One of the most common questions I receive at trading events relates to making that transition from being a part time trader to trading full time and deriving an income from their trading activities.  

I know many people think about this - how should one start out in forex trading while still holding down a full-time job?  Then, how should one transition from a full-time job to be a forex trader?

This is always a difficult situation to assess and of course, everyone’s situation is very different.  It is important that people don’t think they can quit their job on Friday with next to no trading experience and start trading successfully the following Monday.  This ambition is farcical.  

The reality is that developing the necessary skills and attributes to be a successful trader takes time – a lot of it.  We almost need to train ourselves to think very differently and counter intuitively. 

Investors of all stripes use hedging as a strategy to protect one position from adverse price movements. Typically, hedging involves the opening of a second position that is likely to have a negative correlation with the primary asset being held, meaning that if the primary asset’s price makes an adverse movement, the second position will experience a complementary and opposite movement that offsets those losses.

In forex trading, investors can use a second pair as a hedge for an existing position they’re reluctant to close out. Although hedging reduces risk at the expense of profits, it can be a valuable tool to protect profits and stave off losses in forex trading.

Unfortunately, many people who start trading find success difficult to achieve, especially early on.  Trading is a challenging endeavour that has torn people from across the world across generations, from every extreme of their emotions.  

It is our money that is directly involved in trading and therefore at risk, and the potential of making more money is our primary motivation for beginning this undertaking.  Ironically, it is the money that encourages the vast majority to attempt to trade yet it is the money that causes most people to fail.

One of the things I wish I knew before I started trading was how influential my mind was going to be on my trading and how much of an emotional roller coaster I would go on. Many traders have heard others talk often about “psychology”; however, I always wonder how many people truly understand what it is they mean when they talk about it and its relationship with trading. 

In reality, your mindset controls anything you do and, consequently, any endeavour you undertake. Trading is no different, and it could be argued that this truth is even more applicable in trading, as your money is involved, which triggers many emotions inside us.

Concerns over global growth, Brexit’s looming deadline and the ongoing trade wars continue to dominate markets in September.  The head of the International Monetary Fund (IMF) Christine Lagarde has said in a recent interview that the trade war between the United States and China is weighing on the global economy ‘like a big, dark cloud’.  Ms Lagarde asserted that the ongoing tariffs are forecast to remove 0.8% off global economic growth in 2020. “That’s a massive number.” Lagarde said in an interview. “It’s fewer jobs. It’s less business going on. It’s less investment. It’s more uncertainty. It weighs like a big, dark cloud on the global economy.”

One of the biggest challenges of forex trading for beginners is knowing when to close your position. When your open position keeps rising in value, it’s tempting to believe the earnings will never stop. And when prices take a turn for the worse, pride and ego are often begging you to hold on and wait for things to turn around.

But timing is everything. When you hold an open position for too long, it almost always ends up eating away at your profits. In general, how long you should hold an open position is dictated, at least in part, by the type of trade you’re trying to win. Different traders use different strategies to turn a profit on forex price movements, and it’s always important to stick to your guns when allowing a strategy to play out.

With that in mind, here are some guidelines on how long you should hold an open position, depending on the type of strategy you’re using.

For any trader, a critical step in developing effective trading strategies is choosing an analysis method that evaluates charts and potential trade opportunities.

Chart patterns and indicators offer different approaches to evaluating markets, with each presenting its own relative strengths and weaknesses. Although some trading experts are staunch advocates of one over the other, many traders do use a combination of these methods to create their own customized trading strategy.

Here’s a look at the benefits and drawbacks of each school of thought.

Contract-for-difference trading is a popular alternative to traditional investing because of its ability to maximize capital investments and, in turn, increase your potential profits or losses. This approach to forex trading has grown in popularity over the past decade, especially with some brokerage firms offering negative balance protection to limit heavy losses that would put your trading account into debt.

Here’s a look at some of the other key benefits of CFD trading.

Contract trading is popular in many financial marketplaces. As a trader, you can purchase a variety of contract types—and each comes with unique risks and rewards. To choose and execute the right strategy for your goals, it’s important to understand the differences between them.

Below, we’ve outlined the benefits and drawbacks of two popular strategies: CFDs and options trading.