Forex Trading Advice – How to Make the Most of Small Price Movements
Forex trading is a way to trade foreign currency and earn money. The forex market is large, averaging about 5 trillion U.S. dollars daily, and its prices are not set in stone. Exchange rates are influenced by supply and demand, with higher demand resulting in a higher price. Events in other countries, news reports, and other unknown factors can cause exchange rates to fluctuate. However, the changes are often small, and most traders hold their positions for a few hours, rather than days or even weeks.
In order to take advantage of small price movements, traders often use scalping strategies. These strategies focus on volatility and less on fundamental variables, allowing traders to make the most out of small movements. But they can also be risky if not fine-tuned properly. Despite the potential for large profits, scalping strategies are not appropriate for all forex trading accounts. While some exchanges require traders to have a large capital account balance in order to trade, most forex brokers require only enough capital to cover margin requirements.
Forex day traders can expect to earn anywhere from 5 to 15 percent a month with a reasonable risk-reward ratio. Moreover, they do not need to invest large amounts of money to start trading – $500-$1,000 usually suffices. The key is to be aware of the market’s workings and have the right money management strategies.