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6 Tips On How To Trade Profitably Through Foreign Exchange

6 Tips On How To Trade Profitably Through Foreign Exchange

One of the world’s most successful investors, George Soros, has accumulated much of his success and wealth by depending on trade. He does so mostly through forex, or international currencies. If you weren’t aware, investing in forex is one of the most established methods of making investments, though it is bit complex in nature.

If anyone can understand how the forex markets work, they can easily make money through forex investing and potentially give Soros a run for his money.

Here are some simple tips for anyone who wants to trade in forex:

1. Learn To Control Your Emotions First

Any investment is mostly driven by emotions and rationality. Most of the time, investors simply act out of their emotional stress instead of making decisions based on rationality and market knowledge.

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If you are someone who can easily be controlled by their emotions, it is better to trade through a professional instead of trying luck on your own.

2. Educate Yourself First

Before starting an investing trade, it is always important to educate yourself. Learn as much as you can about the forex trade.

This is important because, by making a small investment in educating yourself, you can easily avoid some of the costly mistakes new investors often make in forex trading.

3. Make A Trading Plan

Every investment made must be backed up by a trading plan.

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A well-thought-out plan on how you will trade, in what currencies, and at what risk level will give you a clear idea of what your limitations are and what you need to do in case you face losses.

A good trading plan must be made by carefully studying your market dynamics and the complex relationships between various currencies with each other.

4. Learn To Manage Your Money Well

It is one of the general rules of thumb, in forex trade, that a beginner investor should not invest more than 3% of his capital in one trade, and he must have the capital for up to 40 trades.

This is often done as a means to manage money well because investing most of the money in few trades can put you in a situation where you are not be able to sustain the losses.

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As a beginner investor, you must always focus on conserving your capital first. You must also define the maximum loss you can withstand on any given trade.

5. Get Forex Signals

If you are trading in forex, arguably the most important thing you need is getting timely forex signals.

Forex signals are information provided to you by an analyst, usually after you subscribe to the service. Forex signals are indicators providing you hints as to when to buy and sell, reducing the risk associated with the foreign exchange trading.

Some forex signals can be obtained free of cost, but mostly, they are obtained through a subscription or paid service.

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Trading by receiving forex signals is important because it allows investors to better understand the risks and take the forex trades according to their risk tolerance.

As such, if you are planning for forex trade, do yourself a favor and subscribe to a credible forex signal provider. In most cases, your broker/dealer can also offer you the same service against a small fee.

6. Do Not Use Debt

Many new forex investors are lured by brokers and dealers to use leverage or debt to do more trades. Using leverage or debt basically means that you make investments by taking debt. You pay the interest and return the capital too. Excessive leverage use can destroy your career as a forex investor. You need to rely more on your own capital during the initial years of your investment.

Learn the tricks of the trade before you start using debt to increase your investments and diversify your portfolio by investing in multiple currencies.

Forex trade can be easier and more profitable for you provided you prepare well and understand your market. Always be conservative and focus on limiting your losses. Do not develop extra expectations. Low levels of profits initially are routine matters, so do not put too much weight in this, especially in the beginning. Continue to expand your knowledge and expand your network.

It is always critical to take professional advice from your fellow traders and analysts. Listening to other people’s perspectives on the market can make you a better forex investor overall.

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Adnan Manzoor

Data Analyst & Life Coach

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Last Updated on March 4, 2019

How to Use Credit Cards While Staying Out of Debt

How to Use Credit Cards While Staying Out of Debt

Many people will suggest that the best thing to do with your credit cards during these tough economic times is to cut them up with a pair of scissors. Indeed, if you are already in huge debt, you probably should stop using them and begin a payback strategy immediately. However, if you are not currently in trouble with your credit cards, there are wise ways to use them.

I happen to really love my credit cards so I will share with you my approach to how I use mine without getting into deep financial trouble.

Ever since about 1983 when I got my first Visa card, I continue to charge as many of my purchases as possible on credit. Everything from gas, groceries and monthly payments for services like my cable and home security monitoring are charged on credit. Despite my heavy usage, I have maintained the joy of never paying any interest fees at all on any of my credit cards.

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Here are some tips on how best to use your credit cards without falling into the trap of paying those nasty double-digit interest fees.

Do Not Treat Credit Cards as Your Funding Sources

Too many people treat their credit cards as funding sources for major purchases. Do not do this if you want to stay out of trouble. I use my credit cards as convenient financial instruments so I do not have to carry around much cash. In fact, I hate carrying cash, especially coins. When you buy things on credit, the purchases are clean and you will not get annoying coins back as change.

I do not rely on my Visa, MasterCard or American Express to fund any of my purchases, large or small. This brings me to my golden rule when it comes to whether I will pull out any of my credit cards either at a retail or online store.

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I never purchase anything with my credit cards if I do not have the actual cash on hand in my bank account.

If I really cannot pay for the item or service with cash that I already have at the bank, then I simply will not make the purchase. Remember, my credit cards are not used as funding sources. They are just convenient alternatives to actual cash in my pocket.

Make Sure to Always Pay Off Balances in Full Each Month

The next very important part of my overall strategy is to make absolutely sure that I pay the balances in full each and every month no matter how large they are. This should never be a problem if the cash has been budgeted for my purchases and secured in the bank. I have always paid my full balances each month ever since my very first credit card and this is why I never pay interest charges.

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Using Credit Cards with Rewards

Most of my credit cards are of the “no annual fees” type, including one MasterCard on a separate account I keep at home as a spare in case I lose my wallet or incur any fraudulent charges. However, I do use a main Visa card which does have an annual fee because all purchases on that card reward me with airline frequent flyer points. For me, the annual fee is worth it since I do travel and I get enough points to redeem many free flights.

You have to decide for yourself if you will charge enough purchases on credit each year without paying interest charges to warrant a credit card that rewards you with airline points (or other rewards). In my case, the answer is “yes” but that might not be the case for you.

I occasionally use a MasterCard or American Express card on small purchases just to keep those accounts active. Also, I have been to the odd retailer that accepted only a certain type of credit card, so I find that having one from each major company is quite handy. Aside from my main Visa card which earns the airline points, the rest of my cards are of the “no annual fees” variety.

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So this is how I use my credit cards without getting into any financial trouble with them. This strategy is recommended only if you are not in debt, of course. In fact, it is worth keeping in mind once you’re out of debt so that you can keep your credit cards active and treat them responsibly.

What are your credit card usage strategies? Let me know in the comments — I’d love to hear what methods you use.

Featured photo credit: Artem Bali via unsplash.com

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