In the beginning of their trading activity, all Trader ask themselves the following question: "How do I get profit?" The answer is very simple: invest. But where to and how? Today, we'd like to tell you about several useful things, which you should remember when investing on Forex market.
"I WANT A LOT AND AT ONCE!"
Surely, most Investors stumble upon this idea when they first come to CopyFX system. In order not to dispel all illusions at once, we can tell you: "a lot and at once" can really work, but quite seldom. However, if you decide to follow this idea recklessly, you should understand that it involves exceptionally high risks.
Cause-effect relationship of such statement comes from different sources. It includes international economic conditions, the current market situation (one day or several hours), the Trader's trading style and experience, and many other things.
Some Traders may sometimes enrich themselves because of the high volatility, for others it may be the reason of massive losses. Some Traders enter the market at the correct moment and close their positions with profit, but their Investors may not be as lucky as they are.
The level of risk is the main "stumbling stone" for each Investor when making a decision about subscriptions. This level is very difficult to define, however, it's not impossible.
SYSTEM OF RISK AUTOMATIC DETERMINATION AT COPYFX
To help Investors to make better decisions, we've implemented into CopyFX the system, which automatically determines the level of risk, when the Investor chooses to subscribe to copy transactions from a particular Trader. The calculation is based on the Trader's profitability during the whole period of his trading activity in the system.
Later, the same approach will be used to determine the level of risk of the Trader's current offer, so that the Investor's choice could always be reasonable and conscious.
To know the Trader's risk statistics, you don't have to look through a lot of Traders' cards and assess each of them, if the statistics look attractive. CopyFX Rating now has the filter, which eliminates the Traders whose "riskiness" is beyond some particular numbers.
Surely that this way of choosing the Trader is not perfect, but it may be used as a basis for more careful analysis, which we're going to describe below.
INVESTMENT PERIOD: PROFIT AND RISK
Your profit depends not only on the way the Trader trades, but on the way you invest in him as well. We're talking about the investment period, or, simply said, the period at the end of which you'd like to receive your profit.
SHORT-TERM INVESTMENT PERIOD
Short-term investments involve quite high risks. Why? Think, for instance, of a very successful Trader, who has made a lot of money over a short period of time. He's got a lot of subscribers, he's on the top of the Rating, and suddenly this "all-over-fabulous" Trader loses everything and drags his Investors "to the bottom" as well.
In case the Investor chooses the wrong time to enter the market, he can easily enter it when the Trader's position is getting worse fast (or is starting to get worse). In this situation, losses of the Trader, who has already made profit from the open position, will be significantly below the Investor's losses. And if you take into account the fact that it can happen in just several minutes, then this perspective becomes as black as ink.
Short-term investment period is best suitable for the Investors, who are familiar with the currency market and able to analyze the current direction of the price.
MID-TERM INVESTMENT PERIOD
Mid-term investments can be within the period from several days to one week. From the Trader's point of view, such trading is also considered short-term, but in this case, other principles are applied to the order opening and the order volumes.
Like other words with "mid" prefix, mid-term investments may involve both high and low risks. Such duality helps to keep the level of risk at medium level.
Look at the profitability chart of this Trader and assess the timing difference between his "ups and downs":
Following the principles of mid-term investments, the Investor may not be great on nuances of analysis, but it won't hurt if he watches the open position. The price may start falling very fast, and if it does, the Investor's losses may be much less due to the profit he made earlier.
LONG-TERM INVESTMENT PERIOD
This way of investing is recommended to beginner Investors. Considering that long-term trading strategies are marked by better predictability, the Trader, who uses them, knows how to analyze the market behavior correctly, and Investors can trust such Trader without any misgivings.
In any case, even if the risk level is low, it's still the risk, that's why one should be very careful and, before subscribing, pay attention to how the Trader's strategy was applied in the past.
On the screenshot above, you can easily see that this Trader's profitability chart is very unstable, but this instability is not too critical, and over the long-term period of time the chart hasn't reached zero mark or fallen below it.
When subscribing to the Trader's offer, choose your way of investing wisely and reasonably. There's no point in rushing for easy money, especially if you're not totally aware of possible negative results. Everything comes with experience. Someday each of you will get to the point, when "a lot and at once" idea will surely work.
We wish you successful trading with CopyFX system!