The Easiest Ways for Anybody to Trade Foreign Exchange

The easiest ways to trade foreign exchange (FOREX) is to set the conditions for trading and then let transactions proceed automatically. Instead of being glued to your computer screen all day, your trading system should free you to have a real life and still make a profit on your trades. You can use several different approaches and resources to reach this goal; in each, your initial decisions will highly influence the success or failure of your trading program.

Copy Trading


Figure 1 Copy trading from guru to novice

Copy trading is a novel concept pioneered by several companies. In a copy-traded account, you choose from a selection of other traders. Your account is then structured to mirror the activity of your chosen trader. The trader you copy may not be aware of your account – the auto-trading broker handles the linkage between the trader’s portfolio and your own. Whatever trades your trader makes for his own account will also be executed in yours, adjusted for the relative size difference between the two accounts. Once again, your task is to diligently research the candidate traders before you tie your portfolio to his or hers.

Trade by Robot

Untitled2A FOREX robot is real-time trading software that continuously monitors market conditions and places trading orders when conditions match the profile you have programmed within the robot. Your trading profile will be based upon a set of technical indicators. These indicators trigger trades when critical values are reached. For instance, a momentum oscillator is an indicator which will trigger a trade when prices reach a calculated level. You can buy pre-programmed FOREX robots that give you a number of established trading strategies from which to pick, so that you don’t have to formulate your own.

Managed Accounts

A FOREX managed account is one in which you turn over the trading duties to an experienced professional. Your task is to carefully screen candidates for the job based on their previous experience, their use of trading techniques that you understand and approve, and references from satisfied customers. You set the parameters for the account manager’s activity. For instance, you decide how much leverage (borrowing) to use – the less collateral you pledge, the greater the portfolio leverage and the greater the risk/reward potential. A conservative portfolio may use two to five times leverage, whereas an aggressive portfolio may feature a 40:1 leverage ratio – you pledge one dollar of collateral for every $40 you borrow to finance your portfolio. Your account manager constantly monitors the FOREX market, while your job is to monitor your account manager’s performance.

Binary Options

FOREX online binary options are easy to trade just like a bet: if your currency reaches a given price within a given time period (measured in hours or days), you win. Otherwise, you lose your investment. For instance, you can buy a four-hour binary option that pays off if one U.S. dollar becomes exchangeable for 125 Japanese yen at option expiration. The option will cost you approximately $20 to $40, and will pay off $100 if successful. You set the initial conditions by choosing parameters like the trading currency, the expiration period, the target price, and the option price you are willing to pay. Once you buy the option, you simply wait for option expiration to see if you will collect a payoff – the time until expiration is yours to spend as you like. You should check binary options broker reviews before deciding which broker to use.