It's possible to trade profitably on the Forex, the nearly $2 trillion worldwide currency exchange market. But the odds are against you, even more so if you don't prepare and plan your trades. According to a 2014 Bloomberg report, several analyses of retail Forex trading, including one by the National Futures Association (NFA), the industry's regulatory body, concluded that more than two out of three Forex traders lose money.
This suggests that self-education and caution are recommended. Here are some approaches that may improve your odds of taking a profit.
Prepare Before You Begin Trading
Because the Forex market is highly leveraged -- as much as 50 to 1 -- it can have the same appeal as buying a lottery ticket: some small chance of making a killing. This, however, isn't trading; it's gambling, with the odds long against you.
A better way of entering the Forex market is to carefully prepare. Beginning with a practice account is helpful and risk-free. While you're trading in your practice account, read the most frequently recommended Forex trading books, among them
Currency Forecasting: A Guide to Fundamental and Technical Models of Exchange Rate Determination, by Michael R. Rosenberg is short, not too sweet and highly admired introduction to the Forex market.
Forex Strategies: Best Forex Strategies for High Profits and Reduced Risk, by Matthew Maybury is an excellent introduction to Forex trading.
The Little Book of Currency Trading: How to Make Big Profits in the World of Forex, by Kathy Lien is another concise introduction that has stood the test of time.
All three are available on Amazon. Rosenberg's book, unfortunately, is pricey, but it's widely available in public libraries. "Trading in the Zone: Master the Market with Confidence, Discipline and a Winning Attitude," by Mark Douglas is another good book that's available on Amazon, and, again, somewhat pricey, although the Kindle edition is not.
Use the information gained from your reading to plan your trades before plunging in. The more you change your plan, the more you end up in trouble and the less likely that elusive forex profit will end up in your pocket.
Diversify and Limit Your Risks
Two strategies that belong in every trader's arsenal are:
Diversification: Traders who execute many small traders, particularly in different markets where the correlation between markets is low, have a better chance of making a profit. Putting all your money in one big trade is always a bad idea.
Familiarize yourself with ways guaranteeing a profit on an already profitable order, such as a trailing stop, and of limiting losses using stop and limit orders. These strategies and more are covered in the recommended books. Novice traders often make the mistake of concentrating on how to win; it's even more important to understand how to limit your losses.
Be Patient
Forex traders, particularly beginners, are prone to getting nervous if a trade does not go their way immediately, or if the trade goes into a little profit they get itchy to pull the plug and walk away with a small profit that could have been a significant profit with little downside risk using appropriate risk reduction strategies.
In "On Any Given Sunday," Al Pacino reminds us that "football is a game of inches." That's a winning attitude in the Forex market as well. Remember that you are going to win some trades and lose others. Take satisfaction in the accumulation of a few more wins than losses. Over time, that could make you rich!
Shrimp Jambalaya
First up for new recipes for my Mardi Gras feast is jambalaya which is a classic Louisiana rice dish. There a probably about as many different recipes for jambalaya as there are people that make it but it's base is meat, vegetables and rice and the rice is cooked in the same pot as everything else. One of the nice things about jambalaya is that you can pretty much do whatever you want with it; use whatever meat you want, use whatever vegetables you want, etc.
You start by cooking the non-seafood meat, add the holy trinity (onions, celery, pepper), followed by the broth, rice and seasonings and then you let it simmer until the rice has cooked and the sauce thickens before adding the seafood at the end. Jambalaya is definitely one tasty home cooking dish that is pure comfort food!
A tasty Louisiana rice dish with andouille sausage and shrimp.
ingredients
- 1/2 pound shrimp peeled and deveined reserving the shells
- 2 cups chicken broth
- 1 tablespoon butter or oil
- 1/2 pound andouille sausage, sliced
- 1 onion, diced
- 1 bell pepper, diced
- 2 stalks celery, diced
- 2 cloves garlic, chopped
- 1 tablespoon creole seasoning
- 1 (28 ounce) can diced tomatoes
- 1 tablespoon tomato paste
- 1 teaspoon Worcestershire sauce
- 2 bay leaves
- 1 cup long grained rice
- salt, pepper and cayenne to taste
- 4 green onions, sliced
- hot sauce to taste
directions
- Bring the chicken broth and shrimp shells to a boil, reduce the heat and simmer until required later.
- Meanwhile, heat the oil in a large pan over medium-high heat, add the sausage and cook until browned on both sides, about 5-7 minutes.
- Add the onion, pepper and celery and cook until tender, about 5-7 minutes.
- Add the garlic and creole seasoning and cook until fragrant, about a minute.
- Strain the shells from the broth, add the broth, diced tomatoes, tomato paste, Worcestershire sauce, bay leaves and rice to the sausage and vegetables, bring to a boil, reduce the heat and simmer until the rice is tender and the sauce has reduced and thickened to the desired thickness, about 20-40 minutes.
- Add the shrimp and cook until cooked, about 3-5 minutes.
- Season with salt, pepper and cayenne to taste and served topped with the green onions and hot sauce on the side.
Note: This recipe benefits from more simmer time so if you have the time simmer it for 40 minutes.
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