Make Money Day Trading on the Forex Market

Foreign Exchange (or FOREX) trading is the largest market in the world, and only recently has this market become easily accessed by the general public. The foreign exchange market is where one countries currency is traded against another. Currency rates change relative to other currency values each moment of everyday. It is in these changes in value that our potential profits lie. The currency market is open 24 hours a day, five days a week thus negating our problem of not being able to find a time at which to trade.

Since currencies trade in pairs (USD/JPY, USD/CAD, EUR/USD, etc) not all currency pairs are heavily traded throughout the entire 24 period of the day. Although, since markets throughout the world are active at different times, there are always opportunities available - we may just need to watch a different currency pair that is highly active at the time we are trading.

The FOREX market, while already providing us with a 24 hour market center we can easily access also provides the ability to start trading with very little capital. Accounts can be opened for as little as $100. That $100 will allow you to trade up to $40,000 in currency with some brokers. That means you make money on $40,000 and not only $100. This is achieved through leverage; the broker allows you access to money 100-400 (you can also choose less leverage if you want) times greater than your account capital.

The first thing most people say is "Does that mean I can lose $40,000?!" or "That sounds risky!" The truth is, you can't lose more than you deposit (always have a stop order just in case) and it does not have to be risky. Losses are easily controlled with stop orders (the maximum amount you are willing to lose on the trade) so you can keep your downside very small. Orders are customizable in that you control how large of a position you will take and thus your ultimate risk. Risking the entire account on one trade is never a prudent strategy, instead, you take small positions and thus no single loss is significant. By trading in this way, and with this kind of leverage you are able to make substantial returns over the long run.