Forex trading is one of the best investment opportunities to explore if you are an entrepreneur looking to build a robust portfolio. The forex market is more volatile than most other financial markets, giving you more opportunities to bank pips and secure a higher profit.
There are also ways you can boost your return on investment while trading foreign currency pairs. In this article, we are going to focus more on the simple tips and tricks you can execute from the moment you decide to enter the forex market. Let’s get started, shall we?
Pick the Right Broker
The broker or trading platform you use influences your profitability in the forex market. Brokers who are reliable and trustworthy are what you want, specifically because you can execute trades at the best price even during peak hours, and you get smaller spreads in general.
You can see from the list of top brokers on investingoal.com that each broker offers different advantages to support your trading experience. eToro, the broker that tops InvestinGoal’s list, is a broker that caters to a wide range of traders. You will find eToro’s service offers – including social trading and low minimum deposit – to be very useful.
The easiest way to find a good broker is by understanding the kind of trader you are. Spend some time looking into the top brokers on the market and find one that suits your requirements. You can trade in a suitable environment and maximize your profits from the start.
Set a Target Profit (and a Stop Loss)
Next, you want to enter every trade with a plan in mind. It is one thing to let an open position roll because the market is moving in the right direction, and another to enter every trade without a clear target profit. Setting a target profit helps you become a more responsible trader.
Under normal conditions, you can safely aim for 20 pips in profits. Others aim for higher, up to 50 pips for every trade. Again, the right target profit depends on the kind of trader you are and the trades you want to make.
One thing you also want to do is set a Stop Loss, which automatically closes the open position when the market turns too far. On some trading platforms, you can use a trailing stop to protect your trades while maximizing your return at the same time.
Read the News
Last but certainly not least, be more aware of the fundamentals that affect the foreign currency pairs you trade. News such as an announcement by the Fed or changes in key economic metrics will affect the market; in some cases, the effect is substantial enough that the pairs you trade swing by more than 50 pips within minutes.
The better you are at anticipating the news and reading forex fundamentals, the more of these swings you can benefit from. With the market being as volatile as it is today, this is how you really push your ROI to a whole new level.
You now have the tips to fully maximize your return on investment. For more tips and tricks on trading forex like a true entrepreneur, stay tuned right here on The Frugalpreneur.