How to Exchange Currency Strategically

Step by step
How to Exchange Currency Strategically

The process of exchanging currency to produce an income is also called ForEx trading. There is a lot of money to be made in this type of exchanging or trading if you do it right, but you have to know how to exchange currency strategically. If you know what you are doing, and learn the ropes quickly, you can minimize your risk and maximize your profits. 

Be Consistent

stock exchange markets

No matter what you choose as a strategy or what currencies you like to stick to, you need to be consistent. There are a lot of currencies in the world and you can’t buy and sell all of them. But if you focus in on ones that you have researched well and you know to do well in currency exchanges consistently, you will do much better than trying to spread yourself too thin. 

Start Small

coins calculator

Instead of jumping in with both feet and spending everything you have in your new investment, test the waters with a few trades to get used to how the exchanges work, how fast or slow you want to trade, and how you need to keep track of the many ups and downs that currency rates make by the minute. 

Do Your Research

man looking at documents

Before you even make your first exchange, you should know how the markets fluctuate with the currencies you are thinking of trading in. You should look back over several months to look at trends so that you are better prepared for what you might see when you make that initial exchange. 

Know How You Want to Exchange Currency

currency money cash

There are several ways in which to exchange currency whether you want very fast paced or something that takes several days. These are the four basic types of trading that you can participate in:

  • Scalping

This is the process of buying and then selling currency in just a matter of minutes. You have to know ahead of time where you want the currency to go and why because you won’t have it very long. There aren’t a lot of profits to be made on each transaction but because you can make a lot of exchanges in the course of a day, the small profits add up. 

  • Day Trading

With this type of trading, you may hold on to your exchanges a little longer, perhaps even several hours. However, all of your trades will be complete before the end of the day so that no abnormal fluctuations in currency prices overnight will affect you. The charts you choose to look at will probably be those that look at minutes to hours. 

  • Swing Trading

In swing trading, you will probably hold onto your currencies for several days, watching trends in currency prices until you feel it is most beneficial for you to exchange them. You will look at short term patterns. 

  • Positional Trading

When you engage in positional trading, you look at long-term trends and the profits can be much longer because the markets tend to fluctuate more over longer periods of time. You most likely will be looking at the end of the day reports instead of ones given throughout the day. 

The kind of trading you wish to engage in is completely up to you. How much time do you have to invest? How much money? How much in profits are you expecting over the long-term? Do you want this to be your full-time job or do you just want to check in daily and decide what to do with the currencies you currently have on hand? You need to ask yourself all of these questions before diving in. 

Related articles