Forex Trading for a Living
You can only trade forex for a living if you have an insane drive for success, the hunger to win (and earn big), and the tenacity of a leech. Do it only if you have the conviction and confidence to attack statisticians who claim that only about 15% of forex traders succeed in this "odds" market and have the fearlessness to say "bring it on" despite initial failures and losses. Here's an insight into this option.Forex
If you are considering trading forex for a living, here's a word of caution for you. If you thought that this job entailed just a few hours in front of your computer, expertise in a few technical analysis tools for trend analysis and statistical probabilities, and a secure means of steady income flow, you couldn't be more wrong. Its dynamics requires great skill and timing, the ability to withstand a few blows (there will certainly be quite a few), and a hundred percent acceptance of a few extra-gray hair that you will always seem to be growing. Only if you have the grit and determination to succeed despite failures and have the requisite financial knowledge and education, are you qualified to even consider becoming a full-time forex trader. As a beginner, you can only play it low and safe, till you gain the absolutely essential exposure and experience to become a pro. If you think you have what it takes, read the following paragraphs that will take you a step closer in learning it, like a pro.
Prerequisites to Enter These Markets Forex
Before you dive head first into the forex trading field, please gain adequate information about queries like, "does anyone make a living out of it" and "how much capital does one need for it." These two questions should be enough of a reality check on your big money schemes. It is true that you can earn huge amounts by trading in these markets, but it is also true that only a few highly skilled individuals actually do so, and the probability of that happening is very low. If that probability in itself is low, you can just imagine how low the probability of that happening on a regular basis is; think about it.
Apart from this, you need to have adequate financial knowledge about how these markets work, what are the different trading strategies for the same, and which is the best strategy for you, i.e., which one is in the best alignment with your income goals, investment horizons, risk willingness, and other factors. Last but not the least, the market is a cruel world that shows big dreams. Know who your friends and advisors are, and check their background track records before you follow them blindly. Having a fair and level head is an absolutely essential prerequisite when you think about entering this option. To help you in your dream job, the paragraphs below list the main trading strategies. These are followed by some tips to help you trade forex and make it your primary, full-time job.
Strategies Forex
Your trading game plan should be based on one of the following strategies or should be a combination of them. Mastering the techniques mentioned below should help you in your goal:
Trading Style Earning Objective Time Horizon Other Information
Position More than one thousand pips Many weeks or even months Though the stop-loss is high, at about 100 to 200 pips, the position taken is of a small size, less than 1% of account size
Swing Between 200 to 500 pips Between 2 to 10 days With a position size of about 2% of the account, the strategy comes with a 25 to 50 pips stop-loss.
Intraday Between 75 and 150 pips Single day timeframe Position is of about 2% to 5% of account size and there is a stop-loss of around 15 to 25 pips.
Scalp Less than 50 pips About 3 hours max Position sizes of between 5 to 25% of account size with a stop loss of between 7 and 20 pips.
pip = the smallest possible price change in an exchange rate
Tips
As a beginner, just aim for maximum account growth at minimal risk. You can move on to taking on increased risk for reaping greater rewards, when you advance in this field.
If you already have another job, never leave it on a whim to trade forex and making big money. Gain experience and exposure first. Once you are adept at the workings of the markets and have turned pro in skills and market timing, you can consider making it your full-time occupation. Till then, make it a secondary job, parallel to your primary one.
Learn all the possible money management skills, for they are absolutely essential for survival in this rough and tough field. Furthermore, you must learn the tricks of controlling losing bets from cascading out of control. Money management will also teach you to retain your winners in the "winners" category over the long run.
Always trade in currency pairs, for this will serve as a kind of hedging technique. Open positions in forex markets, especially when you have taken large positions in a single currency, leaving you with very heavy risks of potential losses, in case of adverse exchange rate movements in that particular currency.
Do a proper trend analysis to know your entry and exit positions. In this trade, beginner's luck always wears off, and it is a sheer skill and precise market timing that will let you survive in the long run.
Leave your personal feelings out of this, especially greed, for it can be your downfall. Exiting positions at the right time is the only thing that will make you money. Waiting for higher gains that may never materialize is a common folly. Trust your intuition and experience.
Great successes can only be based on proper defenses. Always hedge your risks. Though these may reduce your upscale profit potential, these will also put a floor on your potential losses. Remember that, when you trade forex for a living, it is your primary source of income, and it is your duty not to put it under unnecessary jeopardy.
Failure is a part and parcel of the job, so do not make losing money your final failure. Persist with your goals and learn from your mistakes. It is always best to take time out after a loss or failure, for this will help you view your mistakes objectively. The forex market is too fickle to stay down, or up for that matter, forever.
Read more at Buzzle: http://www.buzzle.com/articles/trade-forex-for-a-living.html
