Currency Trading Fact ? Most Traders Cannot Accept Big Profits!

Of course all traders want them and are capable of accepting them – but they cant, due to having the wrong mindset and this is what this article is all about – spotting and accepting big gains.

So why is this currency trading fact such a problem to most traders?

The problem is rooted in most currency traders attitude to risk and there inner confidence and conviction.

Many traders are great at spotting the big moves, but they snatch profits too early – or get stopped out to soon.

A closer look at the reasons will reveal why.

Most traders are so obsessed with restricting risk they actually create it in two ways.

1. They place their stops to close and get stopped out by normal volatility.

How often has this happened to you?

You spot a big trend, get in and volatility takes you out – then the trade goes on to make , ,000 or more and your not in but you saw it coming?

It happens to most traders at some point and some more than others.

2. They want to grab profits

When a trader gets a profit he wants to snatch or protect it before it gets away.

The bigger the profit becomes, the more volatility eats into his open equity the more tempted he becomes to take it and then he snatches it.

The mindset you need is:

If a trade looks good risk more!

If you are trading a small account of ,000 risking 2% is waste of time risk 10 – 20% and give the market room to breath – otherwise volatility will get your stop.

If you believe in a trade have the courage and conviction to go for it.

Get Used To Open Equity Dips

If you want to make the big profits you have to accept that you are gong to see open equity dips of thousands per day – that’s just the reality of trend following.

Look at past instances of big trends and peak to valley drawdown and mentally prepare yourself to take these dips.

There not nice to take!

However keep your eyes on the bigger prize and comfort yourself with the end result.

You need to keep your stop loose not tight to do this – if it’s to tight volatility will simply pick your stop and take you out.

Currencies trend long term as they reflect the underlying health of the economy and the way to make the really big profits from them is:

To follow them – but this means steeling yourself to ignore short term volatility.

The only way you will do this is:

If you have rock solid confidence in your method to succeed and this means not just following someone else but understanding the system you are using why it will win longer term.

If you don’t have inner belief and confidence you will never ever follow these trends.

The fact is that making big profits is mentally hard and comes from confidence conviction which leads to discipline – if you want to catch these big trends when others don’t bare the above points in mind.

Sure it’s an uncomfortable ride – but comfort yourself in the fact that if you take calculated risks, at the right time and accept risk and drawdown as normal, you will catch the best profits from the longer term trends.

Look at a forex chart and you will see these trends moving for weeks, months or years, have the courage to go for them and accept the massive profits they can provide you with.

Currency Trading Profits ? a Simple System Making Millions!

Here we will reveal a system for currency trading profits, which has a logic that is so simple, ANY trader will see why it works, and why it will continue to work, as well as how they could be making big currency trading profits too!

If you use this system in currency trading, you will have the potential to catch EVERY major currency trend.

We have all heard this investment wisdom: “To make money buy low sell high”

However there is a better way to make big currency trading profits and the wisdom here is: “Buy high and sell higher”

This will become clear with some explanation:

Ignore Traditional Investment Wisdom if you want the Big Profits!

If you want to “buy low and sell high” you have to guess where a market is going to bottom and this is not easy. You are trying to PREDICT where a trend might start – this very often means the market goes lower and you lose.

Investors and traders are taught to “buy low and sell high” but when a huge move starts they watch and wait for the pullback – it never comes, the market simply goes higher, and they never get in.

The problem with this traditional investment wisdom is you end up trying to pick market bottoms, and try to get in on pullbacks, but when a market trades higher quickly, you miss the move.

This sees traders lose on trying to pick bottoms – they don’t make the profits they could have made from the big moves.

Breakout Systems are the Best for Catching the Big Profits

A breakout system does not try to predict a market bottom – it waits for CONFIRMATION.

It will wait for a market to break above a recent high, (resistance) or break below a market low, (support) if these levels are broken, a move will start, and astute traders ONLY trade the break – they don’t try to predict.

You can make big profits on these breaks – look at any currency you like: Japanese yen, Swiss Franc, British Pound, etc. and you will see huge moves from breakouts.

The Best Risk Reward

The breakout point provides the best risk to reward, to enter the trade.

Why? Lets take a hypothetical example:

The British Pound has traded up and tested resistance at 1.85 several times, and is currently trading at 1.70. The market rapidly trades up to 1.85, and immediately breaks to the upside, and quickly goes to 1.95

What has Actually Happened?

When the critical 1.85 area gives way, traders with stops on their short positions, start to cover, and new traders enter the long side of the trade. This causes a huge surge in price – as the area of resistance is so important.

If you are positioned to get in as the breakout occurs, your risk is low, and reward high.

Many traders don’t want to do this – they feel they are “chasing” the move, and want a pullback – it never comes, and they miss the big profits.

Keep in mind the old saying:

“A trend in motion is more likely to continue than reverse”

Check Your Charts

Most of the big currency moves in history have started with breakouts on the chart, then a huge quick move to the upside – with no PULLBACK

Big Currency Trading Profits can be yours!

Here we have looked at the concept, and why it’s successful, and you can see how uncomfortable it is to do – and that’s exactly the reason it’s so profitable!

Breakout Trading is Simple

All you need to use to trade breakouts, are traditional charts – and have some confirmation signals, to help you filter “true” from “false” breakouts – such indicators as RSI and Bollinger bands, are examples.

Astute traders are making huge profits every day from this simple method and you can too.

Online Currency Trading Strategy ? the Insider Secret

If you have an online currency trading strategy, then you should incorporate the advice given in this article to make bigger profits – and maybe even change a losing system into a winning one.

The advice we’re giving here is contrary to almost everyone else on this subject – keep in mind however that 90% of traders lose! So, let’s stay away from the losers and make some profits.

Get Set for Bigger Profits

So, what’s this insider secret anyway? – It’s about looking at money management in a different light.

Money Management and your Odds of Success

Most traders are virtually guaranteed to lose – because they have money management strategies that ensure they are constantly going to get stopped out by normal market volatility.

For example, many traders risk say 2% of their equity on a trade. On small accounts, this amounts to just a few hundred dollars. They enter the trade, and market volatility ensures their stop is hit. The market then goes back in the direction they had anticipated – and piles up thousands of dollars! Our trader though, thinks he was just unlucky – and tries again, but he wasn’t unlucky, and volatility will take him out every time.

Money Management Guaranteed to Lose

A string of small losses soon adds up, and the trader runs out of money – and his online currency strategy is at an end.

The trader may have been right, on where markets were going – but got stopped out of the trade – and ended up losing instead of winning.

Does this sound familiar? – It happens all the time.

How to Protect Equity and make Bigger Profits

Here are seven tips to incorporate into your currency trading strategy, to protect equity and build huge profits.

1. Don’t listen to advisors or brokers. Advisors don’t care if you win or lose – and brokers certainly don’t mind, as they work on the assumption you will lose anyway. The more commission a broker makes the better – and tight stops ensure this.

2. You need to risk more per trade – so you need to be very selective in trades. Forget day trading, and concentrate on the big, longer-term trends.

3. Keep in mind this truism – “with risk goes reward”. Without risk, there cannot be big rewards. Currency trading offers big rewards – but you have to be prepared to take the risk.

4. Taking a risk with no thought, and taking a calculated risk, is entirely different. If you are taking a bigger risk, you are not necessarily going to lose – it depends on the logic behind the trade – and the profit potential. That’s why you should trade sparingly – and concentrate on the big trends.

5. Use up to 10%, or maybe even more, on the trades you are confident in – these are the big moves – and you don’t want to be stopped out!

6. Don’t move stops up too quickly to protect equity – big currency trends last months or years – so give the trade room to move. You don’t want to get into a big trade, and get stopped out on the first correction – if you think the trade is going to be big, then have the courage of your conviction.

7. Use options as a vehicle – they’re great if used correctly – to give you staying power. Use at the money, or in the money options – with plenty of time value, for greater staying power. Options are a great tool, but NEVER buy out of the money options – or options that are close to expiry.

An online currency strategy consists of a number of components – and the one that lets down the bulk of traders, is money management. They try so hard to avoid risk, but end up creating it – and lose. Don’t make this mistake in your currency trading strategy – you need to take risks, pure and simple – and as the famous, US general George Patton said:

“Take calculated risks – that is quite different from being rash”

The fact is, most traders don’t believe this – they end up creating risk by trying to avoid it – and that’s why their currency trading strategies fail every time – don’t make the same mistake!

Currency Trading ? Make Money Fast With These 3 Tips

Currency trading is a great way to make money fast and here we are going to give you 3 tips (that go against a lot of common currency advice) but don’t let that put you off 95% of currency traders lose and don’t make money fast.

Here are your 3 tips for making money fast in currency trading:

1. Don’t Diversify

I read a lot about how diversification spreads your risk and it does, but it also cuts your profit potential.

If you are trading currencies and you are a small trader (under ,000) diversification will simply ensure that you dilute your profit potentia,or worse help you lose.

When you see a trade that looks good (in line with your trading methodology) hit it hard and risk as much as you can.

You will hear a lot of advice saying you should risk 2 – 5% well you won’t make money that way! risking 5% on a ,000 account is 0.00 and that wont get you much in the way of open positions.

Risk up to 10% and have the courage of your conviction.

Many currency traders try so hard to restrict risk, they never make any decent profits, as they place their stops to close.

This means they are bumped out of good trends even though they have the direction right, by normal volatility.

This is an error most novice traders make – they need to study standard deviation, but most don’t even know what it means and they should – look it up and understand it fully if you want to trade successfully.

Don’t make this mistake.

If you think the above sounds risky it is – but currency trading involves taking calculated risks.

If you don’t like risk then don’t trade currencies.

2. Be Patient

If you are risking more per trade and not diversifying, then you need to be very selective in the trades you take.

Patience is the key.

Many FOREX traders think the more they trade the greater their chances of success, but the opposite is true.

You don’t get rewarded for how often you trade – you get rewarded for getting your trades right.

3. Trade In Relation To What’s In The Bank

Judge progress by what’s in the bank.

If you have had a good run you can afford to be a bit more aggressive (if conditions are right) and risk a bit more.

Generally, try not to have too many open positions, once you hit target bank and move on, this keeps you focused and is good for confidence.

Personally, I like to have only one or two trades open at any time

I will then shift position size and risk depending on how well I am doing.

It’s always easier to risk profits you have made than your own cash.

So there you have 3 tips to make money fast in currency trading.

Many currency traders will see the above is risky, but that’s the nature of currency trading:

Taking calculated risks when the conditions are right and waiting patiently for them.

Its logical and can and does make money fast.

Forex -The term iis well known to most who are in business.This is the biggest financial market known throughout the world and it boasts of thousands of success as well as failure stories. Its popularity has grown over time, and today its daily turnover is a whopping 1.9 trillion dollars.

FOREX deals with the purchase and selling of various currency., Trading is done in pairs, one currency traded for the other.

There are two reasons trading of currency. 5% of the FOREX market’s daily turnover is from governments and organizations buying and selling currency. They would later convert their profit (foreign currency) in their respective national currencies. The rest of 95% is for speculation”, or trades for profit.

If you are new to the FOREX currency exchange, it is important that you get aquainted with the most liquid currencies, as they are the “most traded commodity.” They are called “majors”, which includes the US dollar, the euro, the Japanese yen, England’s pound sterling, the Canadian dollar, the Swiss franc and the Australian dollar.

The foreign exchange markets cannot be manipulated, and it is free from external control. That’s what makes this better than any other market place.

Besides, the money is quickly in the FOREX market. An individual investor may not affect a large currency price in a big way. Taders buy and sell willingly, platforms are opened and closed easily as well.

This market has a wide range of participants. Many enter the markets for long terms while others are round for a short while. In comparison to stock markets, more people are attracted to the FOREX market..

Transactions involving foreign currency on the exchange are not governed or centralized. It just takes place through telecommunications. Currency exchange is open around the clock, from Sunday afternoon to Friday afternoon.

Dealers now quote all major currencies in each time zone around the globe. An investor can buy through these distributors, upon decidingthat the currency was the best deal.

The Forex currency exchange can be extremely rewarding. It comes with its own risks like any other markett. But the rewards of your investment is much greater. The benefits of your initial investment are huge. Other people, even the major players, certainly cannot affect the FX market.

Who says you can not make a lot of money in FOREX? Currency exchange has a tempting upside, however, the drop is immense and frightening. That’s why you must be sure of the trading you do before you catually make the purchase.

Make sure you spend a good amount of timing observing the currency market before you begin trading.

If you wish to succeed in the FOREX market, you mustremain informed of the news in the world, whether political or on the economy. Currencies values are greatly affected by these events. One can see fluctuations in the real exchange rate in terms of the events taking place in the country.

You need this information to make good valuations. It is also important to know the different codes for each currency, but you do not need to memorize all that. It would suffice to become familiar with the various codes, in this way, you will be able to act on short notice if needed.

The FOREX market is one that is truly rewarding. It offers endless possibilities for people looking for a good investment, but at the same time, we must be ever vigilant on a daily basis.

We have already looked at the difference between fundamental and technical analysis of currency trading in our “currency trading success” article, here we will concentrate more on the advantages of technical analysis for currency trading and how to build a successful system.

There are many different methods and tools utilized in technical analysis, but they all rely on the same principles – that price patterns and price trends exist in the market and that they can be identified and turned into profit opportunities.

Technical Analysis in currency trading is based on three core principles:

Markets Discount

The actual price is a reflection of everything known to the market that could possibly have an affect on price movement and includes supply and demand, political factors, and the market sentiment.

The pure technical analyst is only concerned with price movements, NOT the reasons behind the price movements.

Prices Move in Trends

Prices can move in three directions – they can move up, down or sideways.

Once a trend in any of these directions is in effect it usually, will persist and create a trend.

The market trend is simply defined as the direction of market prices, a concept that is essential to the success of technical analysis in currency trading.

Identifying trends in theory is simple; a price chart will usually indicate the prevailing trend as characterized by a series of waves with obvious peaks and troughs.

It is the direction of these peaks and troughs that constitutes the market trend, if they move up, the trend is bullish, if they move down the trend is bearish and of course if they move sideways then the market is in a period of consolidation.

History Tends to Repeat Itself

To a technical analyst in currency trading, the trader psychology that affects prices is extremely important, as human nature is repetitive and this shows up in repetitive price patterns.

This allows anyone using technical analysis in currency trading to predict where prices are likely to go next and traders can then act upon this information for profit.

The market price reflects everything

Technical analysis in currency trading is primarily concerned with price trends and everything that can possibly affect a currency is reflected in price action.

Technical Indicators

The logic of technical analysis for currency trading is universally accepted, and there are numerous ways to execute technical trading systems, with the huge amount of available indictors used either alone, or in combination.

We will look at the different indicators below and some that have proved highly effective in the technical analysis of currency trading. Any traders, who wish to profit from the currency markets, should consider these indicators.

Trend Indicators

A trend is a term used to describe the persistence of price movement in one direction over time. The easiest way to spot trends is via trend lines, drawn below price lows or above price highs.

While basic trend lines have gone out of fashion in recent years in favor of more complicated indicators, they are still one of the most effective ways to technically analyze currency movements.

Support/Resistance Indicators

Support and resistance describes the price levels where markets repeatedly rise or fall and then reverse. This phenomenon reflects basic supply and demand and when prices break above or below significant support or resistance, a big move can follow very quickly.

Again, the best method for spotting and acting on these breaks is the humble trend line.

We believe that trend lines should be the basis on which ANY technical analysis of currencies should be based on – and the indicators below are for confirmation:

Volatility Indicators

Volatility is a general term used to describe the magnitude, or size, of day-to-day price fluctuations independent of their direction. Generally, changes in volatility tend to lead changes in prices.

One great indicator to use is the Bollinger band.

Any trader should look at Bollinger Bands, as they represent one of the most effective indicators for the technical analysis of currency markets.

Not only is it good for predicting trend movements, but also it is useful for timing entry and exit levels, as well as when to increase or decrease position size.

Cycle Indicators

A cycle is a term to indicate repeating patterns of market movement, specific to recurrent events, such as elections, year-end monetary repatriation etc.

Cycle indicators determine the timing of a particular market patterns. A good example would be Elliott Wave theory. Cycle indicators however in our view are of little or no use, in the technical analysis of currencies.

Momentum Indicators

Momentum is a general term used to describe the speed at which prices move over given time periods.

Momentum indicators determine the strength or weakness of a trend as it progresses over time. Momentum is generally highest at the start of a trend and lowest at market turning points.

Any divergence of directions in price and momentum is a warning of weakness; if price extremes occur with weak momentum, then an end of movement in the current direction could occur.

If however momentum is trending strongly and prices are flat, it signals a potential change in price direction. Examples of momentum indicators include Stochastics, MACD and RSI.

The most effective momentum indictor is the stochastic and using stochastic crossovers to time entry and exit levels, can be highly effective.

Sentiment Indicators

Many technical analysts in currency trading monitor surveys of investor sentiment such as net trader’s positions and bullish consensus.

These indicators attempt to gauge the general attitude of the investment community, to determine whether investors are bearish or bullish.

These indicators are only to be used when extremes of sentiment are reached, either bullish or bearish.

If used in this way, they are one of the most powerful warning signs of significant market turning points and can be used in technical analysis of currency markets to huge effect.

Putting it all Together

Traders make money from the technical analysis of currency markets in many different ways, however we believe that trend lines backed up by just a few additional indicators (to help time market entry exit and stop levels) can be very effective.

The ones we favor are: Bollinger bands, stochastics and market sentiment indicators, as filters for traditional trend lines.

The best way to succeed in technical analysis of currency trading is to use a simple robust system based on trendlines and just a few filter indicators such as the ones above and you will soon find yourself catching the big trends that yield the big profits.

Anyone can achieve currency-trading success – you can learn everything about trading currencies by simply investing the time necessary.

Fundamental Analysis

A currency trader who makes trades based upon fundamental analysis, will look at the supply and demand situation relevant to the particular currency studied, and try and predict the impact of such factors as:

. The health of the economy

. Interest rates

. Balance of payments

. Employment

. Trade deficit

. Other factors

Technical Analysis

Technical analysis is the study of a currency, based strictly on using only the price history of the currency.

Technical analysis uses no information about the currencies supply and demand situation – it simply focuses on price action. The secret of currency trading success is using technical analysis to spot them.

Long Term or Short Term Trading

For long term currency-trading success, is it better to be a long-term trader, rather than a short-term trader.

While traders can, and do make money with short-term methods of trading, the fact is, currencies trend longer term and these are the trends that yield the biggest profits.

Choosing a Trading Method

While there are many ways to achieve currency-trading success, all methods have the following salient points in common:

1. Simplicity

Most of the best trading systems are simple. There is no correlation between how complicated a strategy is and how successful it will be.

2. Liquidate Losers Quickly and Run Big Profits:

The basis of any successful trading systems that deals in leveraged products is:

You need to be able to run the big profitable trends and exit losers quickly.

3. Understand your Method

This may sound obvious, but you need to understand your trading method, and the logic behind it, so you can execute it with confidence and discipline.

4. The Importance of Discipline

Currency trading success is rooted in a successful method applied with discipline. This means a trader has a method and follows it. This however is much harder in practice than many traders believe.

The more disciplined you are in trading, the more profits you will make longer term.

You should not underestimate the need for discipline, if you want long-term currency trading success.

Robust trading method + discipline = currency trading success

There are a number of variables involved in longer-term currency trading success and the above are the salient points to keep in mind when deciding how to trade currencies.

If you want to increase your profit potential and achieve currency trading success then the simple tips will help you.

Some are at normal investment wisdom, but as the bulk of traders don’t ever achieve long term currency success, so that’s Good!

Here are your 7 tips for greater currency trading success and bigger profits.

1. Focus on the long term trends

Currency trends mirror the health of the economy generally and economic trends last years and these are reflected in currency trends.

Forget day trading, it’s the equivalent to flipping a coin. You can’t predict such short term movements so don’t try.

When flipping a coin the odds are even, but keep in mind in currency trading the fact that you have to place a stop and you have to overcome both slippage and commission, means you will take a thumping loss.

Day trading won’t lead to currency trading success for you, but will simply make your broker rich.

2. Trade in frequently

Many traders want to be in the market all the time and act like gamblers trading for the sake of trading if you DON’T want currency trading success do this!

Only trade this moves with the best profit potential.

Keep in mind you may need to be patient – You can’t hurry the market, so don’t try.

3. Don’t diversify too much

If you don’t risk anything you won’t make anything.

Diversification is the enemy of making really big gains.

To make really big profits you have to have the courage to take calculated risks on the really good trades and go for maximum profits.

This is the only way you will make really big gains – Period.

4. Use a simple system

There is no correlation between how complicated a system is and how much profit it will make.

On the contrary, simple systems are more robust than complicated ones and will cope better in the face of brutal market conditions.

A good example of a simple system is a breakout system, which anyone can understand.

You must always make sure you understand the system’s logic.

If you do, you will have the discipline to follow it through inevitable losing periods, so never trade a system where the logic is not revealed.

A great method to learn is the Gann method of trading, its different, it’s revealed and it made him $55 million.

In conclusion, get a system you understand, that’s simple and that has been proven to be successful.

5. Never Seek or Give Opinions

If you win at currency trading you will often be trading in the opposite direction to the majority so don’t discuss your trades with other people, they will put you off and don’t give opinions either.

Trade in isolation.

Independent thought, is one of the keys to currency trading success so don’t get distracted.

6. Stay with the majors

Stay with the major currencies: US $, British Pound, Euro Swiss Franc and Japanese yen.

These all have good liquidity and good trends.

Don’t trade minor currencies that can feature erratic moves or currencies that don’t have a long history.

The majors will give you plenty of opportunities so use them.

Above are six general rules for currency trading success and bigger profits.

In part 2 of this article we will look at some others that will help you achieve bigger profit potential from your currency trading. Good luck!

If you want to learn currency trading you need to be aware that 95% of traders lose – not because they don’t put in the effort, its just they get the wrong Forex education. Here, we are going to give you a blueprint to devise a forex trading strategy for success in 5 simple steps.

1. Accept Responsibility

If you want to make money in anything and currency trading is no exception then you need to accept responsibility – no one else is going to give you success you have to take it.

This means no blaming your broker, a mentor, guru or the markets, you are on your own and that’s no bad place to be – ALL the successful traders in currency trading accept this fact.

If you want to make money in currency trading you can – but don’t fall for its easy, its not but with the right forex education you can become a winner, as everything about currency trading can be learned.

2. Accept These Facts

The most important fact to accept is that currency trading is a game of odds not certainties – so forget predicting the market and scientific theories, they won’t give you success.

You’re like a successful card player – playing the odds. You bet big when the odds are in your favour and fold when there not ad if you did this you will make a lot of money.

Accept that you have to have confidence in what you are doing ( which comes from self education) to give you the discipline to follow your currency trading system. If you can’t follow your currency trading system with discipline, you have no system!

Markets can be frustrating but you can win, if you get learn currency trading the right way – now on to your method for success.

3. Building Your Currency Trading System

Building a trading system should be based on the following and if you work smart and get the right knowledge ( and you can find it free on the net ) it should only take you a couple of weeks.

1. Use a long term trend following methodology.

2. Learn support and resistance and the timeless theory of breakouts – if you don’t know what they are read our other articles.

3. Confirm any trading signal you execute with momentum indicators – this is the key to getting the odds on your side.

4. Employ a money management system that ensures you have clearly defined get out area when you enter a trade.

And finally –

Keep your system simple! Simple systems are easy to understand, apply and are more robust than complicated ones. Clutter your trading system with to many indicators and it will break in the brutal world of trading.

You can do well with a system based upon support, resistance and just a few momentum indicators.

5. Putting It All Together

Don’t work hard at trading! Work smart.

This means once you have built your currency trading system, don’t do any more work on it.

Many traders bang on about learning all the time – but if you are happy with your trading system and the logic is sound, what more is there to do but apply it?

When you come to applying it – it should only take you 30 minutes or so a day and that’s it get on with your life.

If you follow the above plan, you will have the education you need to give you confidence and discipline to apply your forex trading strategy for big gains.

Most traders fail not because they lack a method, but because they lack the mindset to apply it with confidence and discipline. Trading are as much in the mind as in the knowledge.

If you want to learn currency trading, keep the above points firmly in mind and they will lead you to currency trading success.

Forex currency trading is becoming increasingly popular as more and more traders want to take their shot at the largest trading market in the world. The lure of nearly $2 trillion in trading going on each and every day is too much for most traders to resist.

So what is the Forex market, and how does currency trading work? Forex is an abbreviated term for foreign exchange market. The Forex is the largest financial market in the entire world, with an average trade volume of nearly two trillion dollars per day. The modern Forex market is what evolved from initial currency trading.

The idea is to use fluctuating currency rates to make money out of money. For example, let’s say you buy one mini lot (1 mini lot = 10,000 currency) of the EUR/USD at a rate of 1.1500. Two days later the markets shift and the EUR/USD is now 1.1525, and so you decide to sell. Using the formula to figure out profits/losses, 1.1525-1.1500 is .0025 * 10,000 (the size of the mini-lot) = $25. In this case, a $100 investment for one mini lot yielded a $25 profit, or 25% in only two days. Not a bad percentage by any count. That’s quite a profit for two days.

This is a simplified example, and as with any trading there is always the chance of loss, but this gives you an idea of what traders are shooting for when investing in Forex currency trading and why the potential for profits is so high. Forex currency trading is conducted using “pairs.”

The reason for this is that to trade Forex you are basically simultaneously buying one of the currencies, while selling the other. If you are selling the EUR/USD pair, then you are selling Euros in order to buy dollars.

Let’s use the earlier pair as an example. If you are trading the Euro versus the US Dollar, your currency pair is EUR/USD. The Euro (EUR) is referred to as the base currency while the US Dollar (USD) is referred to as the cross currency. The base currency is the one you are selling, while the cross currency is the one you are buying.

There always has to be a pair. To buy one currency, you have to do it with another. To sell a currency, you need to get your profits back in another. There must always be two currencies in any Forex currency trading.

The far majority of the Forex trading done in the world takes place between eight currencies: the United States Dollar (USD), Australian Dollar (AUD), Great Britain Pound (GBP), Canadian Dollar (CAD), Swiss Franc (CHF), Japanese Yen (JPY), and the Euro (EUR). Other nations’ currencies may be used, but these are the currencies that are most often used and profited from because they have the most demand and come from the most stable economies.

I hope that gets you started into learning about Forex currency trading, but you should know that you will always need a good proven system to make a profit in this volatile market.