Learn To Trade Forex

By: Thomas

It was once said by Albert Einstein that compounding is the most powerful force in the universe. Whether or not you subscribe to such statement, it is without debate that compounding does offer phenomenal results in the investment world. With a systematic plan, you can parlay your profits from trading in the foreign exchange (FOREX) market to a substantial fortune. Here's the plan:

Get A Dependable Strategy

There are many strategies available for achieving profits on a consistent basis. Of course, you will inevitably experience some losses along the way. The trick is to minimize not only the number of losses but also the amount of each loss you will suffer. Do not be sucked in by products or training programs claiming that you will be successful with every trade you make. Also, do not be dazzled by programs which offer little more than extravagant bells and whistles or those that promise overnight riches. It is not necessary to pay an arm and a leg for an effective program which provides workable strategies. In fact, some of the simplest, and consequently least expensive, strategies have generated results as impressive as those you might pay big money for.

Aim For Conservative Profits

The temptation to make fast money almost always leads to the sin of overtrading. Overtrading can take the form of trading when you should not be doing so or taking positions involving an unreasonable degree of risk. Avoid the temptation by remaining focused and loyal to yor long-term objective. You should also carefully observe and study the market for well-planned trades. You may choose to confine your trading to one or just a few currency pairs so that you can gain a more in-depth knowledge of the behavior of that particular niche.

Once you have a sense of the pulse, you can start trading with a conservative daily goal of, let’s say, 1 percent of your entire margin or balance in your account. If you can keep up that average for 20 trading days per month, then your return for that month will be at least 20 percent. Remember, in the world of FOREX, 1 percent per day is certainly achievable with the right training, discipline and strategy. In fact, many traders routinely average 3 to 5 percent per day. Obviously, the reward potential is greater when more risk is taken. But one percent is plenty enough to achieve outstanding results by year end.

Reinvest for Exponential Growth

When you first start, 1 percent may seem quite small both in terms of percentage as well as in absolute dollar gains. However, once you start to reinvest a significant portion of your profits, you will quickly see that 1 percent daily adds up fast. As do many traders, you may want to withdraw a small portion of your profits at regular intervals to give yourself a feeling of realized accomplishment.. But, leaving the lion’s share in your account for reinvestment will be the key to your real achievement. If you would like to test this hypothesis, use different variables in your calculation of profits where you start with $1,000 as your margin. For instance, compounding $1,000 at 20 percent per month yields a total balance of approximately $9,000 over 12 months and almost $80,000 over 24 months. Of course, you have to deduct your broker’s spread and Uncle Sam’s cut. Still not bad though, huh?. Well, what are you waiting for? Get started today.