It's possible to trade profitably on the Forex, the nearly $2 trillion worldwide currency exchange market. But the odds are against you, even more so if you don't prepare and plan your trades. According to a 2014 Bloomberg report, several analyses of retail Forex trading, including one by the National Futures Association (NFA), the industry's regulatory body, concluded that more than two out of three Forex traders lose money.
This suggests that self-education and caution are recommended. Here are some approaches that may improve your odds of taking a profit.
Prepare Before You Begin Trading
Because the Forex market is highly leveraged -- as much as 50 to 1 -- it can have the same appeal as buying a lottery ticket: some small chance of making a killing. This, however, isn't trading; it's gambling, with the odds long against you.
A better way of entering the Forex market is to carefully prepare. Beginning with a practice account is helpful and risk-free. While you're trading in your practice account, read the most frequently recommended Forex trading books, among them
Currency Forecasting: A Guide to Fundamental and Technical Models of Exchange Rate Determination, by Michael R. Rosenberg is short, not too sweet and highly admired introduction to the Forex market.
Forex Strategies: Best Forex Strategies for High Profits and Reduced Risk, by Matthew Maybury is an excellent introduction to Forex trading.
The Little Book of Currency Trading: How to Make Big Profits in the World of Forex, by Kathy Lien is another concise introduction that has stood the test of time.
All three are available on Amazon. Rosenberg's book, unfortunately, is pricey, but it's widely available in public libraries. "Trading in the Zone: Master the Market with Confidence, Discipline and a Winning Attitude," by Mark Douglas is another good book that's available on Amazon, and, again, somewhat pricey, although the Kindle edition is not.
Use the information gained from your reading to plan your trades before plunging in. The more you change your plan, the more you end up in trouble and the less likely that elusive forex profit will end up in your pocket.
Diversify and Limit Your Risks
Two strategies that belong in every trader's arsenal are:
Diversification: Traders who execute many small traders, particularly in different markets where the correlation between markets is low, have a better chance of making a profit. Putting all your money in one big trade is always a bad idea.
Familiarize yourself with ways guaranteeing a profit on an already profitable order, such as a trailing stop, and of limiting losses using stop and limit orders. These strategies and more are covered in the recommended books. Novice traders often make the mistake of concentrating on how to win; it's even more important to understand how to limit your losses.
Be Patient
Forex traders, particularly beginners, are prone to getting nervous if a trade does not go their way immediately, or if the trade goes into a little profit they get itchy to pull the plug and walk away with a small profit that could have been a significant profit with little downside risk using appropriate risk reduction strategies.
In "On Any Given Sunday," Al Pacino reminds us that "football is a game of inches." That's a winning attitude in the Forex market as well. Remember that you are going to win some trades and lose others. Take satisfaction in the accumulation of a few more wins than losses. Over time, that could make you rich!
Cheese bread sharing wreath
Cheese bread sharing wreath
SERVES 8
HANDS-ON TIME 40 MIN, OVEN TIME 50 MIN, PLUS PROVING
A festive showstopper made of the softest, most tempting bread. This recipe is best made on the day and warmed through before serving.
Ingredients
- 500 g strong white bread flour, plus extra for dusting
- 1 tsp caster sugar
- 1 tsp salt
- 1½ tsp dried fast-action yeast
- 350 ml lukewarm water
- 100 g (vegetarian) cheddar, gruyère or block mozzarella
- 75 g parmesan cheese, finely grated (or vegetarian alternative)
- 1½ tsp dried Italian seasoning
- 1½ tsp finely chopped fresh rosemary, plus extra sprigs to decorate
- 50g butter, melted, plus extra for greasing
- 2 tbsp polenta
- Sea salt flakes to decorate
- 8-10 peppadew peppers from a jar, well drained, to decorate (optional)
Method
- Sift the flour, sugar, salt and yeast into a mixing bowl or the bowl of a stand mixer. Make a well in the centre and add the 350ml lukewarm water. Gradually mix together to form a slightly sticky dough, then turn out onto a lightly dusted work surface and knead for 10 minutes or until smooth and elastic. Cover the bowl with a cloth and leave in a warm place for 1 hour or until doubled in size.
- Meanwhile, cut the cheddar, gruyère or mozzarella into 1.5cm cubes. Mix the parmesan with the Italian seasoning and chopped rosemary in a shallow dish. Pour the melted butter into another shallow dish.
- Grease a large baking sheet with a little butter and sprinkle with the polenta. Knock back the dough and knead once more until smooth and elastic, then divide into 25 even-size pieces. Working with one piece of dough at a time, knead it a little, then press a piece of cheese into the centre and seal the opening by pinching the dough together with your fingers. Roll into a ball using your cupped hand and the table.
- Put an upturned 10cm round heatproof dish or ramekin into the centre of the baking sheet. Roll the dough balls briefly in the melted butter, then in the parmesan cheese mixture. Place the balls around the dish, leaving a 5-6mm gap between each ball and also the edge of the dish (see picture, p67). Make a second ring around the outside of the first, again leaving a little space around each one to allow them to rise. Cover loosely with a sheet of lightly oiled cling film and leave to rise somewhere warm for 40-60 minutes until doubled in size.
- Just before baking, heat the oven to 190°C/170°C fan/gas 5. Bake the wreath for 40-50 minutes until lightly golden brown, covering it loosely with foil if the cheese on the outside starts to go too brown. Remove the wreath from the oven and leave to cool slightly for a few minutes. Decorate with fresh rosemary sprigs, some sea salt flakes and the peppadew peppers, if you like, and serve warm (or leave to cool and warm just before serving).
