Tuesday, May 3, 2011

Forex | How to Make Money Currency Trading

Forex - How to make money currency trading. People will tell you it's easy - that you just open an account, make a few trades and flash, bam, boom you make money. Worse still, people will tell you that you can set up an automatically trading robot and just let it trade while you sleep.

Now while it's true some people have made money using these methods, they typically aren't for the average joe just trying to make a few extra dollars playing the market. The truth is it is far easier to lose a large amount of money in the forex market than it is to make money.

Still think it's easy? Try reading about how forex trading works. Fear not though, as complicated as making straight plays in the forex market might seem, there are other far less complicated (and math intensive) ways to take positions in the forex market and make money.

A Simpler Method for Forex - How to Make Money Currency Trading Using Binary Options
A much simpler way to make money currency trading is to use options, and more specifically a special type of trade called binary options. Binary options (as the name implies) have only two outcomes - win or lose. As a result, the contracts are vastly simplified, as traders need only determine how much money they wish to invest and click OK. Everything else related to the trade happens without further intervention on the part of the trader. No margins to compute, no worry about trade execution, no figuring out when to sell and take profit. (Read more on binary options).

Forex | How to Make Money Hedging Against Inflation
One thing people tend to forget about paper money is that like any other printed publication - the only limits to the amount of paper money in circulation is the amount of ink in the printer. These days the printers are running very fast in the United States (and elsewhere), causing a great amount of purchasing power destruction in several major countries. We have seen riots in several countries in Europe (not directly a result of inflation but effectively so), plus China and other Asian / Middle Eastern countries.

These countries have the mis-fortune of pegging themselves or otherwise tying their economies to the US Dollar. Given many major commodities have increased in price (see about buying gold), foreign businesses locked in with the US dollar have been forced to pay much more for metals and food than they would have if they'd just let their currencies float. Are you sensing an opportunity for yourself here? Think about it - you as a US citizen or resident of another country with a currency pegged to the US dollar have a problem: so long as the US Fed keeps printing money, the costs of things you buy will rise in price - as you perceive them.

The Problem of Inflation and Forex - How to Make Money by De-Pegging Yourself from the Dollar
Why is this a problem? Because the true VALUE of the things you are buying hasn't changed! That is the very nature of inflation - paying more "tokens" of value for something today than yesterday even though the items bought are exactly the same as they were yesterday. The way smart people get off the "paper token" merry-go-round is to diversify their investments (today) away from US dollar and US dollar pegged assets. This is why you see the Canadian and Austrialian dollars at all time highs today. Likewise Gold, Copper, and (almost) Silver.

If you can't afford forex trading or trading gold is prohibitively expensive - you can still get some inflation protection / diversity away from the US dollar by using a forex binary options broker or gold binary options broker.

Further - stay away from so-called inflation protection mutual funds. Read the article to see why they won't be effective for you.

More on Inflation:
How to Protect Against Inflation

More on Forex:
Understanding High Leverage Forex Trading

More on Binary Options
Trading Binary Options Profitably

More on Options Trading:
How to Trade the VIX

More on Gold:
Making Money Buying Gold