I get the same response from people almost every single time I mention that I trade currency for a living. The vast majority have absolutely no idea what I’m talking about (well…certainly here in Mexico) or perhaps have “heard of such a thing”… but never imagined it was actually possible.
Trading currency is not unlike trading any other asset class – you want to buy low and sell high. In this case instead of buying gold with your money, or buying stocks with your money – you are buying or selling “money” with your money.
Online I come across many “arm-chair investor types” who suggest that trading currency is a fool’s game, and that I will soon disappear into the sunset “broke and shattered” – the victim of over leveraged trading… and a blown up account.
Have you taken a shot at trading gold / silver or equities in general lately? Oh ya? – Tell me…how’s that going for you hotshot? Making lots of money then are you? – Ridiculous.
Trading currency through November and December have been my most profitable months all year.
A quick peak at a chart I’ve recently been looking at – while teaching my girlfriend how to trade. Can you spot the trend?
Trading Currency
Currencies generally trade in familiar and recognizable “trade patterns” and are well-known for long-term trend trading behavior. Granted, the money management side of it can be a challenge when first getting started – but anyone suggesting that “it´s way to risky” or “you’re gonna get killed” only needs to have a good look at the example above to clearly see this isn’t the case.
These days…currency markets are much easier to trade.
My girlfriend is doing quite well.
Why Currency Markets Are Actually Less Risky Than Traditional Investments
The Mathematical Reality of Forex Leverage
Let me break down something these armchair critics completely miss about leverage in forex trading. Yes, retail brokers offer 50:1, 100:1, even 500:1 leverage – but here’s what the “experts” don’t understand: you don’t have to use it all. When I’m trading EUR/USD or GBP/JPY, I’m typically using 2-5% of my available leverage on any single trade. That’s actually more conservative than buying stocks on margin, where most brokers hand you 2:1 leverage and traders routinely max it out. The difference? In forex, I control my position size down to the micro lot. Try doing that with Apple stock when you need $18,000 just for 100 shares.
The real advantage is liquidity. The forex market trades $7.5 trillion daily – that’s 25 times larger than all global stock markets combined. This means tighter spreads, faster execution, and most importantly, you can actually get out of your positions when you need to. Ever tried selling a falling stock during market panic? Good luck with that. Meanwhile, EUR/USD will quote you a 0.1 pip spread at 3 AM on a Sunday night.
Reading Central Bank Telegraphing Like a Professional
Here’s where currency trading becomes almost unfair compared to other markets – central banks literally tell you what they’re going to do months in advance. When Jerome Powell speaks about interest rate policy, he’s not being cryptic. When the ECB discusses quantitative easing, they’re giving you a roadmap. Compare this to trying to predict if Tesla will beat earnings or if some biotech company will get FDA approval. It’s not even close.
Take the recent USD strength we’ve been riding. The Fed’s been telegraphing hawkish policy since Jackson Hole, yet I still see equity traders acting surprised when the dollar rallies against the yen or euro. These aren’t random movements – they’re logical responses to monetary policy divergence. When you understand that AUD/USD falls because the RBA is dovish while the Fed is hawkish, you’re trading with institutional flows, not against them.
Technical Analysis Actually Works in Currency Markets
Stock traders love to mock technical analysis, but then they’ll draw support and resistance lines on charts of companies that could get acquired, have management changes, or face regulatory issues overnight. Currency pairs don’t have earnings surprises or activist investors. They respond to technical levels because the same institutional algorithms are watching the same price points.
That trend I showed earlier isn’t an accident – it’s the result of systematic institutional selling meeting predictable support levels. When USD/JPY hits 150.00, the Bank of Japan intervenes. When EUR/USD drops below 1.0500, European officials start jawboning about dollar strength. These aren’t mysteries – they’re tradeable patterns that repeat because the players and their motivations remain constant.
The 4-hour and daily charts in forex are incredibly reliable for trend continuation patterns, flag formations, and breakout setups. Why? Because central bank intervention levels create real support and resistance, not the imaginary lines that equity traders draw based on some CEO’s previous stock sale.
The Macro Edge That Beats Everything Else
Currency trading forces you to understand global economics in a way that stock picking never will. When you’re long GBP/JPY, you’re not just betting on one company’s quarterly results – you’re positioning for the relative economic performance of two entire nations. This macro perspective actually reduces risk because you’re diversifying across entire economies rather than individual corporate stories.
Interest rate differentials, inflation data, employment figures, trade balances – these all matter in predictable ways. When Australian employment beats expectations while Japanese inflation disappoints, AUD/JPY moves higher. It’s not gambling; it’s applied economics. The best part? This information is public, scheduled, and interpreted the same way by every major institution.
While stock traders are trying to guess if management guidance is conservative or if supply chain issues will hit margins, I’m trading quantifiable macro data that central banks literally publish calendars for. The edge is obvious once you stop listening to people who’ve never actually traded currencies professionally.
Hi,
Do you trade other currency pair like gbp/usd or eur/usd? I personally trade more in gbp/usd since 6 months ago, I gained but also loss. Gain loss gain loss… very tired on it. May have some opinion from you?
I do trade the GBP and EUR but not very often …especially against the USD – only in that…..the pairs don’t offer me the same “fundamental trade” as trading a known “safe haven” against a known “risk related currency….such as NZD/JPY for example.
The EUR and GBP are difficult to “read” at times…as their “function” globally is not as cut and dry, as well considering they are th emost commonly traded pairs…..I often see suspicious activity (deep spikes/ stop hunts?) as virtually every “new comer” to forex has a tight stop and is trading in EUR /USD.
I generally avoid that situation.
Hi kong,
Which mean you are only trading NZD/USD? So gbp/usd you would not recommend me to trade if I want to trade in forex for long term?
I like to trade the commodity currencies against the safe haven currencies, but it is really up to you.
I find that both the GBP and EUR are difficult currencies to “project” or “forsee” their long term values or trend – that’s all. I can´t recommend “which” currencies to trade but can really only tell / show what “I” am doing.
I am sure many people have success trading GBP/USD and EUR/USD – but they are not my most profitable pairs.
I see. So now you are trading in XAUUSD? I want to do forex trading in full time but I fund its not very stable perhaps I should have to learn to be not that greedy. Haha
Well its really interesting to see that you have 95% profit. That’s really impressive to me 🙂
Careydina.
Actually as of last night I’m now at 101% for the year – and very pleased. I am a fundamental trader at the basic level ( always looking at macro trends, longer times frames, and also current news / monetary policy) but also have an extremely refined and accurate short term technical trigger which I am currently reading for commercial sale/use along with a paid service and suppport of the technology. Please stick around and watch for that.
I have been trading short “JPY” for several weeks now with large gains, as well as of recently short the dollar against well – almost everything.
Kong,
I totally have no idea on community trade. I always check on the forex crunch website to see what’s the latest upcoming events for the week but sometime seem not that accurate and get confused too. How do you know all the fundamental news from? I wish to learn more but peoples who are around me all not experience in forex.
It takes a lot of time and effort to get familiar with each individual countries monetary stance – and projected future monetary movements.Forex crunch offers times and dates – but not really enough fundamental background in order to fully understand a given central banks intensions etc..
I would suggest that you look at forexfactory.com – as well stick around here at Forex Kong and watch how a given trade lines up with fundamental news/policy shifts.
Btw, can I have your email, I would like to ask for advise from you more. If you don’t mind.
Ok. You do give advise and tips here? How do you look at USD now? Cos risk on tradeso us bbeen weakened for days, will it rebound to 200 pips?
In this morning post I suggested that the USD will likely rebound – after such a quick fall over the past few days.
The “number of pips” obviously depends against “which currencies”. For example today the USD has gained some 60 pips on the EUR but has barely moved 20 pips against the CAD.
Without some idea of what these currencies represent – with respect to each individual countries relationship and policies, I would likly suggest you step back and do some research and reading before risking alot of money in the currency markets.
My longer term view of USD is down – but short term – I do expect a small bounce.
Kong,
Is community pair easier to trade than gbp/usd? I will check more in forex factory. Thanks for your advise!
Kong if you want a good laugh check out this rating.
cxoadvisory.com/14562/individual-gurus/gary-savage-tracking-smart-money/
42% accuracy
Its really too bad, and I do feel for the followers there. As well I find it difficult to imagine how one could expect much – when only considering trading like….2 or 3 stocks in one tiny sector, and only in one direction. Each to their own. I expect / assume things can’t be going too well now in light of the PM’s recent moves. Damn.
kong – whats your take on the PM’s activity from your perspective…. seems to be taking a beating these last few days while the DXY is trending lower as expected. While other assets are receiving the expected MF, the PM seem to have been sidelined for the time being.
Schmed.
As a currency trader (with only a recent “delve” into the PM’s) I can’t get past all the talk of “manipulation” and speculation behind closed doors / shadow activity / price supression / garbage – in looking at the PM’s. The fact that they are not getting “much love” as the market rallies and the dollar dives fits into the same lil ol theory I’ve always subscribed too – markets will always look to confound and confuse, and fleece as many in the process as possible.This doesn’t look much different in general.
One would have to assume that the entire planet ( on a purely “duh” fundamental level ) would have assumed “gold to the moon” in the face of QE to Infinity…so in the big boys eyes…Im sure this was pretty telegraphed. I’m just as guilty there – in suggesting to buy gold some weeks back – but certainly not my life savings.
I still believe the fundamental story is intact – and that gold/silver and related stocks will move – but the “when” is certainly a challenge.
Now that the dollar has taken a pretty solid fall – I expect some retracement, and it will be curious to see how PM’s move in coming days. My timeline is cool as a cucumber till mid march – as perhaps this ridiculous “fiscal cliff” story is still the thing that needs to be put to bed.