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Forex Investing

Vladimir's LST System

Interested in  Forex   Investing  as a possible hobby that makes money? It definitely can bring in the cash, but unlike many hobbies there is a significant risk involved in this hobby. However, if you have the guts and maybe just a little luck,  Forex   investing  can make you a little cash. There are several simple rules to  Forex   investing  that you should follow. While I am definitely not a professional and the following isn't a comprehensive guide to investing, these are some great tips that any new investor should keep in mind.

RULE #1 - NEVER EVER Risk More Than You Can lose

Yes, this is the same rule as you'd use at a casino. Never bet anything that you could never afford to lose. You don't want to be losing your house over this hobby, do you? Do not jump into  Forex   investing  with both feet. Test the water a bit with your toe first. Set aside the amount of money that you had in mind, but don't use it all yet! Use a little bit of your investment money to get a feel for it. After you start feeling comfortable with the ups and downs, try a little more. Just do not let this become a problem and rule your life, where having a bad week causes you to miss your rent payment. That is what you want to avoid no matter what.

Rule #2 - Let An Uptrend Continue and Bail Out of Lost Cause Downturns

This advice is basic stock trading 101. Long story short, don't get too jumpy and sell your shares early on an uptrend. You never know when it's going to come back down. Likewise, sometimes you just have to cut your losses on a downtrend and get out before you completely lose it all. Try to break the idea that you're going to get rich super fast. While its certainly possible, you should listen to the saying "the trend is your friend". In short, let your profits run the course and cut your losses early. Rule #3 is going to introduce an idea that is going to help with both of these problems.

Rule #3 - Use Stops to Your Advantage

A stop order is simply and order that allows you to close your position when the currency drops to a certain price. This is ideal for cutting your losses. Here's an imaginary scenario. For example, say you buy some currency at 1.9500. You obviously want the price to go up, and let's say it does go up a bit, to 1.9800. Since its going up, you don't set a stop order, and next time you check it it plummets to 1.8700. If you would have set a stop order at, say, 1.9400 you could have dramatically limited your losses.

Stops are not just for limiting your losses though! They're also very useful in riding out an upswing trend. Let's use the above example. You buy some currency at 1.9500, then it upswings to 1.9800. Now you decide how close you want to push your stop and how much you're willing to risk. If you're happy getting out around 1.9800, you can set the stop at 1.97XX. If you want to risk a little bit of a downswing for a possibility of more upswing, you can set the stop order at 1.96XX, either way you come out ahead of your initial 1.9500. As you can see, stop orders are extremely useful for cutting your losses before they get out of hand, as well as making sure you can get out when the uptrend starts to fail.

Another option you have is seeking out like-minded individuals through the internet or local interest groups. Find people that share Forex interests and get together. Talk about it; share your experiences while trying to learn from theirs. Maybe you will get lucky and learn a great deal from a seasoned Forex veteran or a Forex professional. When in doubt, you can always pay a professional to handle this for you, but then it wouldn't be much of a hobby now would it?

No amount of reading about  Forex   investing  beats experiencing it. Just make sure you follow at least these 3 rules and do not overextend yourself in the market. Hopefully this turns into one of your lucrative Hobbies That Make Money!

Vladimir's LST System

Source by Robert Dant

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