There is one main factor that determines whether an investor will risk capital or not. The risk/risks versus the potential reward.
Real estate is a typically a very stable investment option. The currencies market on the other hand, are an entirely different animal all together. The Forex, also called the Foreign Exchange market, is the largest and most fluid in the world. 5 trillion dollars approximately, is exchanged every 24 hours on the Forex exchange. It is very fluid/liquid, making it attractive for investors because there always seems to be someone willing to buy or sell a position. Investors are also attracted to the Forex because of the price volatility, which makes for large potential trading profits.
The 5 basic trading options available to Forex traders:
1. Spot transactions
2. Forwards and futures
4. Spread betting
5. Contracts for difference
The vast majority of Forex traders trade using spot transactions. Spot transactions involve the exchange of one currency for another.
Fundamental analysis typically is used in scalping or day trading.
Forex scalpers try to anticipate price movements in the short-term, and generally don’t hold onto a position for more than a couple of days. In some cases, positions may be bought and sold in a matter of hours, or even minutes.
Technical analysis is aimed at identifying and capitalizing on trends. The moving average chart/charts are a favorite among technical traders to make investment decisions.
To identify trends, technical investors look at historical data of currency rate prices.
Moving averages help to smooth out the erratic nature of lines causes by the daily highs and lows and is refreshed daily with the most recent day being added.
Resistance and support levels are sometimes identified as entry and exit points in some Forex technical trading strategies.
The fact is that you have to find the strategy that best fits your trading style, and your risk tolerance level.
To improve your odds of success trading on the Forex, here are 4 recommendations from professional Forex traders:
1. Avoid over-trading
Forex traders can make big profits but can lose equally big due to highly leveraged accounts and a very volatile market. Over trading increases the odds that you will lose money
2. Trust charts
Once you have your strategy and set your exit points, let it ride. Study the charts at the end of the day and stick to your strategy.
3. Patience is a virtue
4. Back test to continually test your investment strategy
No investment strategy can predict price fluctuations with 100% accuracy. That said, the highest odds of success strategies for Forex tend trading to involve technical analysis, using stop/loss price points, and resisting the temptation to over trade.
Everything That You Could Ever Want To Know About Forex (1 of 4) – https://www.mastersofmoney.com/everythingthatyoucouldeverwanttoknowaboutforex1of4/
Risk disclosure: *All investments involve risk. Before making any financial or investment decisions, we highly advise that you seek the advice of a properly licensed and trained investment professional.