How To Make Money Through Forex – Part Two

Today I learnt a big lesson about FX trading. Don’t wait forever.

I started off on my dummy account with $3000 worth of equity, and I began the first round of trading last week. Based on the daily analysis that I received from Max Knudsen, the chief market strategist at ADS Securities, I made a decision to buy one lot (that’s 100,000 of the base currency) of EUR/USD at 1.24205 on August 7.

One of the best things about FX trading, in my opinion, is that it’s not necessary to sit in front of your computer and stare at the varied charts and graphs all the time. You have an option to ‘take profit’– that is specify at what point you want to sell your lot and make a profit, or ‘stop loss’– that is specify the amount at which you want to exit and limit any further losses.

Unfortunately, I didn’t make use of either when I bought my first lot. Spurred by the bullish trend for EUR/USD, I waited to make a hefty sum.

In the meantime, I bought another lot, this time for 1.24180, and decided to curtail my greed. So I set my ‘take profit’ mark at 1.24300 and left for the day.

When I returned the next day, August 8, I found that I had made a $120 profit with my second lot, while on my initial lot, I was running into a loss. The EUR/USD was trading near the 1.24100 mark, and although the loss amount was not massive, I decided to wait longer. Bad decision.

The research note from Max today indicated that a bearish trend was expected to continue throughout this week. And finally, a week later, I decided to sell my lot. I made a loss of $1,096.

Tip for the day from Max: “Don’t get married to a position. You should cut your losses and run.”

Also read: How To Make Money Through Forex – Part One