How To Trade Foreign Currency Exchange In A Way That Makes More Money

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Foreign Currency Exchange

There are a variety of ways to make money in trading foreign currency exchange. Before you get into the nitty gritty of using 1 method over another, you have to ask yourself what kind of style you probably prefer. For instance, if you choose short-term trading, you have to narrow your focus to the here and now, working off of a 5- or 15-minute chart for hours on end, fuelled by very high leverage ratios (i. e., 100:1 or more). Eating lunch with your computer is a hazard. On the other hand, if you’re mentally inclined to see “the big picture”, then “trend trading” may be the way to go. With such longer-term trading, you’re more interested in catching an evolving trend and riding it for as long as possible, using a low leverage ratio (i. e., 30:1 or less). The mind set is entirely different than short-term trading. For this reason, it’s hard to do both well. Look at the long-term USD/JPY chart. It’s “pennant formation” is almost finished.

Select Your Trading Positions Carefully For Foreign Currency Exchange

In order to make money in forex, you have to catch a currency pair that is on the move. (In other words – not when it’s consolidating.) This phenomenon can best be seen by placing a “Williams Alligator” on any 1-hour currency pair chart. What you notice – almost immediately – is that the Alligator has a tendency to take off (either up or down), gaining or surrendering pips very rapidly; and, then, it starts moving almost horizontally (i. e., consolidating). In addition, if you watch the Alligator for a long time, you’ll notice that the longer the consolidation period, the more breath-taking the move that follows. Comparing the AUD/USD and the AUD/JPY, on a 1-hour chart, in this fashion, is very interesting.

Short Term Foreign Currency Exchange Strategies

Profitable “day trading” can only be accomplished if you have a broker who can help you execute trades in a very cost-effective manner. In addition, you have to have a risk profile that is not going to get stressed out by using relatively high leverage ratios (i. e., 100:1 or more) again and again. If you think you fit the bill, try out this strategy on a “demo account” first. Open up a 15-minute chart of the USD/JPY and place 2 exponential moving averages (“EMAs”) on it. Make the first EMA 8-periods long (that’s very time-sensitive); calibrate the second EMA for 20-periods (a standard length). Trade all crossovers, as long as your “Know Sure Thing” indicator also crosses over.

Long Term Foreign Currency Exchange Strategies

Successful long-term trading involves picking an evolving trend and sticking yourself into the trend in such a way that you can surf it into the sunset. If you switch your USD/JPY chart to daily mode, you should be able to see that the pair is finishing what appears to be a pennant formation. From a technical point of view, upon breakout, this formation has a target of at least USD/JPY 120.00. As long as you position yourself under USD/JPY 100.00 and are willing to wait as long as one-half of a year, this represents an unparalleled opportunity to successful partake of the US Federal Reserve’s “taper” decision. Keep your leverage ratios low (i. e., 30:1, at most).




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