One question that is often asked by people that are not well versed in the Forex trading industry is the question of profit. There are a lot of people that are highly suspicious of the idea that you can make money over the short term through Forex trading, and given the fact that swing trading and day trading strategies often require a person to make multiple trades per day, it is perhaps understandable that people would liken Forex trading to putting your money on red and hoping to double up on the first spin of the roulette wheel. Forex is quite a bit different from gambling, however, and there are many ways that you can make money through currency trading in the Forex market.
The first way you can make money through Forex trading is through the conventional trading strategy. In this strategy, your overall goal is to guess a long term fluctuation in a particular currency, and then stick to that trade for a number of years in order to get the return that you want. This is the Forex trading equivalent of putting all your money in a blue chip stock. The return that you get from doing so is not going to be the highest possible return you can get from the stock market, but at the same time it is usually the most reliable because of the established nature of blue chip stocks. A good example of a successful conventional Forex trading strategy would have been to purchase a number of Canadian dollars a decade ago as the value of those dollars have gone up substantially in the last decade even given their rather dramatic drop in the last couple of months.
The second way that you can make money through the Forex market is through a trading strategy known as day trading. This is a strategy of trading that involves you taking a look at the price of a particular Forex currency pair on a daily basis and then making your decisions based on those daily landmarks. Some people prefer to use differences in daily prices to determine a trend and try to hop on that trend whereas other people prefer to take a look at differences in daily prices over the course of a long period of time in order to try and guess the general behaviour that the currency market might display. However you choose to do it, if your main Forex point is to look at the day-to-day prices of Forex pairs then you are involved in day trading.
Finally, swing trading is the most hair-raising type of Forex trading available but at the same time it can be the most profitable if you play your cards right. Take for example the CAD/USD Forex currency pair. In the last year the CAD has gained dramatically against the USD, dropped off dramatically, gained dramatically for a second time and then stabilized in the $1.20 range. Someone that was able to predict all of these moves could have made a killing in the market. It is not easy to predict currency swings correctly multiple times a day but just two or three proper guesses could allow you to take home a very handsome amount of money each day.
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