Entering with unrealistic expectations will also cause you to put more pressure on yourself financially, making any losses far more excruciating than they need to be. Even before I give you the first step on earning as a Forex trader, I want to add that your mindset is everything. Making money through Forex is going to require sheer grit and dedication — not collapsing into a ball of despair when you trip and graze your knee after the first hurdle.

Technical analysis is the process of reviewing date — charts and graphs — to make predictions on how the value of currency will change in the future based on its history. Your broker will usually have this information handy, however there are a number of online sources you can use to find it.

3 Things I Wish I Knew When I Started Trading Forex

Technical analysis involves looking at the prices of shares themselves and the patterns of other investors to determine how values may change in the future. Fundamental analysis involves looking deeper into the company, figuring out how much the share is intrinsically worth based on the company itself rather than based on the patterns of other buyers.

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You need to determine your margin before actually making any trades to figure out how much money you actually have to trade with. She then ruined all the hard work she had done in winning me over by saying her trades are 98 percent accurate, higher than any legitimate trader could guarantee. If only trading forex were that simple. Neither account replied to multiple requests for comment after I suggested they were running scams.

Forex trading as an efficient way to earn money

He lost money on dodgy signals when he was a rookie, but continued paying out of a misplaced sense of pride. I might as well be throwing darts at a dartboard. Tom has been trading for 15 years and he now does it full-time after quitting his HR job at a bank and moving to Mexico. Although he has been profitable for the past five years, he says it is only really in the last two years that those profits have given him consistent returns. He also supplements his forex income with matched betting and other remote work.

With the scams too much of a minefield to navigate, I push forward alone. My biggest win comes off the back of a piece of news: an MRP poll, which is seen as a reliable general election result predictor, forecasts a Conservative majority and GBP rises quickly against the Euro because markets tend to prefer the Tories to Labour. This is as close as I get to my " big short " moment — but it's not enough to make up for my losses.

I had stopped trading by the time the general election rolled around, and it was probably for the best. I thought Labour might do better than expected, perhaps snatching another hung parliament, but in the end they were crushed by the Tories. In the immediate wake of the exit poll the pound surged more than 2 percent, its biggest one day rise since January of At the time of writing, Brexit anxiety has crept back in to dampen the gains, but would I have predicted any of this accurately enough to make money from the turbulence?

Probably not. Before I started trading forex, I thought I'd either scrape a profit, or lose it all in a blaze of glory. Either would have made for better copy, but in the end it turned out to be far more dull than that. I made 35 trades in total — 15 were profitable and the rest lost money. Like three-quarters of retail forex traders, I proved to be a flop.

By signing up to the VICE newsletter you agree to receive electronic communications from VICE that may sometimes include advertisements or sponsored content. Sign In Create Account. Here's what happened when I bet against the value of the British pound on the foreign exchange market.

This is usually expressed as a percentage and is also known as leverage when expressed as a ratio. As a trader, this means you can hugely amplify your returns, but at the same time amplify the losses. He really knew his stuff that guy. It should all start to make a little bit more sense now on how money is made when trading forex. The powerful tools of leverage and CFD's combined make trading one of the most profitable vehicles you can choose to drive.

But before we can start making those returns, we need a plan. This will be your forex trading strategy A forex trading strategy is a plan you make to build a money-making portfolio. A good forex trading strategy will answer the following questions, no more and no less:. The aim of the game is to try and predict which currency will gain strength and increase relative to another currency.

In forex those questions can be replaced with the following steps:. In this step traders will determine the value of each currency, to determine if you want to buy it or sell it, based on its fundamental value. In this step traders check the current price, and historical price of the forex pair and compare it against your value calculation.

If its below value, buy, if its above value, sell! In this step traders will work out at what price they're willing to take their profits, or minimise losses. A forex strategy must have a structured plan that encompasses valuation, optimisation and risk management, in a quick and easy fashion every week. To understand this, we need to look at something called fundamental analysis. This is where we consider a variety of economic variables to determine the supply and demand of a currency. Simply, how much money is there in circulation in the economy. Each currency is backed by an economic region or country.

Therefore, what we want to do is take a deep look into how well that economic region is doing to decide whether we want to buy or sell their currency. A lot of traders use things like a macro currency strength meter to do this for them, as it's not an easy task to do alone. The first step to answering the questions of "what" we want to buy or sell, is to change the question to:.

There are 6 key factors to consider:. These 6 broad categories are essentially how global macro traders, from investment banks, right the way to your stay-at-home novice value a currency. Once analysed, this will tell us, in the future, if there will be an increase or decrease in the supply of the currency for a particular region.

Then from this, we can answer our original question of "what" we want to buy or sell by understanding the basic principles of supply and demand theory The theory of supply and demand suggest the amounts of goods and services available for people to buy in comparison to the amount of goods and services that people want to buy.

I think the best way to explain this is with a little example:. Once upon a time, in a small town, there was a Gold mine. The miners were working for 2 weeks and found an almost infinite amount of gold, and it was easily accessible to the whole town. In this town, there was a massive "supply" of gold. As the gold was so easily available, the "demand" for gold was quite low.

This made it cheap. Day After a month, there was a storm, and it flooded the mines, washing away all the gold that the village had, leaving a small stockpile that was in the Mayor's house. Gold has now become scarce, and the "supply" has become restricted. As the gold was no longer easily available, the "demand" for gold has drastically increased.

How Do Currency Market Work?

This made it a lot more desirable and more expensive. There are 2 rules we can gain from our story:. This same principle applies to currencies. By using our fundamental analysis, we can determine the supply and demand of the currency, and by net effect, its value. And just like that, we know "what" we want to buy and sell, and "why" we're doing it The most powerful trading strategy there is and is used by nearly all investment banks and you soon enough you'll be using it too budding forex trader.

But Marcus, how do we know whether there is more or less money in circulation? The trick is to use a scoring system for each economical variable which makes it easier for us to interpret the data. This is essentially what a macro currency strength meter would do to make it really easy. Our macro currency strength meter has already considered if there is more or less money in circulation for the United States and Japan. It then computes the currency score on a scale of to on how strong or weak the currency is dependant on this.

If we have a strong positive score for a currency, we would want to buy it the currency is in low supply, more demand. If we have a weak negative score for a currency, we would want to sell it the currency is in more supply, and less demand. If you'd like to learn this in a bit more detail, we have a free web-class breaking it all down simply here. Now we know what we're doing, and why we're doing it The best traders answer this is with a traffic light system based on the current market sentiment :. If the market is against you - don't enter.