Forex Investing: The Basics

By: Camie Ibara
Forex trading has its own rules for the winners, so, if you just started doing business on this market, a little piece of advice will do you good. One rule that you should know about, if you want to be able to protect your capital, is the 10 a.m. rule. Here is an imaginary situation: you want to invest in a forex stock, because you think that you can make a nice profit. As many others know, you are also aware that you must buy when the stock is on the gap down, but, as the market is in rally mode, you see it gaping up. The question is: what should be done?

The answer? You will need to apply the 10 a.m. rule, which means that you wait until this hour and then you buy the correct forex stock. When you see it gaping up, after 10 a.m., it is time to make your move and trade the stock for some profit. Also remember to use stops in order to protect your capital.

As a general rule, the experienced forex users know that a forex stock will know a gap up in the morning, and then it can go all the way down. If you just wait until the clock is 10 a.m., you will not fall into this trap, of investing too much, so later on, you lose everything. There is a chance that the forex stock rises up again after 10 a.m., and then it will be your moment of glory.

We will show you an example to understand what we are talking about. At the closing of the day, the forex stock you are interested in has a price of $140; early in the morning, the next day, the price rises up to $160, as the company makes a two for one stock split announcement. The price continues to rise until 10 a.m., but after a few hours, it is stabilized at 165$. Then it is the moment to buy.

The morning is very important for the forex stocks. They can appear in hot sectors that you are interested in investing, and you will need the 10 a.m. rule, as well. If you make a good buy, and then watch the prices all day long, you can hunt for the best highs of the day, and sell when the moment is right. Some forex stocks open the next day at prices that are lower than they were the previous day; but it is not wise to buy immediately, but wait to see if the forex stock knows another gap down during the day.

Probabilities are a science when it comes to forex stocks. You just need to apply the 10 a.m. rule, to the stocks that you evaluate to be profitable for you. Whether you will win big or not, is only a probability, so you need to maximize your chances. You will avoid some expensive decisions and you will even be able to learn the ways of the trade, while making profit.

Camie Ibara is the Editor and Publisher of Article Click. For more FREE articles for your ezine and websites visit - www.articleclick.com