How to Make Money Trading Forex
The Forex market, the most liquid financial market in the globe with greater future projection, possessing a growth share of more than 150% trades on a daily volume of $5 trillion. Despite the high daily trading volume that is negotiated, nobody believes that making money in the Forex market is easy. However, with dedication, working hard in a constant way and a good methodology you can make money in the Forex market. Below we will explain with details how to make money in the Forex market.
In Forex, one buys or sells currency. It is simple to make a transaction in the Forex market: the mechanics of an operation is much related to those we can find in other markets, such as the stock market. The major aim in Forex is to exchange one currency for another, with the anticipation of a change in price, expecting that the price of the currency that one purchased will appreciate with respect to the one that was sold.
How do you make money in the Forex market?
In Forex you can make money with the price fluctuations of the different currency pairs and you can be able to do so whether the price increases or decreases, since you can choose 2 alternatives when opening a position.
Go long: Open a purchase position if you believe that the price will rise and then close the position with a sales order.
Go short: Open a sales position if you believe that the price will go down and then close the position with a purchase order.
For the millions of participants in the Forex market the goal is to buy cheap and sell expensive or sell expensive and buy cheap. However, the million dollar question is:
How do I know when is the best time to buy or sell?
There are 2 methods to try to predict the optimal moment to buy or sell in the Forex market: Technical analysis and Fundamental analysis.
- Technical analysis
It is established on predicting the price direction through the analysis of its evolution with the aid of graphs that show the different values that it has been taking, to look for formations, signs of continuation or change of tendencies; aside being able to use a set of indicators based on mathematical formulas and statistics. The technical analysis may appear a bit complicated at first but it is much easier than you think.
If you want to make money trading Forex you must learn technical analysis properly, the great thing is that there is abundant free documentation on the internet to learn technical analysis, if you are a discipline and serious person you can learn in few months, the most important thing is to practice.
- Fundamental analysis
It tries to predict the direction and future movements of the price, by analyzing the economic and political situation that may affect each currency pair. It is largely used by investors who operate Forex in the long term; although it is also used by traders who wish to take advantage of those moments of high volatility to generate income.
These moments of volatility largely occur after the appearance excellent economic news and represent an outstanding opportunity to obtain short-term gains. A great recommendation is to have an economic calendar to be aware of this news, and above all focus on the most outstanding of the day, since there will be many that will might not have an impact on prices.
The experienced and professional traders can spot trading opportunities in Forex using technical analysis and fundamental analysis although most use technical analysis. It is crucial that you learn to perform the technical analysis accurately and that you begin taking practice and experience from the first moment. Further, technical analysis will be your best ally to spot trading opportunities and make money in Forex.
