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Forex Tips

Neat Forex Trick

Neat Forex Trick: Two Accounts, One Currency Pair, and a Relaxed Attitude

Want to learn a neat forex trick that not everyone knows?

Open up two new forex accounts and stick an equal amount of money in each account, doesn’t matter the amount.

Then, choose a currency pair that you think has the potential to trend reliably, one way or another, over the next three to six months.

Now buy that currency pair in one account and sell that currency pair in another account. Use equal amounts of money for both the buy and the sell.

Lastly, sit back and relax, and wait to see what happens.

What sometimes happens, and with more regularity than you’d think, is that the currency pair will trend one way or another over the course of the next three to six months, allowing you a real nice opportunity to score pips by the hundreds.

Perfectly Hedging

This forex trading strategy is predicated upon the notion that you have nothing to stress about with this kind of trade. Your bets are perfectly hedged, you receive both profit and loss from any movement in the currency pair—you’re at equilibrium.

You’re watching two teams play and you don’t care which one wins. You don’t even need a stop-loss order, you’re running free with a relaxed attitude. Your sphincter isn’t all seized up like last time, when you tried to “call the bottom” on EUR/JPY.

Losing = Winning

What often happens, with this neat forex trick, is that a losing side of the bet will emerge, wiping out one of your accounts. Your forex broker will, once your margin is not sufficient to cover future losses, close out your position for you.

This is great news! Because your other account—the winning side of the trade—is still active…and growing. While your loser account has been thrown overboard.

Persistently Trending

The success of this forex trading strategy is based upon the idea that the currency markets are, generally speaking, markets that trend extremely well.

Unlike stocks, for instance, that skyrocket or dive based upon quarterly reports and revenue projections, currencies are primarily affected by slow-moving macroeconomic factors such as interest rates and monetary policies of governments.

Not to mention the other major macroeconomic factor that causes currency pairs to trend: investor sentiment, driven by market psychology. That is, the more people buy a currency pair, the more other people want to get in on the action, or at least protect themselves if they were, for example, formerly short against a now up-trending pair.

By the time everyone else is buying, though, you are already in the trade. And you’re ready to ride the wave higher and higher. Neat trick, huh?

It is—if you can identify a currency that is due to trend. That’s not necessarily easy, but it’s not that hard, either. Currencies trend by nature.

Wisely Exiting

The final step you must execute if you want to complete your cycle of dominance is to exit the trade at an opportune time. This is when use of forex charts can come in handy.

When you see the currency hitting double tops or head and shoulders, for instance, it may be time to take the money and run. The trend may be thinking about becoming your ex-friend.

One way to prevent yourself from trying to take too much profit (yes, there is such a thing) out of this neat forex trick is to, once you have been profitable enough, set up a trailing stop-loss order on your winning account to lock in your gains.

A trailing stop-loss order will follow behind your currency pair and, if the trend starts to reverse, a trailing stop-loss will stop you out of the trade—protecting your profits.

Where exactly to place the trailing stop-loss is your own business and depends on your appetite for risk, money management strategy, and overall forex trading approach.

Just be careful not to get too greedy with this forex trick; take at least a partial profit when the charts say you should.

Important Forex Information

The most important step in currency trading is finding the right broker; our forex experts can help. See our
reviews of forex brokers for more information.  arrow

Contrary to what you might think, a margin call in the forex markets can be a very, very good thing. Get tips on
forex margin calls.  arrow

Avoid exiting currency positions manually rather than setting a stop-loss order that automatically triggers a sale. Read about
the problem with manual exits.  arrow

You can capitalize on fear if you can see it. Through the use of forex charts and technical analysis, you can see this fear taking hold. Learn to turn fear into forex profit.  arrow