Forex Trading. Ever thought about making money through exchanging currencies? It might sound like a secretive activity for professionals only, but actually anybody can join the game. It is called "Forex Trading". To begin with Forex Trading the right way you should definitely know how to apply Forex Trading Strategies for Beginners which I am going to share.
Forex Trading Explained Simply as Possible (It's Easy!)
Let's assume that you have a Nigerian Naira note while your friend has a US Dollar. You believe that Dollar will rise next week, and therefore you agree to swap. If you are right, then you will be able to swap back and earn more Naira this time!
That's it. Such swapping currencies is what is referred to as Forex Trading. You exchange currencies hoping that the one that you purchased will grow in its value.
But there is a tricky part! You cannot just guess because guessing is a sure way to losing your lunch money. What you need is a strategy (that's what experts call a plan in trading).
Three Simple but Working Strategies You Can Use
You may think that becoming an excellent Forex Trader requires mathematical skills. Not necessarily. There are plenty of successful strategies which even require no calculations at all.
1. Trend Following Strategy (also called Follow the Leader)
Imagine a huge bus running on the street. Would you run against it or with it? You see, there would be a smart choice – move along with it. Similarly, if price rises – then buy; if it falls – then sell. Do not try to be a prophet and predict the moment of reversal. Just follow the trend.
2. Support/Resistance Strategy ("Ceiling" and "Floor")
Imagine a ball moving around the room. It gets down to the floor – then bounces high. Then it touches the ceiling and drops again. In trading, prices do the same.
Support Level ("The Floor"): It is the price level which is difficult to fall below. Great opportunity for buying!
Resistance Level ("The Ceiling"): It is the price level which is difficult to exceed. Perfect moment for selling!
Simply observe a chart and wait until price reaches the "floor" or "ceiling".
3. "Don't Bite Off More than You Can Chew" Strategy (Risk Management)
Here is the first rule of any game in life. Never, and never under any circumstances invest all of your savings into one deal. For example, take a delicious cake. Do not swallow it in a single bite! Successful traders never invest all of their money. They usually risk only a fraction of total amount (1%, 2%). Even if you lose your money – you can try again the next day.
The Secret Weapon: Taking Someone Else's Money for Trades
There is always one problem with novice traders that they lack money for trading. Moreover, who would risk his/her tuition fees?
Fortunately, there are some special financial institutions such as Prop Firms that help you with starting Forex trading without risking a single coin.
A Prop Firm lends you its money to trade on the market. All you should do is just to prove your competence passing a tiny test. If you succeed in making profits – you get to keep most of them (80%-90%). Otherwise, losses will not influence your finances at all as you didn't invest any money yourself.
This explains why having access to instant funding becomes a real advantage for novice traders. Thus, you can gain experience, knowledge, and profits working with real money but bearing zero risks.
Forex Trading is not magic and you can't expect fast earnings from it. It requires practice, skills, and lots of patience. It is the same as playing football. You are not supposed to score a goal from each kick but keep practicing until you succeed.
If you decided to try trading – start with a demo account first. Learn trading strategies and when you feel confident enough look for a Prop Firm to provide you with a funded trading account.