The amount of liquidity on the Forex markets have become larger than even the stock markets of the world today, surpassing $5 trillion a day mark in turnover. But unlike stock markets, trading currencies has only become easy today with the availability of a Forex trading platform and high speed internet. You can trade in currencies 24X7 as the world is divided into many time zones allowing you to make money even at odd hours of the day by choosing what Forex currency pairs you wish to trade. Despite these new developments, more than 90% of investors lose money consistently in Forex markets. Here are some simple ways to maximize your chances of making profits in the Forex markets.
The basic principle behind Forex markets is to speculate in the prices of pairs of currencies. You buy a currency in anticipation of movement of its price in comparison to another currency. When this price changes takes place, you sell the currency to book your profit. It is your anticipation of movement of the price of a currency that allows you to make money. You do not buy a product or service when you trade in the currency market but you place your confidence in the currency of the economy of a country.
It is seen that investors are correct in predicting the movement of a pair of currency more than 50% of the time. Despite this fact, more than 90% of the investors lose money consistently. This is because traders lose big money when they lose while they book small profits when they are right in their trade. This implies that investors should control their emotions and cut their losses early. Cut the trade as soon as it goes against your anticipation instead of waiting and hoping that there will be a reversal of trend.
On the other hand, few inexperienced traders start to get worried when the trade turns profitable and cut it off at the first instance, losing out on their earnings. This is because of the fear that looms large in their minds that they might lose their money on the trade.
If only traders control their greed and fear, they can hope to make money more often that they do now. Do some research on the psychology of trading and you will become a better trader today.