After so many years, maybe I can say one thing about trading: nothing in your life will be more unpredictable than when you are staring into a chart trying to understand what will happen next. You will start to see things in your life - things you think are the hardest ones to deal - in a very different way. Then, you will fell in love with it. In case you do not, it is not a bad thing. People have different talents and maybe trading is not for you. You can see this when trading stocks. However, there is something else I would like to talk about: it is called Forex Trading.
Ok then, what is Forex?
Forex means foreign exchange rates. A currency is evaluated against another currency based upon several criteria, such as the economic situation of countries, political news, media and so many others factors. The easiest way to understand a currency is think about it is the value of that country in the same way a share represents the value of a company. Trading it means buying or selling foreign currencies. If public companies have shares that you can buy and sell on the market as you wish, then countries have currencies.
In forex, you do trades based on pairs of currencies. An example is buying EUR and selling USD. There are other major pairs made with the USD, like GBP (British pound), JPY (the Yen), CAD (the Canadian Dollar) and so many others. These ones are the pairs with the highest liquidity in the market. In addition, liquidity is another wonderful thing about forex. It is a market of 5 trillion dollars a day. By day, you should understand that Forex is a 24h trade, starting on Monday at 0:00 and ending on Friday at 23:59. During this time, you can be 100% connected to the market. Any open position you may have can be influenced for something happening during overnight.
In the Outspoken Market, we always talk about emotions on trading. That is because we believe this is the key player on trading. Especially if you think about Forex trading, it should be a sniper duty. Cold and accurate. What does it means in real life? It means that emotions should not be used as the sole foundation for your actions. A little bit of control must be exerted continuously on emotions. The two main emotions: fear and greed. In the trading world, greed is one of the two reasons people are losing money. In real world, greed is one of the two reasons people are losing their lives. The second reason is fear. Fear manifests the moment you do not enter that position because you think it will go lower or higher, or when you close a potion too soon, thinking about that the market will turn against you or will never be in your favor. Fear makes you lose money by not letting yourself taking the profits that you worked for.
One common thing about these two feelings is that both will make you staying in a losing trade and hoping for the market to turn into your favor. This is definetely the worst thing a trader can do. It will never happen. You will learn that the small loss is the first one.
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