The foreign exchange market is known for its ability to move quickly. Billions can be made or lost in milliseconds. As a beginner getting lured in by the promise of money made in an hour seems tantalising. The foreign exchange rates have to be moving quickly enough or you have to have enough money to make it work. Look at the various scenarios to understand this concept completely.
Foreign Exchange Rates Exponential Increase
An exponential increase in foreign exchange is a quick movement. You could also consider this a volatility movement in certain currency pairs. Volatility is not looked on as a favourable situation to get into when you are a beginner. In fact many experts recommend never getting into volatile pairs. Certainly, the quick and large movements can turn into a profit, but they can just as quickly turn into your downfall due to extreme loss. The reason most people like the foreign exchange market is for the quick movement foreign exchange rates can undergo. In a few seconds it is possible to make 150 pips in certain pairs. It is just as likely that you would lose that 150 pips instead of gaining it. Of course, the idea is to prevent against loss by using stop losses and trailing stop losses. These only work if you have your stop loss set at a distance. A tight stop loss in a volatile market will be slipped. Slippage means the position did not sell even though you had it protected. It happens a lot with tight stop losses on volatile pairs.
If you intend on investing with foreign exchange rates offering more volatility than others be prepared for the losses you can incur. You have to be on hand for that hour of trading. You need to have your sell ready for the minute the pair hits your exit mark. You need to hit the confirm button to sell that pair or hope your stop loss is not slipped.
Foreign Exchange Rates with Thousands Invested
When you have thousands invested like leverage of 400:1 it means you are playing with your dealer’s money. You have to have a certain margin in your account, but you can trade with higher risks. It is great if the profit arrives on the quick trades, but when there is loss you still have to make that money up to the dealer.
You are better off to stay out from highly leveraged positions and only invest thousands that you can afford on the changing foreign exchange rates. As you look for pairs to trade in an hour, make certain you have examined the news for any potential upsets. New events can completely change your position in the market. For Australia, you might look to China, Japan, the Eurozone, and USA. These countries can have an effect on AUD pairings. The USA is especially known for changing daily trends in all pairings to the reverse or increasing them even more than expected. It is after all the last market to open and trades on all other market data.