How to Maximise Your Returns with Forex Trading

Posted: 29th August 2016 09:41

What are some of the terms that you associate with the modern Forex market? If phrases such as "liquidity", "profit" and "versatility" come to mind, you are likely aware of some of the major benefits that can be enjoyed by traders of all levels. With more than $5.3 trillion dollars changing hands every day, it is no wonder that a growing number of astute investors have taken the leap into this lucrative marketplace. Still, enjoying sustainable wealth is only achievable if you are able to maximise your returns while mitigating the risks that are inherent within the currency trading sector. What do the experts have to say and what are a handful of effective ways to achieve such a balance?
Consider the Risk
Before being able to enjoy substantial profits, the concept of risk needs to be appreciated. One of the most basic rules of trading observes that higher levels of liquidity naturally equate to greater levels of risk. Your "comfort level" must therefore be determined. It is a foregone conclusion that not every trade will prove to be profitable. Those who eventually succeed are willing to take a few financial hits in order to experience overwhelming rewards. This is also the primary reason why even institutional traders rarely invest any more than a few percentage points of their total capital during a given trading session.
Consider Leveraged Trades (to an Extent)
Leveraged trades enable you to purchase a greater quantity of a Forex position than would otherwise be possible through a traditional investment. The benefit here is obvious. Should the currency relationship move in the predicted direction, you stand to make a very significant profit. Unfortunately, the opposite is also true. You may lose a substantial amount of money if this very same holding drifts into negative territory. Only attempt a leveraged trade after you are well aware of the mechanics as well as the amount that you could stand to lose.
Diversify Your Returns
Experienced investors will utilise Forex trades to bolster their portfolios as a whole. Due to the fact that currency returns can be proportionally higher than those associated with stocks or commodities, any Forex profits can be funnelled back into these more conservative positions. This is the basic concept behind the diversification of your holdings.
Multiple Currency Pairs
Many Forex traders will become familiar with the major players on the currency markets. These include:
●        The United States dollar (USD).
●        The Japanese yen (JPY).
●        The British pound (GBP).
●        The euro (EUR).
Appreciating the relationship between two disparate pairs (such as USD/JPY or GBP/EUR) is one of the best ways to capitalise on market movements within various regions of the world.
The Trading Platform
Finally, ALWAYS make certain to employ only the most efficient and streamlined trading platforms such as those found at CMC Markets. Without having access to all of the latest data and the most intuitive investment tools, success will remain more of a myth than a reality. As these systems can also be accessed through a mobile phone, on-the-go trading is likewise possible. With prudence, experience and research, maximising your Forex returns is always a distinct possibility.