People who are involved in Forex trading have also experienced the other markets that have been around longer like stocks and commodities. If you are planning to go into this type of trade, first you must decide if you are a trader or an investor.
By becoming either a trader or an investor, you will know how you will move within the market. This is where you will base your decisions in the future regarding your every transaction.
Are You a Trader?
There are many types of traders. You can be a day trader, a swing trader and a lot more. As such, you will hold onto the position for a short period of time. It may take a few seconds to a few days.
As a trader, you will base your decisions on technicalities. You will analyze things based on the indicators and on charts. As you profit, you will take it and move on to the next market. If you lose, you will break away from it by trading on to the other one. You are always on the lookout to what you see as a profitable trade. You don't hold on to anything. You just want to earn fast.
You are into the Forex trade for money, for a quick profit, nothing more, nothing less. As a trader, your eyes see what gains you will get on a short term basis. You are not deeply involved in the trading schemes. You will back away once the rock is gliding and take whatever amount is available.
Are You an Investor?
When you are an investor, your mind and heart are into the trading schemes. You go into it with a long term goal. You will buy and hold your positions for a period of time, whether just a few months or even years.
Investors base their analysis with macroeconomic data that is long term in nature and study the cycles of interest rates and economic growth. You are also into digging deep into the multinational currency trends and policies.
This is sort of a marriage to the trade, you will stick to your transactions whether you're losing or winning or through thick and thin. You will not easily get your profit but instead, you'll let it grow in the markets.
So decide first whether you're a trader or an investor before you commit to the Forex trading. There are many decisions after that you will have to do based on this first analysis that you have to think through.
