How to Increase Currency Trading Profits

The point of trading currencies is to make a profit. How to increase currency trading profits is to increase the number of winning trades and reduce the number of losing trades. This is accomplished by sound fundamental analysis, skillful technical analysis and the Forex options to hedge risk.

Fundamental Analysis of Forex Currencies

In our article Practical Approaches to Forex we wrote about anticipating fundamentals.

There are fundamentals that eventually determine the value of one currency versus another. Balance of payments, strength of an economy and central bank policy all help determine how much traders will pay in US dollars for the Euro, British Pound, Yen etc. Currency traders who are well versed in the fundamentals that drive currency prices can swing trade currencies and profit over a few days, weeks or months. This is one of the practical approaches to Forex. It requires that the trader do his homework and keep up with the market.

Keeping up with the fundamentals that drive Forex rates will help you increase trading profits over the long term and especially help you avoid being blindsided by market changes that everyone else expected.

Technical Analysis

In our article about Forex technical analysis we noted that this approach is appropriate for use in trading major currencies and not so much with minor currencies.

Modern Forex technical analysis works because it is based on statistics, the history of the market. Signals that have a high degree of reliability are used to predict the next market move. This system works the best with high trading volume and liquidity. Thus the best way to use Forex technical analysis is with major currency pairs.

If technical trading is your route to Forex profits you need a fast and stable internet connection and enough computing power to keep up with a fast moving market. Then you need to practice simulation trading in order to develop the skill set to day trade in a timely manner and increase your currency trading profits.


Forex options are commonly used by those who do business internationally and want to hedge their currency risk. Our recent article about Forex options trading highlights three reasons to use options.

There are three good reasons for Forex options trading. In international business transactions Forex options trading helps hedge currency risk. In volatile markets Forex options trading both helps limit risk while providing profit potential. And traders can use Forex options trading to provide extra leverage for their trading capital. Here are snapshots of each reason for Forex options trading.

Limiting risk may not sound glamorous to new Forex traders but remember that how to increase currency trading profits over the long term is as much about avoiding bad trades as it is about finding good ones. Forex traders are wise to remember the rules of famous investor Warren Buffett. Rule number one is not to lose money and rule number two is to always remember rule number one. How to increase your profits in currency trading starts with hedging your risks and eliminating bad trades.