Do you know that you can make money trading forex?

If you know that... You’re OK

If Not you are missing a great chance to make easy income.

This article will help you to understand better what Forex market is, and how traders benefit and

make money from it.

There are many people forex changed their lives to a better one; there is no reason to not make

money trading forex market.

However, there are reasons why 95% of people still not making money from financial markets and

still losing their money every time they decide to trade a market.

A forex market is a place where traders trade currencies (United States dollars - Australian dollars -

Canadian dollars - Japanese yen ...).

In the forex market, you can buy a currency by selling another one, like buying an amount of

Canadian dollars (CAD) by selling United States dollars (USD).

You have probably wondered how you could find a seller when you buy a currency.

Moreover, how will you find a buyer when you decide to sell the currency?

The answer is that you can find buyers and sellers in just a few seconds, the forex market is very

volatile.

The revolution of the internet made forex trading very easy to monitor. You can by the way trade

anywhere.

You need just a computer with internet connexion and a trading platform to commence trading

worldwide sessions and start making or (losing) money on forex markets.

How to start trading Forex?

You are probably excited to know how to be a trader.

Not just a simple trader, a professional one!

The first step is to learn about forex trading.

Both technical and fundamental analysis are used by professional traders to trade forex successfully.

They use them to forecast Market trends and decide if they will buy or sell a currency pair according

to several metrics and rules.

The second thing is to practice your knowledge using a forex demo account for at least six months.

After doing that you can begin trading forex with a real account and make real forex income, it is not

easy but it is not impossible.

How do traders benefit from Forex Markets?

Traders make money from forex markets by buying or selling currency pairs.

For example, if you expect that the price of a particular currency will rise you will buy (long position)

it and vice versa (Short position).

For these reason forex is an excellent opportunity to make money on, traders can make money

whatever the market situation is.

Why forex and not Stock Market?

In the stock market, you are obligated to buy shares to get dividends as a benefit or to speculate

them to make a profit from time market price difference, this is not the mean problem.

The difficulty is that you need a significant amount of money to invest in the stock market to receive

a good return on the investment.

For small investors, it is not recommended for them to trade equity markets.

Even if the company make a significant result the current year, you will receive a little profit.

The best way to make money from stock markets is to speculate assets but as I said above you need

a significant amount of money to invest 100K $ at least.

Stock Market need many skills to know, you need at least two years of studies to be a professional

stock, trader.

It comes to your financial analysis skills, and your mathematic knowledge, trading stock markets is

not easy at all.

According to http://www.intc.com/dividends.cfm the dividend history of the American

multinational technology company Intel Corporation is:

Look at the progression of the dividend

The highest progression was +0.6$ between 2010-2011

The dividend changing is weak

In 07/23/2015 one Intel share is for approximately 28,95$ and the average dividend is 0,24$

If you invest 28,95$ you will get 0,24$ as a profit

To get a profit of 10000$, you need to buy 5 026 041 shares for 1 206 250$

Ridiculous!

It is a waste of time to invest in companies for small investors!

However, on the other side you can speculate Stocks with the same logic you speculate currencies!

Because of those reasons listed above I recommend to you if you are a small investor to invest in the

forex market.

Also to speculate stocks when you acquire enough experience!

In the forex market, you can start just with 1000$ targeting 20-50 pipes per day which will make you

20-50$ per day.

You can make easily 600-1500$ per month, which is 12500$ yearly leverage income. Isn't a nice ROI?

By just investing 1000$.

Technical Analysis?

Technical analysis is the art of forecasting the point where the price will change its direction from an

uptrend to a downtrend or vice versa.

There are many forex trading strategies to trade and even many black boxes and robots to trade

forex automatically.

Approximately 90% of traders use indicators to expect the price, in my opinion indicators do not

expect the market price they just follow the price.

Strategies that use indicators purely to predict prices will fall in the long run.

We cannot neglect the power of some indicators that can help us to predict the forex market prices

professionally despite the fact that they just follow the price.

I use indicators that provide an idea of the strength of the market to decide if I will make some

positions or not.

Moving averages Indicator:

You can set it on your platform ( Metatrader is a good one ), moving averages help us to identify if

there is a probability that the price will change its direction.

There is a simple way to use Moving averages to predict the trend reversal probability

For example, you set the 7MA, 3MA and 50 MA with 14 periods.

Sell Opportunity with over 916 pips of profit:

Buy Opportunity with over 179 pips of profit:

I will explain to you how I do it.

If the 50MA is downward (White line).

Once the 3MA (Red line) begin to cross 7MA (Yellow line) to the downside

There is a high probability that the price will change its direction from a downtrend to an uptrend,

Vice versa of these technic is correct.

It’s simple!

Professional traders also use 200MA to give them a clear idea about the price direction.

If the 200MA (Blue line) cross the price, there is a high probability that the price will change its

direction.

Bollinger Bands Indicator:

Invented by John Bollinger, it is further a good indicator to make successful decisions and increase

your chances to win a position.

The Bollinger bands are calculated from closing prices; bands are where the price become less

volatile.

Momentum Indicator:

This indicator is the best one I suggest you to use it in your strategy.

There are no traders that make significant money from forex markets without using the momentum

indicator.

It is simple and powerful.

I can explain it to you with a simple example

If you throw a ball in the air, at the first time it will get a high momentum because of your force.

After seconds the gravity reverses the ball direction to the downside, this concept is also applied in

financial markets.

An uptrend or downtrend price have its limits to get reversed.

The role of the momentum indicator is to predict when buyers will lose the market and vice versa.

Volume indicator:

It is also an excellent indicator to make your decisions more successful.

The volume indicates how much buyers and sellers are available on the market at different times, it

can also predict when the trend can get reversed.

Here is the rule,

When the volume chart bars increase and the price go down, there is a big probability that the price

will change its direction and go up.

Moreover, if the volume chart bars decrease and the price rise, there is a significant chance that the

price will amend its direction to a downtrend.

Bullish and Bearish Market?

The bullish market is when buyers take control of the market.

As a consequence the market price is rising and display an uptrend.

The bearish market is when sellers take control of the market.

As a result, the market price is falling and display a downtrend.

The forex market and all of the financial markets follow trader’s psychology.

If the traders today are greed we are in a bullish market, and if more traders afraid then we have a

bearish market.

Fundamental analysis:

Professional traders use both technical and fundamental analysis.

Technical analysis is about forecasting the future price using several analyzing tools (Ex: Support and

resistance lines, Fibonacci retracements and extensions, Elliot waves).

The fundamental analysis is different, it is about forecasting the price direction following currencies

news.

for example, if Mario Draghi the President of the European Central Bank Announce today that

Eurozone suffer from a lot of financial problems.

As a consequence, the EUR value will decline according to these unfortunate announcements

(traders will be fear to trade EUR so they will sell it).

Also, there is a process to use fundamental analysis is by analyzing economic indicators.

For example if the USD money supply indicator displays an increase, of course, the USD value will

decline.

Fundamental analysis is about understanding behavioral finance and trader's psychology.

It is necessary to know how news can affect a currency price positively or negatively.

I use often Forex Factory’s Calendar http://www.forexfactory.com/calendar.php to analyze different

worldwide forex news.

It shows the impact and the percentage of Experts who say that the news will affect the currency.

Types of Forex Markets:

Spot Market:

The most famous market is the spot market, it is high volatile and liquid, it is for traders who want to

make a quick profit from the market.

A spot market is a contract between a trader and a broker where the first one exchange an amount

of currency with the broker.

The trader makes a profit if he expect well the market changes and the broker make profit whatever

the trader’s situation is.

The agent grabs the difference between the bids and asks price.

Forward Market:

It is divided into two financial instruments, swaps and forward contracts.

Both of them are used to protect investors against currency price fluctuations.

A Currency Swap is a deal between 2 companies or persons to exchange a specific amount of money

for a specific time and a specific price.

Futures Market:

Futures are a small part of foreign exchange market.

They are derivative instruments from the spot market usually used at commodities markets (the

place where traders buy and sell oil, Gold, uranium, platinum, sugar ...)

A future contract is a simple contract that give the chance to investors to buy or sell a standard

amount of currency for a period and for a particular time.

Options Markets:

Options are also used to hedge against market changes.

It is about buying a contract of buying (Call) or selling (Put) a specific currency for a particular time

with the same price.

I know this is a bit complex to understand

However, what I want you to know is that:

You can buy the right to "buy" a specific currency for a specific price and at a particular time with the

same price.

Moreover, also you can purchase the right to "sell" a specific currency for a precise price and for a

proper time with the same price.

You are also able to sell those rights if you want.

Usually, European options are executed at the expiration time of the option, American options are

executed when you want.

How Currencies work?

The major worldwide currency and the most liquid currency is USD (United States Dollars)

USD is the only currency pegged to gold (click here to learn why USD is the strongest currency in the

world).

Other major currencies traded against USD are British pound (GBP), Swiss Franc and Japanese Yen.

Always trade major pairs EUR/USD, GBP/USD, USD/JPY, and USD/CHF.

The price of a currency is defined according to the currency supply and demand.

If the Supply is more than the demand the value of the currency Decrease.

In contrast more the supply is less than the demand more the currency value will increase.

The Importance of Forex Risk Management

Successful forex traders practice Risk management well.

Trading forex without setting a Risk Management strategy is a waste of time and money.

You should learn forex Risk management before you trade forex and use it to protect you from the

market fluctuations.

You are lucky because I have not found anyone to tell me about forex risk management before five

years ago.

How about if you can generate profit even if your predictions are 50% true?

What makes forex risk management rules powerful that even if you have a Win/Loss ratio of 50% you

will make a significant profit on the market?

It is the magic of risk management you can check my forex risk management guide here.

Conclusion:

Forex Market is an opportunity for everyone who want to change his life.

Expressly for those who knows about financial markets and analysis.

All you need is to develop your skills by studying Forex Books and by practicing Forex using Demo

accounts and Simulators.

After one or two years you will be proud of yourself.

What do you know about Foreign exchange markets?

Do You Trade? Respond me with a comment

Article From: www.investoune.com

Thanks for reading