Page 108 - Ultimate Guide to Currency Trading

make a living at currency trading. It would also not be right to have a trading system that takes hours
each day in order for it to work effectively if you are seeking a slow and steady return.

Ask yourself what you would like to gain out of currency trading, and -then ask yourself what
you are and are not willing to give up in order achieving those investing goals. If you do this
questioning, you will be on the path of starting to develop a currency-trading system that works for
you.

Look at your past history when thinking about your risk tolerance. If your past
investments have been in commodities, options, or futures, then you are definitely
ALERT
more risk tolerant. On the other hand, if you normally only invest in government bond
mutual funds, then you are likely more risk averse.

You can read this and every book in the stores about currencies, trading, and analysis, but
until you are comfortable with what you are expecting out of your FX trading endeavors you will never
actually get into trading. So, the best thing to do is to look at yourself and ask, "What do I want from
Forex?" The answer can be anything, from treating it like a competitive sport with your friends, to
earning enough in profit to make the payments on a new car, to adding return to an otherwise
ultraconservative (and low-yielding) bond portfolio, to a making it your full-time business and relying
on currency trading for your weekly salary.

Ask yourself the tough questions. It is okay, whatever your goals are! Once you have a good
idea of what you would like to try to gain from trading currencies, then you will begin to see what your
overall picture is and where FX fits into those plans. It is safe to say that if you want to make enough
money to make the payments on a new SUV, then a smaller account with a more conservative trading
style would be a good trading system. You can consider yourself lower risk tolerant. If you are looking
to supplement the returns to an otherwise low-yielding AA- and AAA-rated bond portfolio, you, too,
can consider yourself as having a very low-risk appetite, and can be very conservative in your currency
trading.

On the other hand, if you are looking to make the mortgage, or even live off your earnings and
draw a weekly paycheck, then you can say that you will have to be much more risk tolerant with your
trading system. Whatever your goals are, look to see how much you actually need to make a month to
meet those needs. If it is a big number, you will need to build yourself a more risk-oriented portfolio in
order to squeeze out those returns. If you only need coffee money, well then, a micro account and an
hour of trading a night will yield you enough for a latte in the morning.

Overall Investable Assets

A good place to start when looking at what you expect to gain by your currency trading is to look at
your overall investable assets. Contrary to what you may think, you should not look just at how much
money you would like to make or how much money you need to make. In other words, if you are in a