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Electronic currency trading has bought currency trading to the masses and anyone can now start trading online its easier to trade but this new revolution has pitfalls to. Here we will look at why currency trading is harder than before but how you can still make huge profits…

Today, in any corner of the globe you can get all the breaking news at the click of a mouse and this has leveled the playing field but it has also created huge volatility.

The problem is, when news events break more traders trade them than ever before and you have a lot of volatility around key events, such as non farm payroll.

In today’s world of electronic currency trading, you can very often take a position get the direction right and be stopped out by volatility and then see prices go back exactly the way you thought.

This is a common problem, you get your trading signal and market timing right, only to be stopped out and then see the trend develop the way you thought, pile up thousands of dollars and your not in!

Today day trading and forex scalping is more popular than ever; 30 years ago the floor traders could day trade as they had the information first and it took minutes or hours for everyone else to get it, now they get it at the same time and day trading and forex scalping are doomed to failure.

The fact is all short term volatility is random and when you don’t have valid reliable data, any forex trading strategy is doomed to failure.

So how to you overcome the problem of sharp volatility and random volatility? Here are some tips:

1. Use patience and only trade longer term i.e. forex swing trading or trend following and forget day trading.

2. Never trade over news events - wait until there over and trade at the close of the session

3. Risk more on your stop and cut leverage - it’s a fact, most traders leverage up to far and lose because they have to have their stop to close.

4. Trial stops further back to get more of the big trends, or use targets to lock in profit

5. Use options - these are a great risk control tool. Not as fashionable as they were - but they give you unlimited reward and fixed set risk. You only need the option to trade in the money in your time period to win, regardless of where prices go in the short term.

You will hear a lot about the benefits of currency electronic trading and there are many, they have levelled the playing field and let anyone get involved - but you have to deal with volatility and that’s a challenge.

If however you can overcome and handle volatility, then you can open up this markets profit potential and the rewards are huge. If you are learning currency trading, make sure you understand standard deviation of price and volatility.

It’s not about getting market timing right and direction; it’s all about staying with the trade and seeing your view turned into profit.

Of course, it’s not easy and you need a sound forex trading education, as well as a robust forex trading system but once you have these in place and the mindset to succeed, you’re all set to enjoy currency trading success.

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Tags: currency trade, electronic currency trading, Forex Training

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