Let’s agree that currency trading for beginners is something of a misnomer. While foreign currency exchange (forex) may be new to you, investing and day trading had better not be. There is a considerable amount of money to be made in the forex market however traders need to either have done significant amounts of course work in the field of investment finance or better learn to use automated tools that make the transactions for you.
Currency Trading for Beginners: Doing It The Hard Way
Making money in the foreign exchange market without software automation is quite a challenge these days, involves a lot of capital, and requires constant attention. Trades must be set up to execute based on specific criteria, perhaps by setting a stop loss trade or by using a trade trigger such as the dollar falling below a specified level against the euro.
Big Bets Needed for Manual Foreign Currency Trades
Anyone pursuing investments this way also needs to make large quantity bets with their money because the return percentages are quite small in the daily action. Execution of simultaneous trades is critical to getting the arbitrage plays in motion and the bid/ask gap needs to be small so as to reduce transaction cost losses.
Compare That with Automated Transactions
Automated programs make currency trading for beginners much easier. For one, the programs tend to be fire and forget. Set the parameters of the desired trade pairs, hit start, and walk away. The other really nice feature of this sort of forex software is its ability to take advantage of larger gaps in the bid ask spread and quickly recognize disequilibrium between the actual and implied cross rates amongst trios of currencies. This sort of rapid response program allows for investment capital to be turned over multiple times in a given day, each time returning profit to the day trader.