A few words about Forex.
I suppose that you are somewhat bored and tired by monotonous operations in Forex trading such as purchase and sale and once again sale and purchase, purchase and sale, etc. A successful trader, by some reasoning, as well as through our own experience and intuition determines the moment when, in his opinion, the course of a chosen currency is going to jump up rather than go down. As the result of it he’s ready to make a corresponding deal which is purchase off course. If the rate actually goes up, a trader waits for the moment when, in his view the growth rate is going to be “exhausted” and it’s likely to go down rather than up. So naturally in this case a trader makes the opposite opening of the transaction or sale. Thus, it captures his desirable profits. If the currency does not live up to its trust and there’s no confidence that it’s on the bottom then a trader makes his investigation concerning whether it’s going to be a powerful acceleration of an upward motion. Then it means for him that it’s high time for the opposite opening of the transaction. In such a way traders are used to limiting their losses. Pretty simple, is not it?
Now let’s go through a short dictionary. A long position is an open position at which the instrument has been purchased. A short position is an open position at which the sale has been made. Note that there are several strategies of trade. It is possible to keep to a strategy allowing large but rare losses and fix small but frequent profits. It goes without saying that you can use another strategy for your deriving profits. Certainly you can develop it by yourself.
All transactions are delivered to a broker, or another responsible person to perform a given operation. And these transactions are delivered by so –called orders. These orders perform a function of a warrant used by traders, depending on a particular trading strategy, as well as the situation on the market.
Some guys try to convince everybody that they needn’t using orders pointing out that these orders can be considered to be a real burden for them. They say that orders can restrict their freedom on the market. May be there’s something worthy as for their attitude but I don’t think that it’s going to be a good approach for those people who have just started doing their first trades. As for me even in spite of my experience I haven’t got an opportunity and desire to refuse of using orders especially stop loss because there’s always a necessity to protect my deposit during executing my deals. I don’t doubt that very soon you’ll also realize this necessity.
It’s really vital to know that forex trading is not the game of chance, no matter how close to this it looks.
That is why, those who start buying and selling on the foreign currency exchange market, are getting into a trap.
And this is when a good forex book can be of real help.
Of course, it makes no sense to trying reading all forex book info in the world, but extra knowledge is not an extra.
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