In forex, the fact that the commodities held are currencies instead of corporate stocks, that trading is done 24 hours a day, and that transactions happen worldwide, all mean that the market is very volatile.
This is not necessarily a bad thing because, as you may already know, there is a direct correlation between risks and gains. What you should do to translate your investments into profits, as much as, and as often as, possible, is to look for good conditions in forex trading.
The fact that entire countries, economies, markets and central banks, at the very least, are involved in forex trading, leads to the unavoidable conclusion that the profitability of a forex trader hinges on him/her getting the perfect conditions, and in those conditions making the best decisions.
Being able to identify when to buy and sell currencies – not necessarily the time, but the instances or situations that would warrant or highly recommend the purchase or sale of currencies – is very important.
Suppose you are a day trader and you want to make the most of the limited funds you put in, in the limited time that you set for yourself, any promising sign could mean immediate gains.
For example, you learned of concluded bilateral or multilateral treaties covering inter-country economic efforts and ventures, then the best course of action is to buy those currencies as early as possible. Chances are, there will be an upcoming increase in their values as a result of the news of the perfected agreements.
If you are a carry trader with larger pools of funds and can afford to invest long-term, then waiting for the proper time to buy or sell currencies would be the best strategy. Take a look into trends and ensure their continuity. A currency consistently getting stronger against another currency for the past three years could only indicate that the former currency is a good buy.
Whatever type of trader you are, however large or small your pool of resources is, making the best decisions at the right time is the best way of maximizing one’s potential for earning.
This Begs The Question: How Do You Identify The Right Time? How Do You Identify Or Look For Good Conditions In Forex Trading?
You have to be consistently updated with the markets. You have to identify opportunities and threats. And, you have to assess whether these can impact you and, if so, how you can play at an advantage or against a disadvantage.
Practically, you can achieve these by reading the business and international news sections of the spreadsheets. Or, in this digital age, you should subscribe to and follow news agencies who can provide the latest news on forex trading.
Better yet, follow the renowned finance experts themselves who steadfastly help people look for good conditions in forex trading. You should also keep abreast of developments in the economies, socio-political climates, and technological developments of other countries.
Always study your graphs, trends and charts. And concomitant with these are the tried-and-tested pieces of advice: to remain patient, to stick to your trading plan, and to ask expert help at all times.