There are lots of Forex traders out there. However, over 90% of them never become profitable with foreign exchange. In reality, making money with Forex is not as difficult as many investors make it. Here are 3 ways to make it happen.
Be Skeptical Of Forex Robots
Robot Forex trading programs get a lot of hype. While they can make you money, none of them will make you rich-even the best ones. Many investors think they will see returns of 20-30% a year with these robot programs, but these claims are greatly exaggerated. Most likely, you will see returns in the 5-10% range, assuming you pick a quality robot. If you do not, you could lose money.
A good robot will never make as much as a human investor. While many of them will make you money, they will not make you the huge ROI many investors claim. Instead, you want to focus on learning investing yourself if you really want to become profitable.
Consider Fundamental Analysis.
This is a form of investing where you focus on buying currency pairs for the long term. Most Forex traders use technical analysis, simply because fundamental analysis is rather difficult when dealing with foreign exchange. However, technical analysis can be very time consuming. While it can make you money, it requires a lot more time and effort.
On the other hand, fundamental analysis is designed to help you make money long term from an investment pair. The factors you look at to determine a currencies’ long term potential include the countries’ interest rates, unemployment statistics, and inflation rates. These are the best indicators of how a currency will do for the long term.
As mentioned, fundamental analysis will help you make money long term. This is because you are buying with the intention of holding for the long haul, and you do not have to keep making trades to be profitable. The whole strategy is designed around fewer, low quantity trades.
Cut Your Losses
Having stop losses is very important with Forex trading. If you do not, you can easily hold an investment for too long, and you can end up losing a lot of money from it. Instead, you want to have a set point you will sell at no matter what.
If you are looking to join the many Forex traders investing in foreign currency, you have to take a different approach than most of them. The important things to do are to invest yourself, cut your losses and invest for the long haul. Use these 3 tips and you will become a profitable trader shortly.