The Profit Margin of FOREX Trading

Making a profit in forex trading is not too difficult, if you can follow the rule that states “ Buy at lower prices and wait and sell at higher prices.” This is much more easily said than done. Making money in the Forex trade calls for certain planned approach. A trader buys apples from wholesalers at $1 apiece and sells it at $2 per fruit. The differential margin in price less whatever expenses – is the trader’s profit. Investors in real estate play the same game by buying properties when the markets are down to sell at higher value when the markets bounce back. Dabblers in stock market also follow the same principle. It is no different in Forex trading.

Action Plan

  • Avoid trading beyond a particular limit in the Forex market
  • It is advisable to broaden the stops. It is suggested that the initial stop loss should ideally be between 23 and 33 points when trading short term.
  • Be selective about the profit margins. It is not worth trading if one cannot make minimum 100 points.
  • Study the direction in the 4-hour chart and do not trade in an anti-direction. In other words, trade only with the prevailing trend.

You should follow the action plan in order to make money in this market. Any seasoned Forex trader will verify that if the action plan is adhered to,  the profits will come, despite a couple of misses.

Contributory Factors

The Forex trade market should be approached with a balanced and proper mindset. A mature trader should know that not every profit will have a return. Long-term trading is not possible if the trader refuses to treat losses as part of the game. Sporadic losses will inevitably occur in any trade. The success formula is to keep the losses as low as possible and subsequently earn profits to wipe out the occasional losses.

Yet another important quality needed in a Forex trader is money management skills. Many beginners in the Forex trader are unaware of the pitfalls and trade over-enthusiastically and end up losing all the investment money. A sound money management principle entails winning twice as much as the loss of any one trade. People lacking in money management methods can meet with serious setbacks.

Summing up

If one is serious about making handsome profits in the Forex trade, you must become a quick study with  market movements and become familiar with different world currencies. Several traders have made huge profits in the Forex trade by following a well-conceived plan. The Internet has quite a few online courses that can help you learn more about Forex trading.

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