How Long Does it Take to Trade Currency Profitably?
Currency trading has exploded in popularity. With soft recoveries in stocks and weak returns on savings, investors are turning to foreign currency exchanges in search of big profits. How long it will take you to become profitable trading currency depends upon your ability to learn this complex and fickle marketplace.
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Basics
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Currency trading is the act of simultaneously buying one nation's currency while selling a different nation's currency. Most foreign exchange (also known as forex) trading involves the U.S. dollar, the Japanese yen, and the euro, the common currency among a bloc of European countries.
Function
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One of the major keys to becoming profitable in trading currency is simply understanding how your trading platform works. This allows you to make trades directly using your home computer. Platforms by firms like Forex.com actually permit you to have a practice account, without using real money, so that you can become familiar with the application's function.
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Types
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Sustained success in currency trading requires a disciplined plan. Profitability in forex will likely not be achieved until you decide what your analytical technique is. You may decide to be a technical analyst, who focuses in on past price trends. By contrast, you could examine fundamentals, such as political and economic news and world events and how those will influence currency rates.
Time Frame
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Because of the speed of currency markets, profits can be measured minute to minute. In addition, currency markets, unlike stock exchanges, are open 24 hours, 7 days a week; this means that trading can be done at any time of the day or night.
Warning
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Forex trading is done on "margin," meaning that the broker will give you leverage, or control over large trades through small amounts. This can mean fast profits but also a quick liquidation of your account, since trading at a risk-reward ratio of 50:1 or higher, for example, means losses can literally wipe out a small account in minutes or even seconds.
Considerations
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In summation, you can become profitable in currency trading in a relatively short time if you apply yourself to learning the market. You may want to consider investing a month or two in studying the currency market and investing time in learning the business rather than jumping into live trading fully prepared.
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References
- Currency Trading for Dummies; Mark Galant and Brian Dolan; 2007
- What is Technical Analysis?
- Real-Time Economic Calendar
Resources
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Comments
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vcrfix
Oct 17, 2009
Trading times for the forex market are 24 hours beginning Sunday at 6 PM through Friday at 4:30 PM. No trading on Saturday. Margin is good for Forex, but you have to watch your Margin level as when this level drops below 100%, a margin call is imminent, and you could risk loosing all funds in your account. Unlike options, you will never risk more than you have deposited in your account. Forex brokers are commonly referred to as Forex Dealing Makers (or FDM).
