Who has not wondered what it takes to make money investing in the currency market? And not only in the currency market but also in the stock market. This article will summarize the three key aspects of making money in forex independently. These include market analysis, money management and trading psychology.
Every trader uses a different type of analysis. Most traders who trade with small capital (less than $500,000) usually do so with technical analysis.
It’s the most common type of analysis. Although technical analysis, used correctly, can lead to profits in forex, it is useful to know an important detail.
Most traders who trade big money in forex use quantitative analysis. That is automatic algorithms. And there is a type of algorithm within automatic algorithms called expert advisor, expert advisor, or EA. Likewise, there are more sophisticated techniques such as cointegrated asset trading and financial arbitrage.
More important than market analysis is money management. Most newbie traders rack their brains trying to find the Holy Grail. That is to say, an indicator or a system that is always or almost always right. It does not exist.
What exists is long term profitable trading systems. Since it’s not the winning percentage that’s important, money management can be the difference between being a good trader and not being one.
It doesn’t matter if you are right or not. What matters is how much you win when you’re right and how much you lose when you’re wrong. »
It is useless to know a perfect theory if the trader is not disciplined. We can have in our hands the best trading system in history, and if we do not follow the rules, we will end up losing all our money. The psychology of trading is the aspect that most gurus point to as the key aspect.
However, the problem usually comes from not knowing what is being done. When you do not know the trading system perfectly, it is easy to fall into psychological errors. Therefore, by mastering the first two aspects, the psychology of trading largely disappears.
Beware of scams
Finally, before investing in forex, it is necessary to be informed and to train well. Read as much as possible brokerage reviews such as Gigachains Review since reviews are a great source of info encompassing forex brokers’ trading conditions.
Beware, there are many scams on the internet due to the fact the Forex market brings sustainable profits to many and that the daily trading volumes are huge. But many individuals claim to be millionaires and are not while trying to sell you forex trading signals.
Lots of fake traders promise dizzying returns to attract capital. And sadly, there are more and more Forex advisors presenting themselves as experts but are losing money and have no track record of successful trades to disclose.
In line with that comes the importance of opting for a reliable brokerage service that will work in your interest and protect you from being scammed.