treading a system that you will not stick with me is eventually you will stop following in trading that system consistently. Assuming that this is a good trading system to begin with not following it consistently is simply a recipe for disaster. Let’s dig into this a little further for some clarification.

There are some excellent trading systems available that do not have a high percentage of winning trades. But we’re talking about here is a winning percentage in the 40-60% range. For many beginning traders the success ratio might be uncomfortable for them. What many traders starting out and I understand that it is not the percentage of winning trades that makes a Forex trading system good, but its ability to profit over the long haul.

Whereas the percentage of winning trades may make some traders uncomfortable the frequency of trading may make them uncomfortable as well. Some traders simply have the need for high energy, fast paced action each and every day. It may be difficult for them to stick with a trading system that only takes one trade every three months.

We’ve seen a couple of examples of some of the types of things which may make certain trading systems uncomfortable for some Forex traders. Now let’s touch upon some factors of the most powerful way to trade Forex for you.

The capital requirements of the trading system is extremely important. Each of us has different amounts of money to invest in Forex trading. This means that we need to either locate or create Forex trading systems that work well within our own personal capital requirements. For example, a trading system which trades a portfolio of 12 different currency pairs is most likely not well-suited to someone without a well-financed trading account.

Along with the capital requirements the risk level of the system will also help us decide whether or not it is ideal for us. The systems maximum drawdown, which is a measure of the largest peak equity to Valley equity drop in a trading system’s history is a key factor. If we have our eyes on it trading system with a maximum drawdown of $25,000 we already know ahead of time that opening an account with $25,000 is not going to cut it.

As we can see the most powerful way to trade Forex depends on a number of factors each of which may be different for different traders. The most successful Forex traders either find or develop Forex trading systems which suit both of their personality as well as their bank account.

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Starting a Career As an Individual Forex Trader

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Starting a career as an individual Forex trader is one of the things that’s on the minds of most beginning Forex traders. Their thoughts turn to the level of financial freedom that Forex trading can bring as well as the amount of flexibility that the trading lifestyle can afford you. Here’s some useful things to consider before you enter into your Forex trading venture.

Do you have the necessary amount of working capital available? — If you plan on making Forex trading a career then you will definitely need to have substantial capital available in order to do so. While you can start trading and learn the ropes with smaller amounts of capital you most certainly will not be able to replace your day job with the monies generated from a smaller amount of capital. For instance, if you’re currently making $100,000 per year and you want to replace that income is unlikely you will do so using a $5000 Forex account. While it is definitely possible for you grow a $5000 Forex account in to a much larger account that can generate six figures per year, it does take more time to do so than if you started with a larger bankroll.

Do you have discipline? — To put things in perspective for you I wanted to start off by saying that every successful trader has discipline. Not some, not just the vast majority, but successful every trader. Although you will see many products which touts the ability to be unfocused and lazy and still make money in Forex trading, nothing could be further from the truth. Lazy people fail in Forex trading. Undisciplined people also fail in Forex trading. So in essence you want to be disciplined or become disciplined prior to venturing into Forex trading.

Do you have the time? Does your current schedule have room in it for you to trade Forex?

Are you willing to learn to trade Forex? — Do you really want to learn how to be a successful Forex trader? Are you willing to take the time and put in the effort necessary? These are some important questions you should ask yourself well before you venture into Forex trading.

Do you have a trading plan? — What is your plan for making enough money for you to have a career as an individual Forex trader? Do you already have a Forex trading system and do you understand the importance of Forex trading systems? Getting involved in Forex trading without a plan is a recipe for disaster. Make absolutely certain that you have a rock solid business plan before you place your very first trade.

You just read some questions you will need to ask yourself while considering a career as an individual Forex trader. These questions were placed here not to discourage you, but to cause you to think about the steps that are necessary as well as some of the important characteristics of successful Forex traders.

It is a good idea to get involved in Forex trading slowly rather than to jump in with both feet. By giving yourself the time to learn Forex trading you can at the same time build up your capital base so that you may have a comfortable cushion during the initial stages of your Forex trading career.

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Five Profitable Forex Trading Tips

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There are certain things that successful Forex traders do consistently in order to remain profitable. Here are some tips that will serve you well and will help you to become a much better Forex trader.

Always Know Your Risk Reward Ratio — it’s important in Forex trading to always know your risk reward ratio. For example, if you have to risk $6000 in order to make $100 you should not take the trade. Such a risk reward ratio is tremendously off-balance that it can be detrimental to your account balance. Always make certain that the trade is “worth taking”. As you gain experience you will find yourself not trading and standing on the sidelines rather than taking on too much risk.

Think Long Term — becoming successful in Forex trading is more of a marathon than a sprint. You’ll need to think long term in order to make big money in the Forex market. By thinking long-term you’ll be able to make it through those inevitable periods when things don’t go exactly as planned. Every successful trader can tell you about a series of consecutive losing trades that may have shaken their confidence. Keep in mind that these losing periods are natural part of Forex trading. Overcoming your fear of loss because you understand that your winners will overshadow your losers is one of your first steps in becoming a successful Forex trader.

Prepare Yourself for Trading Success — one of the biggest sources of failure in trading is a lack of preparation. Traders enter into the market every hour of every day without adequate trading knowledge, trading experience, trading discipline, or working capital. The old Boy Scouts saying of “be prepared” is very applicable to the field of Forex trading. One of the most practical ways to be prepared to take a few moments and formulate a simple Forex trading plan. Remember that when you have a Forex trading plan you will also have a higher probability of Forex trading success.

Maintain Your Trading Discipline — when you mention Forex trading discipline and trading psychology to some people they will react to you as if you were spouting off some totally useless pshyco-babble, mumbo-jumbo. The only people who think that trading discipline is unimportant are people who do not trade. We traders can’t really expect them to understand can we?

Exercising your trading discipline means such things as entering the trade when and at the price you are supposed to enter the trade. It also means cutting your losses and getting out of the trade that is not going your way. At some point in time in our lives we have all experienced what happens when we do not exercise our discipline and do what we are supposed to do when we are supposed to do it. The big difference in Forex trading is that not exercising your discipline can be very, very expensive.

What we’ve covered are just a few Forex trading tips that will serve you well. Please do not take them lightly and be sure to reference them again and again. As you gain experience in Forex trading you will find these tips were not just written at random, but were garnered from years and years of training experience. Keep these timely tips in mind and go on to trade Forex successfully.

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How to Choose the Best Forex Day Trading System

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Finding the best Forex day trading system will be important to your Forex trading success. There are many products available to choose from, so you’ll need to learn how to evaluate them in order to make the best possible choice.

The very first thing to keep in mind, of course, is that all Forex day trading systems are not created equal. Some will clearly perform better than others and some will simply not work well at all. Here are a few of the criteria for selecting the best day trading system for you:

Does the Sales Material Sound like Hype — it’s understandable that there should be a certain amount of hype in any sales material, after all it is advertising isn’t it. Unfortunately, in the Forex trading arena ridiculous performance claims have become the rule rather than the exception. Even more unfortunate is that most of these performance claims simply either are not true or are certainly not sustainable for the long term. The lesson to be learned here is that if it sounds too good to be true it probably is.

Does the Vendor Leave out Important Details — some vendors of Forex day trading systems may leave out important details in their performance reporting. One such important detail is the systems maximum drawdown level. In short, the maximum drawdown level is the largest drop in equity that the trading system has experienced. It is important know the drawdown level because you will need to understand how much of your account equity may be at risk at any time during your trading of the system.

Does the Vendor Make Ridiculous Claims — does the vendor make claims like “100% winning trades”? Fortunately, you and I are smart enough to realize that that is a ridiculous as well as a fraudulent claim. In reality, if I personally possessed a 100% accurate for extreme system I wouldn’t breathe a word about it. Would you? The percentage of winning trades is not nearly as important as most beginning Forex traders might think, so don’t be overly impressed by a high percentage of winning trades.

Does the System Have a Long Track Record — in order to evaluate any Forex day trading system we want the longest possible track record that we can get. A short track record such as a two-month track record is basically useless. That’s because even some of the poorest performing Forex day trading systems can have two months of stellar results.

As you can see it will be important for you to learn how to evaluate trading systems before you choose the best Forex day trading system for you. While the evaluation process may seem tedious to some, it will serve you well in the long term by helping you avoid those trading systems which might keep you from the success you desire.

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