Foreign Currency Exchange

The foreign currency exchange is without a doubt the largest financial market in the world. With such a large financial market, it is easy to see how one could be profitable and make a nice living with it. While the idea of making money in the Forex market sounds nice, many people end up losing their shirts (and their trust funds). So what does it take to be successful in currently trading? Read on to find out, my friend.


The foreign currency exchange is all about making pips. Pips are the basic unit that is used in the Forex market.

foreign currency exchange

Since you are dealing with two different currencies in the same transaction, you have to be able to quantify the changes in the exchange rate between them. The pip is the basic unit that is used to show this difference. When trading in the market, your objective is to make pips. It sounds simple, but you would be surprised how difficult it can be.

Hang on to Them

Can you guess what the next step in the process is after making the pips? That's have to keep them. This is like when you go to the casino and you hear about the guy that was up $1 million after the first few hands. All he wants to tell you about is how much money he won. He doesn't want to mention how he ended up losing $10 million after that or how he had to give away the title to his car and house. You have to keep the pips before you can really be a winner in this market.

Money Mangement

One of the most critical components of success in the Forex market is money management. This is how you can actually keep you are winnings. Regardless of which system you decide on (and there are plenty of them to choose from) you have to use sound money management principles before you can be successful. This means taking a portion of your winnings out periodically so that you can actually make a profit. This means not increasing your lot size when you win a few trades in a row. It also means not increasing your lot size when you lose a few trades to try to make it all back up again (unless of course you're using a Martingale strategy, which is a completely different subject).

The moral of the story is that you need to figure out how to handle the money in your account before you can really be successful in this market.

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Photo credit: gabriel77

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