Forex Online - The Safest & Most Profitable Way To Trade

The global Forex (foreign exchange) market is estimated to turnover $4 trillion on average daily. By comparison, stock market turnovers are in the billions. So, the Forex market is easily the most liquid financial market in existence, period. So wouldn't you want a piece of the pie? With advancement of technology, trading Forex online has become much more accessible. There are literally dozens of online Forex brokers around the world. There has never been a better time to trade currency. In this article, I'll show you the safest and most profitable way to trade Forex online while minimizing and even eliminating risk altogether.

Risk And Leverage
The advancement of the internet, computers and mobile devices have made it a dream to trade Forex online. But it is absolutely important that one must firstly understand the potential risk involved with leveraging when trading with Forex online. Leverage simply allows a trader to put up a fraction of the money (margin) they wish to control on the Forex market, the amount is usually a specified percentage. For example, one broker may require 1% margin to control $100,000 on the market, so the trader will only need to put up $1,000. Therefore, that makes it 100x leverage. Simple! Leveraging varies from broker to broker. Some allow as little as 50x leverage, while others allow as much as 800x leverage. While the leverage can earn astounding amounts of money, you can also lose just as much if you become too greedy.

Choosing The Right Broker
When first starting out with Forex online, it's important to choose a broker that allows 'Options trading' (this will be explained later). In terms of leverage, choose a broker that allows 50x to 100x leverage, which is enough in my opinion. 200x leverage is pushing it but you can choose it if you're happy with risking that much of your capital but I don't recommend any higher. The reason why many people choose more than 200x leverage is because they are specifically day-trading. This is where they watch chart movements every single second and buy/sell every few minutes. That's not my style, I'm more of a mid-to-long term trader than a short term day-trader. I personally don't like being glued to the screen and trading Forex online like a robot. There are software programs that can do that much more efficiently than any mere person can.

Eliminating Risk
The best way to trade Forex online without risk is by "hedging" a trade with a put option. A put option is a form of insurance where it protects you in the case where the price falls unexpectedly. This is why it's important to get a Forex broker that allows options on Forex trades. The process is simple and requires basic three steps. Firstly, find a currency pair that has been either oversold or overbought. Next, go into the trade and then purchase a put option. The put option should be the same amount value as the actual Forex trade and the strike price should be exactly the same as the open price. This essentially eliminates any potential risk to your trade as it covers you whether the price goes up or down. The only risk is the cost of the insurance. I recommend buying a put option that lasts at least 6 months. Keep in mind, this is method only works for you're doing mid-to-long term trading and not day trading.

Trading Forex online can easily make you or break you. But there are many tools and strategies to help minimize the risk and maximize the potential profits. Put options are one of the techniques out there. Personally, it's made me a very successful trader. Although it sounds simple to do, being successful with trading Forex online will take time to master.