Forex Currency Trading

Forex Currency Trading is an amazing meeting place of the smallest and the largest of traders in the World, not even Governments can corrupt the process and there has never been such a large investor that he can dominate it.

Make no mistake, when you enter the fx exchange market place, you are in the exact same bidding pool of forex currency trading with the largest banks, 4x brokers, investors and Governments as all the rest of the small brokers and day traders. Forex Currency trading in the fx exchange is an equal and level playing field - except for brokerage fees aka "the spread".

It is important that you seek out the best value for money with your fx broker. Like, how can you scalp for 6 pips a fx trade when you are paying 3 pips in spreads? Mostly I trade at 0.9 pips. Some brokers charge 0.5 pips - but how secure they are I won't comment.

That aside, forex currency trading on the fx exchange is a place of equals. No one can skew the fx exchange market for more than a few hours at best, and no one owns the game entirely. You will trade foreign currency with faceless people, and if you are smart, you will take their money AT YOUR WILL.

Trading foreign currency is not about luck or gambling. Rather, forex currency trading is a game, and it is a game of strategy and skill. Think of it as a computer game that is just played by kids - it is nothing to get too excited about.

It is just a game of skill, strategy and tactics. As such, teenagers can be the best at forex currency trading. To trade currency you must remove your emotions, and see it as a computer game of skill and tactics that kids use every day. Shoot in your trades, knock them down with strategy, drag out your cash.

I hate to use gambling as an example, but if you are playing Black Jack, 21's or whatever you want to call it, my point is that when you get Aces, you bet big. You play the numbers. When your card is rubbish, you fold or bet low.

To trade currency, when you see a huge dip or spike in the charts, it is a fair bet that the fx exchange will retract, bounce back, or retrace its movements. Knowing this helps a little for you to get a feel for what happens next.

However, no way can you consider following spikes and dips in the fx exchange as a strategy to make money trading currency. Rather, forex currency trading is about seeing the charts, and selecting the fx strategy that is right for the next fx trade to make. It is about being aware of the news that just hits the fx exchange markets and it is about being aware of the fundamentals of the world's economies. And it is about when to trade forex currency.

Get forex currency trading into your blood. Study the 4x strategies on demo accounts. Become passionate about forex currency trading. When you can make serious money in demo accounts at your own will, then you are ready to go live with real money.

To trade currency you need to have fx strategies that you have mastered. Some fx strategy is simple and easy, others take time to master. Give yourself that time. You can only make serious money trading currency when you have studied the right rules for success and applied them. Don't get too excited about a large, one day windfall in your favor. It's easy to lose that and more if you have no rules in place to protect you.

Do get excited when you knew you could not lose on a fx trade because your strategy left no room for error. Do get excited when you know that whatever the fx market did, your butt was covered - say by a hedging strategy.

Rule 1 of Forex Money Management is Do Not Lose Money! Forget the holy grail of making profits (for now), just protect yourself from losing money. That's the best place to start your forex currency trading education.

There is no such thing as a forex robot, super computer or the Albert Einstein of 4x trading. We cannot catch every market high to sell, nor every market low to buy. We WILL miss 4x trading opportunities. Get over it! But opportunity cost is not the same as money cost. If I miss a trade through caution or being asleep in bed, that is not the same as getting on a 4x trade and losing.

Forex currency trading comes down to rules, and the first rule of Forex Money Management comes down to never risking more than 2% on a trade.

The first rule of Forex Money Management is to be used, not abused. Let me run you through a typical day for me in a volatile forex trading market. I have my $10,000 4x trading account. I am only allowed 4 pips for my stop losses because I am going to be trading with 5 lots. 5 lots is $50 per pip, and with only being allowed to risk $200, I must not lose more than 4 pips.

So far, I am sure you are thinking that only the rule of 2% maximum risk makes sense - that none of my plans for 5 lot trades seem reasonable at all. Well, lets look at a real trading day. Stop reading this now, and open up your metatrader charts or whatever platform you use and look at the H1 (hourly) EURUSD for 19th August, 2009. You will then see that the USD crashed after some bad and sad economic data came in. The Euro shot from 1.4111 to 1.4265 in 3 hours - 154 pips.

Not even a super computer could predict to buy at 1.4111. News traders would have got on board based on the USA problems sure. But actually, I was lucky enough to be already long a few hours earlier. But with only a 4 pips stop loss? Luck or stupid?

When I entered my buy limit trade at 1.4080 I did it as a pending order. Actually, when I placed that pending order, I was going shopping with my girlfriend and wasn't going to be back home for hours. SO, at the same time I placed a 5 lot sell stop order at the same price as my 5 lot pending buy order. IF the market dipped to pick up my buy order, it would also hit my sell stop. The market can then do what ever it likes after that. Each trade 100% cancels the other out. It's called hedging. I had hedged my position with opposite orders.

If the market did not dip and execute these pending orders, nothing was lost. If I returned from shopping to find the market did pick them up, then I would be in profit on one trade to the same amount of the loss on the other trade. So far so good, I came back to find the orders now live trades and it was the long position that was in a loss position. But that was OK, no forex money management rules were broken because the short position was in profit to the same amount. By closing both positions I could only lose the 0.9 pips spread. Within an hour, I closed out the short position at break even, and let the long position continue to stay in profits.

After an exciting few hours at the screen I watched that long position go crazy into profits, and so I switched it to a 20 pips trailing stop, which it did do at 1.4245. That was a tidy, ultra low risk, $8,250 profit on the day. 82.5% profit on a $10,000 trading account while I went shopping. The first rule about forex money management was never broken. I was never at risk of losing 2% of my account.