Losing Money on the Bourse? Try Forex Instead

When you begin to trade in the Forex market, you will see that it has many benefits over some of the other financial markets. Some of these benefits are: superior liquidity, better execution, 24 hr. market and others. Does this mean that it is easy as pie to make money on the Forex market? Absolutely not!

Since we now know that it is not as easy as it seems to make money on the Forex market, why do some traders succeed while others fail? That is not an easy question to answer. Something does set apart the profitable traders. They do not follow the crowd. These traders think independently from the crowd.

How long does it take to see consistent profitable results in the Forex market? This, too, is not an easy question to answer. It varies from person to person. One thing is for sure - this cannot be done in a short time frame.

It is a process that could take years to see desired profits. Here are a few things to consider if you decide to trade in the Forex market that may hasten the process of realizing a profit: have a trading system in place, education, use money management, be aware of psychological issues and have the proper discipline to follow your trading system as well as your trading plan.

Benefits of Online Forex Trading

Thanks to the Internet being available to almost everyone, the Forex market may be accessed with ease. Computers are now able to make complex charts that are very beneficial when you go to trade in the Forex market.

Forex traders can do business 24 hours a day no matter what their geographical location may be. Daily transactions in the Forex market have increased to two trillion USD.

It is quite easy to open a forex trading account. There are even free practice accounts that can be set up which allow you to test your skills before you make any transactions with real money.

Traders can trade with different currencies in different markets at the same time and not have a problem doing it. Online forex trading touts a lot of liquidity and flexibility. The trader can trade and access quotes in real time when he deals with online forex transactions.

A very important benefit is that forex trading has virtually eliminated the bears and bulls of the trade. This is the only trade market that does not have these elements.

There are no commissions, exchange fees or any other hidden costs involved with online forex trading. The trade is done very quickly and there is no delay of any kind. It literally takes just seconds to execute a trade or fill or confirm the same. Small traders have more leverage in the Forex market.

There are indeed many benefits to online forex trading, but you also have to look at the other side of the coin. Online forex trading is risky. You should not invest any more money than you are willing to lose.

Remember, it takes education, patience and practice to become good at forex trading.


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Forex Trading 80:20 Rule

In the late nineteenth century an Italian economist named Vilfredo Pareto observed that, in his native country of Italy, a small group of people held nearly all the power, influence, and wealth.

Came to the conclusion that in most countries, about 80% of the wealth and power was controlled by about 20% of the population and he referred to this as:

"Predictable imbalance," which became known as the 80:20 rule.

He concluded that in relation to an individual's effort:

20% of your effort or energy output will produce 80% of your income furthermore, 20% of your time will produce 80% of your work out put or income.

Does this apply to forex trading?

Yes it does and the lesson you can learn from the 80:20 rule is to work smart not hard. Concentrate your effort on the trades that have the best risk reward.

Cut The Number Of Trades You Do

It's a fact that most traders trade too much and execute trading signals to often, as they want to force the market to give profits, but of course profits cannot be forced.

The way to apply the 80:20 rule to currency trading is drop your frequency of trading. If you look at forex charts you will see that there are very few big trends each year but when they do occur they produce huge profits.

How do you spot them?

Here is a checklist

1. Look for valid resistance levels, that if broken are considered significant by the market.

2. Learn how to use a breakout methodology and go with breaks of these support and resistance levels.

3. To increase the odds even further make sure that you use momentum indicators to confirm that price momentum is supporting a break.

4. As you are trading less you can afford to risk more on these trades and increase profitability.

5. Don't trail stops to close and have a profit target that relates to the size of the break.

The above method will ensure you are trading a lot less and it could be as much as 80%, but your profitability will be increased.

It's a fact that most of the big profits are generated from trades that break from new market highs - NOT market lows.

So if you have been buying dips its time to re think your forex trading strategy.

Trading Less for More Profits

If you like excitement and the thrill of trading this strategy is not for you. The above strategy is all about making money and trading the trades with the best risk to reward which can yield triple digit annual gains.

If you have been trading and making marginal profits, apply the 80:20 rule to your trading, cut the frequency of trades and increase the profits!

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