Tip 5: Tips for businesspeople making forex trades

How much funds does a businessperson need to start forex trading?

Although there is no clear and definite amount required, if you want to invest in a single transaction in an amount of 1 million yen you would use leverage of about 10:1 if you started with about 100,000 yen.
Even with a hedge fund, leverage is about 2:1 or 3:1.
A professional dealer at a bank conducts transactions with leverage of 1:1.
At leverage of 10:1, risk is 10 times the amount invested. At this rate, funds could disappear quickly.
This is because even professionals do not always make money on their investments.
Controlling leverage is very important.

Reasons why professionals might not make money on forex investments

Professional dealers do not make money on investments because they buy and sell only over the short term.
Also, professionals can never step back from the market and take a break.
Since they need to conduct transactions at all times, they tend to not have positions in the market when it is good to do so and to have positions when they should not.
They need to have positions in the market even on days when they definitely are unable to understand the market.
As an example, let’s say that the market is attractive only for about two months during the year.
If a professional decided to trade only during those two months and take a break the rest of the year, he or she would quickly be out of a job.
In contrast, nonprofessionals step back from the market when they don’t want to trade.
This is why nonprofessionals are likely to outperform the professionals.

When should you step back from the market?

- Take a break when the charts do not move the way you thought they would
- Take a break when you have suffered continuous losses
- Basically, take a break when you do not want to enter the market

In the end, there are times when the market moves in straightforward ways and times when is difficult to understand what the market is doing. Trading in the latter case can have serious consequences.
In many cases, the forex market is fairly easy to read, and you can guess what the consequences will be for any action. However, it is important to step back from the market when it does not move as expected.

Eight tips for Forex trading in Japan