October 7, 2013

The Profits that You Make with FX Trading

Profiting From FX

All FX trading is done to make a profit, but you have to consider what these profits are.  Some FX trading strategies will offer you greater profits than others.  However, you should not only look at the amount of profit you are going to make.  You have to consider what the timeframe is for the profits and the risks that come with chasing these profits.  You also have to consider how comfortable you are with the FX trading that needs to be done to get the profits you want.

FX Profits and Timeframes

When you trade on the FX market you need to be aware of the different timeframes.  The different timeframes affect the FX strategies that you use, the analysis that you use and how long you have to wait for profits.  There are three different timeframes that you need to consider when you look at the profits that you can make.

The first time frame you should consider is long-term.  This FX trading timeframe will cover all buy and hold trading strategies.  The profits that you make with this trading can be very large as you are looking at profiting from large pip movements.  The problem is that you will have to wait at least a week for the profits to materialise if not longer.

The medium-term timeframe mainly offers the use of swing trading.  Medium-term trading does allow you to get your profits faster than long-term, but the amount per trade will be less.  Of course, there are times when you will be making the same with a medium-term trade as you would with a long-term trade.

The short-term timeframe offers instant profits.  All of these traders will last less than a day which means that you can see how much you have made every day.  However, the amount you make per trade will be less than any of the other trading strategies.

The Risks

All trading comes with risks and you need to know how this affects your profits.  Most traders see increase risks as an increase in the potential profits.  While this is true you need to consider that increased risks will also bring increased potential losses.

The higher the profits you look to make the higher the risks are likely to be.  If you are looking at increasing your returns on short-term trading you have to increase the risks of things like leverage.  Long-term trades come with an increased exposure risk as adverse events on the market could affect the profits that you get.

The Trading You Have to Complete

It would be a mistake to choose the type of trading you do based solely on the amount of profit that you can make.  If you are uncomfortable with trading in the short-term then you are not going to make the profits that you want.  When you are comfortable with the trading that you do you will be able to trade more effectively.  This is more likely to bring the profits that you are looking for.  Of course, you have to consider that trading is not a get rich quick scheme so the profits you want may take some time.



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