Successful Currency Trading Techniques For Beginners

Many are looking for successful currency trading techniques

. They've heard about FOREX (foreign exchange) trading and want in on the game. Often lured by the huge leverage available in this market, they think they might be able to profit in this type of trading but, all too often, approach it purely speculatively.

For some new traders, trading currencies is like playing roulette in Vegas. Betting only on red or black, you have a nearly 50% chance of winning. With FOREX you also have a 50% chance of winning or losing. The currency you bet on is going to either go up or down. It's as simple as that.

The old saying goes, "Buy low, sell high." In currency trading, you can also profit by selling high and buying low. Currencies are traded in pairs, of which there are more than 40 available. Most of the more actively traded pairs will include the US dollar as one of the two. To make a profitable trade, you have to correctly choose which of the currencies in the pair you're betting on will go up and which will go down.

Valid currency trading techniques will tell you four things... Which pair to trade, which direction to trade and when to open and close each trade. Take the Euro dollar/US dollar pair as an example. It's one of the most active couplings. The Euro, which is named first in the pair, is referred to at the base currency. A price quote on this pair will tell you how much one Euro dollar is worth relative to the value of the US dollar. The price quotes change continually, normally every few seconds.

Let's say the current quote for this pair is 1.33. That means one Euro dollar is currently worth 1.33 US dollars. If you believe the Euro will strengthen against the US dollar, you would BUY the pair (trade LONG). If you think the Euro will weaken, you would SELL the pair (trade short).

Then, after the desired amount of movement in their relative values, the next step is to exit the trade. If you traded long and the Euro, in fact, went higher, you will win the trade. If the Euro goes down, instead, you will lose. The amount you win or lose will depend on how much the currencies have moved, relative to each other.

Good currency trading techniques will help you win more than you lose, which will make you profitable. They will advise you on the best time to enter and exit each trade. They will also tell you which pairs to trade and whether to go long or short. It's as simple as that.

by: Cedric Welsch.

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