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Forex Basics

The Rules of Forex: Are They Meant To Be Broken?

Darwin, analyzing the content of his work “the origin of species”, explained that the strongest species are not the ones that survive, not even the ones that have the greatest intelligence, the ones that survive are the species that best adapt to the changes. This has always been an important part of my investment philosophy, a clear example is my aversion to pension schemes, a product whose extreme illiquidity prevents adaptation to change, and the coronavirus crisis has set a good example of how harmful this can be: Many people have gone blind until it is not known when, and many of them are left without income and perhaps with economic problems. 

Having savings allows you to adapt to change, it is good to have savings; but if the bulk of your savings is locked in a pension plan, they will not serve to adapt to change…

Okay, yes, governments have changed the rules to allow some to be saved. And you’ve done well, by the way. But is it wise to let your adaptability depend on the government changing the rules? What if you’re not on the assumption that ransom is allowed? Maybe you can’t get it out because the plan is in your partner’s name, or because you don’t have problems but your son, father or brother does…

But this post is not about pension plans, but about rigidity vs flexibility; rules vs exceptions. And I’ve titled it “Rules are enemies of the best,” because that’s the corollary that comes from two premises that I think are true:

Rules Are Good

I will finish the post defending the deviation of the rules in certain circumstances, so it is good that I start by making it clear that normally you must follow the rules.  When there is a rule for anything (from the circulation code to the ratio of fixed income to the equity that you should have according to age and risk profile), these rules have been put by people who know a lot about the subject, and who have seen that for most people, Following these rules often gives good results most of the time. If you find a rule in a field where you are not an expert, you will do well to follow it. And if you find it in a field where you are an expert, you should have it as a reference and follow it most of the time.

That being said, make it clear that there are a few rules that are an end in themselves, and these must be fulfilled ALWAYS. But most rules are not an end but a means to achieve a goal, and in such cases, you have to stay the course towards the goal, not the rule…

But Rules Aren’t the Best

¡Nor do they claim it! Many rules do not seek to achieve the best, but to avoid the worst. I saw this a lot in my time at Indra, working in public administrations. There are rules to prevent the posts of civil servants from being given to friends, which would be “the worst thing,” but what happened with those rules is that if someone had entered as an interim had done a good job, he could not be allowed to continue in his post. 

But his position was taken to the contest by anyone who knew how to memorize more articles of the constitution… although that had no correlation with his good performance in the post. What was going on? On more than one occasion, they cheated themselves to make a call tailored to the person who was acting, breaking the rules, to achieve “the best thing”: that the one who had been doing that work continue doing it, for the benefit of all. Probably illegal, but certainly not reprehensible… if you’re looking for the best, you’ll have to break the rules. And the same thing happens with promotions, competitions for hiring companies… or outside the administrations, also happens with professional associations or designations of origin of wines. They all have rules to ensure minimum quality, but these rules will make it difficult to achieve the best possible result.

What About the investment Rules?

Investment rules are made with two main objectives:

Limit the risk: Achieve adequate profitability for the level of risk assumed. Both objectives are desirable (although the definition of risk can be discussed a lot), and to achieve them, certain investment rules have been proposed:

The Permanent Portfolio proposes:

  • 25% Shares
  • 25% Long-term bonds
  • 25% Gold
  • 25% Cash

Reducing the risk with age, Bogle proposed that the percentage you have in the stock market should be to subtract your age from 100 (I who have 46 would have to have 54% in the stock market), and the rest to fixed income. If your profile is more conservative, you can change the 100 by 90 or 80, if you are riskier you can use a 120.

These rules have worked pretty well most of the time, so it would be foolish to ignore them. But this post is about adapting to change… and certain circumstances have changed most of the time. The risk-free bond used to give modest but reasonable returns (2%-4%). Now he’s giving negative returns… you pay to lend the money!

For me, fixed income is at a terrible time, and variable income is at an optimal time. Are we going to follow the rules? Do we remember that the purpose of the rules was to limit risk and increase profitability? Because in the long run, buying cheap (stock market) is a great way to limit risk and increase profitability… 

The problem, of course, is that this is difficult because it is very easy to go from “applying the rules with flexibility” to making hot decisions, guided more by emotions than by reason. This is why designing a system of rules where rules evolve with the environment is especially attractive. Frankly, I have not seen anything similar in other disciplines (except in computer science, but is that computer scientists are “special”), and it would be very interesting… can you imagine that when a particular public administration shows above-average performance, it would be allowed a freer system of recruitment, without the obligation to go through competitions and competitions?

And this that I have commented regarding the rules of distribution of assets in portfolios applies also for many other rules that are used in investment…Distribution of assets by sector? Yes, but first let’s see if there are any particularly bad sectors (banking, for example), or expensive (dotcom in 2000, brick in 2007), and that we leave out.

Distribution By Country? Same Thing

The rule of PER 14? Very useful for detecting craziness when you see normal companies trading at PER 40, but beyond these extreme cases, it has many exceptions and nuances that need to be known. The rule not to invest in companies with high debt? It is more difficult to find exceptions to this because we are just talking about the survival of those species that are able to adapt to change, and high debt limits the ability to adapt to change.

So you know, learn the rules, apply them in detail, understand them thoroughly… and start thinking about when it’s time to break them. Adapt to circumstances and be flexible. And do not stop questioning your own ideas, and listen carefully to those who question them; sometimes you have to unlearn some things to continue moving forward. And as a general rule, avoid the rigidity that comes with debts and illiquid investments… Although I do not despise an illiquid investment that comes with a substantial discount!

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Forex Basics

Traders: How Much Do You Value Your Time?

All traders at the end of the year always take stock of their own trading activity. There is, still, an element that is never taken into account and therefore we tend to forget… How much is our precious time worth?

While it may seem obvious, time cannot be “preserved” and we know this. It just happens. It is said that when we are born we are filled with time, because we have a life ahead of us, but no one can quantify this wealth and no one can know how long a person’s life will last.

Even so, this wealth is a certainty, since time can be devoted to all things that free will allows. Bearing in mind that our choices will show us the way because with each decision we take new paths and leave others.

This leads to a consequence: we spend more time on what motivates us the most. This motivation can be effective, economic, work, sense of duty, etc. It is interesting to note that on many occasions we use time as an exchange currency.

Traders Continuously Exchange Their Time

This concept applies particularly well to a trader. He exchanges part of his time to have more availability of it, later. What do you mean? Invest money in financial markets to get more of it so you have more time to enjoy your life with your goals and desires. Let me explain in detail what this phrase means.

Time and money are perhaps the two most important resources we have available to invest and make a profit. However, it is money that is really valued as an investment because it allows us, being a system of payment, exchange, and reference, to receive something in return.

Otherwise, when we invest our time, it is not so easy to quantify the performance we will get, only in some cases will it give us a profit in the form of money. For example, in the event that we exchange our time with work to be rewarded with a salary.

In others, the exchange is not tangible, for example, when we want to increase our knowledge through study. Paradoxically, these resources have great similarities: both can be managed, lost, wasted, saved, they are not infinite, but the substantial difference is that only money can be earned. If you lose money, you can recover it over time, but if you lose time, you can never recover it, even by buying it.

Unconsciously, money is valued more than time, except by increasing age: older people value time more because they realize their lack. Time is available at no cost and available at will. Moreover, it is the most equitable resource there is. We all have it. The problem is your administration.

Different Uses of Time and Money

The same amount of money and time in the hands of different people will not coincide with their uses, even if the source from which they come is the same. If it is easy to answer that time is the main resource we must fight for, we must be aware that money is decisive for our future. Buying new experiences or particular desires requires a significant monetary expense and an investment of time to enjoy them.

The needs of life and the time in which we live mark the future of events: money well-spent costs little, while time well spent is scarce and spent inadvertently. A very good dilemma.

Time measurement predates the creation of money and is often related to productivity. Benjamin Franklin said that “time is money” and explained that time spent working to earn money was time well spent; otherwise, if time has been spent on other matters, money has been lost. This reflection is correct only in its own context, outside of it it does not make sense because the time well spent not only generates money but also generates many benefits that go beyond money.

Both time and money are consumed even if nothing is done with them. If we let time go, it is spent. If we do nothing with the money, like leaving it in a non-productive place, then inflation will, over time, despite its initial value. And this is surely the most important theory of finance: while the price of money remains constant, its value fluctuates over time.

Time Should Be Devoted to Investment

In the world of investment, the results are obtained after having devoted much of our time to them. The paradox that to make money I have to invest my time and that if I have money I will have more control over my time, does not go beyond the fact that the reward of both is not proportional. Having a lot of money is not synonymous with having a lot of time.

Time is indifferent to the amount of money. Those who have obtained a significant amount of money have invested a lot of time in it and will also need a lot of time to manage it.

It is clear that everyone is happy in their own way, but it is possible that those who have more time and less money to devote themselves and their families will be happier. A study carried out by the publication Psychological and Personality Science reveals that 64% of respondents prefer to have money for leisure time, even if the results changed when asked about happiness. In fact, it has been concluded that the amount of money accumulated is not proportional to happiness.

When you reach a certain limit of money, by earning more, that extra amount is not proportional to increasing happiness. In this sense, it is said, and rightly so, that the rich do not enjoy the same happiness as money. This limit is at 60,000 euros per year, according to experts. 60,000 euros a year? Here must enter an important reflection.

Invest Time to Gain Time

The trader invests his time because a greater amount of money improves the ability to use his time. Very true, but how do you use this time spent for this purpose? The trader must be really good at managing the time he spends in this profession. If the study of trading requires much of our time and a lot of dedication, it is also true that we should not launch it in a 10-hour session that does not bring anything good.

Some will say it depends on how much I earn. True, but only in part. If I have to destroy my psycho-physical balance to make money, there’s no point in working like this. Trading is said to be freedom, but this statement is the subtle line between good and evil.

If by freedom we intend to spend money on totally useless luxury items or sit in front of the screen for hours and hours to end up repenting and burning our human contact with the outside world, happiness will never be there and this is clear to everyone. If, instead, we mean the possibility of having quality time, for example, stay with our loved ones or have experiences that enrich us as human beings, then everything changes.

Trading As A Growth Process

Trading can be seen as a great ladder: a path where step by step we grow first as people and then as traders. A continuous exchange of time and money that should have a higher quality of time available, but above all the awareness of ourselves and of how we want to live our lives.

Life… We know it’s unique and we’ll never know the exact moment we’re leaving. Therefore, we must be very responsible to ourselves throughout this journey. Negative emotions, the lack of objectives, and the inability to react in the difficult moments of this work must be prohibited.

Time is the most precious thing we have. Unfortunately, we seldom evaluate it consciously: it continues to decline, inevitably tending to run towards a zero balance. Only in the future will we lose the past and this can never be recovered. Therefore, it is necessary to manage time: if you want to achieve something, the first thing is to realize it. It would be sad and out of logic not to do so, it would be an act of self-denial.

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Crypto Forex Basics

Forex or Crypto Trading: Which is More Profitable?

Forex and Cryptocurrency markets are very popular. With both traders trade looking to profit from this, but in itself which market is the most profitable? While cryptocurrency is growing, it is quite volatile, even more than the Forex market which makes many wonder which option is the most profitable.

Both markets have a high level of volatility, although the cryptocurrency market is much more volatile than any other and in this aspect, you can control more risks in the Forex market having greater chances to maximize profits. Trading in any form means a risk of capital loss but there is always the potential for a trader can earn money. Price changes in cryptos are very wide, and although you can earn money, you can also lose quickly by making risks more controllable on Forex by having less volatility.

The Forex market, as we know, is decentralized just like the cryptocurrency market, but what impact does this have? The currencies and assets of the Forex market are regulated and in the cryptocurrency market, cryptocurrencies are not regulated and are decentralised. Both the market and the assets present within it are totally decentralised.

Because of this, the variation in the price of assets in the cryptocurrency market is allowed to be much higher, which in turn leads to much higher volatility where prices rise and fall widely. While in the Forex market although the changes are present in the same way as the currencies regulated by the countries, their prices remain much more stable despite the volatility.

The purpose of this publication is to say that market is more profitable to operate in terms of the possibility of controlling the risk of loss of capital that as I said always is present. Now, if you ask me if you should trade cryptocurrencies, my answer is that if you do, start by using the most heavily capitalized cryptocurrencies like Bitcoin, Bitcoin Cash, Ethereum, and Litecoin.

Operating in both markets can generate potential profits, but what if you compare the two? You can conclude that Forex is much better, but if you only talked about cryptocurrencies in this article, I would tell you to make use of them because they are very good assets.

Many people wonder what will be the best option to invest, as cryptocurrencies are quite popular and have good returns, but Forex trading is gaining increasing popularity among young investors.

It will always be advisable to make good investigations of the markets of interest. Although for the modern investor Forex and cryptocurrencies head the lists, because they have very good profitability and also offer much desired financial freedom. It should also be noted that many of the investors at the moment have a stake in both markets.

Advantages of Cryptocurrencies:

-They are widely quoted and recognized worldwide.

-They do not depend on any central bank and are not regulated by any country.

-It functions as a scarce asset, so the market gives it value.

-It allows anonymous transactions outside the system’s regulation.

-Cryptocurrencies are immune to inflation.

-It is a payment system that does not depend on banks since it has a blockchain chain system that allows you to transfer money without the need for banking.

-It is a digital ledger that cannot be manipulated. 

Disadvantages of Cryptocurrencies:

-They are highly volatile: it has presented an annualized volatility in the last year of 80%, which makes it enter the classification of high-risk assets

-Changes and Attempts at Regulation: for many, it is a bomb that can explode at any time, and although they have tried to regularize it has only remained in comments and statements. To this end, countries like China prohibit cryptocurrency transactions.

-Robbery: although it is a bit difficult it is not impossible. Hackers have been engaged in developing different methods by which they have succeeded in taking over the assets of others.

-It demands high commissions for its exchange for traditional currencies and they are not yet accepted at all levels.

Advantages of Forex

-You can trade in any currency in the world.

-It offers a greater number of profitable options to invest.

-It is focused on trading (short-term trades) allowing you to see benefits in less time.

-It works with brokers that are regulated by the countries in which they were founded, which increases the reliability of the system.

-It is a highly liquid market and can operate with leverage. 

Disadvantages of Forex

-To see big profits requires the investment of a greater capital or in its absence of a greater number of small and effective operations.

-Forex as such is unregulated and no one or nothing watches over the trades that are made there.

-Leverage can be negative in some cases as it can lead to significant losses.

So… Cryptocurrencies or Forex?

This decision is very subjective, so let’s see what it’s like to invest in each of these markets.

First of all, time plays an important role when you buy these two investments. Forex transactions are short-term, you usually don’t wait more than a few days to close your positions. It’s pretty fast compared to cryptocurrencies, as you want to trade every opportunity you get because of small profit margins.

The more you trade, the more profits you will get, which means you must be an active and experienced Forex trader to know exactly when to place your trades and when to withdraw. With cryptocurrencies, it’s a completely different story.

To begin with, the market is highly volatile, meaning that prices can skyrocket or plummet significantly in just one day, even hours. Applying the same tactics as with Forex trading would be too risky because there is a lot of money at stake, especially if we are talking about Bitcoin.

This is because, in terms of investment, cryptocurrencies should not be regarded as currencies at all, but as precious goods of some kind. Therefore, when you invest in cryptocurrencies, you are actually making long-term investments, because the results are not quick: you will have to wait several months until they start to pay off.

As a result, cryptocurrencies are not for everyone, as they require an infinite amount of patience and self-control to prevent you from performing a panic-stricken transaction when the time is not optimal for you to sell. In addition, with more than 1500 cryptocurrencies today, predicting which one is the goose of the golden eggs and which one is not an almost impossible task.

On the other hand, Forex transactions are much more concrete, as they are almost always the four main pairs and have only a few coins crossed here and there. Forex is a more stable market than cryptocurrency, with the latter being a portfolio diversifier first. Of course, it does not take away the merit of virtual currencies, as they are still a very young market and have much to give, maybe in a few years have enough stability to be seen by traders with greater importance.

For now, Forex will continue to be the favorite for traders on a day-to-day basis, while cryptocurrencies will be seen as long-term investments for those people who can withstand the high volatility of these, and who seek to move away from traditional institutions, as well as banks and states.

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Forex Basics

Is it Possible to Trade Forex on Sundays?

If you’re new to forex trading, you may be eager to trade as much as possible, or perhaps you’re trying to figure out a schedule for trading that works around your daily life. For many of us, things slow down on the weekends, making it a good time to pursue extra tasks such as trading. The good news is that the forex market is in fact open 24/7, however, there are some things you need to know before you decide to devote a large amount of time to trading on weekends.  

To start, the forex market actually opens at 5 p.m. Sunday evening and closes at 4 p.m. Friday evening. Although this leaves out Friday night, Saturday and most of Sunday, overlapping market sessions and different time zones mean that there is always at least one market open. Market sessions are divided into the following:

As you can see, the overlapping market sessions make it possible for traders to enter currency trades at any hour. You’ll always have access to the most traded currency pairs as long as the market is open, but other currencies may not be available 24/7. These are the currencies you can always expect to see available for trading:

  • The U.S. Dollar (USD)
  • The Euro (EUR)
  • The Japanese Yen (JPY)
  • The British Pound (GBP)
  • The New Zealand Dollar (NZD)
  • The Canadian Dollar (CAD)

Did you know that these are the seven most traded currencies in the entire world? You also might be interested to know that spreads for cross pairs involving these currencies are tighter during the busiest market hours. If you trade during these times, you’ll be able to benefit from the tighter spreads while trading highly liquid pairs. 

Should You Trade Forex on the Weekends?

Although you can technically trade forex on the weekend thanks to the market’s time schedule, this doesn’t necessarily mean you should do so. Allow us to explain why.

Typically, the busiest trading times occur during the London and New York sessions and one of the best times to trade is when these two sessions overlap, from 8 a.m. to 12 p.m. CST. During this time, the majority of the daily volume is traded and the market is highly liquid. Things also tend to be much more active towards the middle of the week before slowing down on Friday for the upcoming weekend.

Many traders simply choose not to trade on the weekend. This is due in part to lifestyle reasons, as many of these traders are looking to spend time with their families or to kick back and relax as the weekends. Since there aren’t many traders online, the market slows down, and you’ll find a less liquid market with fewer trading opportunities. This is yet another reason why many traders avoid the market on weekends, as it seems less efficient to trade during this time. 

If you do choose to trade during the slower times, you’ll still be able to make a profit, so this is a personal choice. You should also know that there are some other times that may be better to avoid, such as when major news releases are expected. Political news or elections, financial news, and other events can really shake up the market and make it harder to predict what will happen, but some traders do thrive in this type of market environment. Another time when it’s better to take the day off is whenever there is a major holiday, as most other traders are doing the same and you won’t really be missing out on much. 

The Bottom Line

We covered a few important topics in this article related to trading on the weekend. Here’s a quick summary of the most important things you need to know on the subject:

  • Forex is considered to be a 24/7 market because of different time zones and overlapping market sessions. During this time, the seven most popular currencies are always available for trading, but other emerging currencies may be limited at times.
  • The best times to trade occur through midweek and when the London and New York sessions overlap. Brokers also offer tighter spreads on popular currencies during the most active times.
  • Monday mornings, Friday evenings, and weekends are typically slower and provide fewer trading opportunities, meaning that it is less efficient to trade during these times.
  • There are a few other times when you might want to avoid trading, including major holidays and times when important news releases are expected.  

Flexible market hours provide traders with several different opportunities for trading and everyone should be able to find trading times that work best with their schedule. It’s also important to keep the best and worst trading times in mind when planning what times you will and will not trade. Paying attention to the best trading times will help ensure that you get the most efficient results with less effort invested, plus you might be able to take advantage of benefits like tighter spreads and more trading opportunities.

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Forex Basics

How to Explain Why You’re Trading Forex to Your Spouse

If you’re currently married and you’ve just decided to take up forex trading or you’ve recently opened a trading account, you might have a hard time convincing your spouse that it is a lucrative investment. Many people have heard rumors that trading is a scam and doubt that it’s really possible to make money doing it, or they assume that only the rich can benefit from forex trading.

Your spouse has likely heard about these misconceptions before. Some people even believe that forex trading is similar to gambling even though trading is based more on facts and evidence over chance. When it comes to marriage, it’s important to agree on financials, so you’re likely feeling frustrated if you can’t get your spouse on the same page with your decision to become a trader.

We’ll start by mentioning that forex trading can be a very profitable investment that can help with pocket money, pay bills, help you through retirement, or even take the place of your full-time job. If you realize this, you’re probably eager to gain your spouse’s approval so that you can start investing in order to gain a return. The best way to reach an agreement is to listen to your spouse’s opinion and provide hard facts and explanations if they disagree with you. Here are some of the best responses to common objections to forex trading:

Argument #1: Trading is the same as gambling.

When you gamble, you purposefully risk money while relying on things like chance to hopefully make more money. You never know if you’re going to get lucky and win big or walk away with nothing. Forex trading is different because decisions are made based on different kinds of evidence. For example, some traders look at historical price data on charts, while others try to measure the intrinsic value of a stock versus the price it is trading at. There are several other ways that traders make informed decisions about what they are trading and where the price will go. This takes away the whole chance or luck concept that comes with gambling because you’re making evidence-driven decisions. It’s true that the market might move against you, but you are much more likely to see good results if you make informed trading decisions. Think of trading as an investment where you can take steps to improve your likelihood of seeing a large return by performing research.  

Argument #2: You can’t make money by trading.

Some people think that forex is just a big scam that draws people in, gets them to invest money, and then sucks their account dry. Perhaps this comes from the fact that there are some shady brokers out there, or because the ability to trade from home with a small initial investment just seems to good to be true. The good news is that it is very possible to make money trading and it isn’t hard to avoid being scammed. You simply need to find a trustworthy broker that is regulated so that you’ll be protected from malpractice and your money will be refunded if the company goes out of business. After that, you need to find a good trading strategy that is profitable. If your spouse is still hesitant, try trading on a demo account using your trading strategy and then show them that the account was profitable. 

Argument #3: Trading takes up too much time.

It’s true that some forex traders sit in front of their computer screen multiple hours each day, but many others only trade part-time or devote a very small amount of time each week to trading. It’s very easy to find a profitable strategy like swing trading that doesn’t ask you to constantly monitor the market. Also, with all of the convenience offered by the modern world, traders can use signal providers to receive information about trades they should enter directly via alerts on their phone, which eliminates the need to do all the research yourself. An even more convenient option would be to use a forex robot, which trades on your behalf and only needs to be monitored from time to time. 

Argument #4: You Don’t Know What You’re Doing.

Everyone has to start somewhere. Fortunately, there are a ton of free resources available online that can help new traders learn everything they need to know, from beginner concepts like terminology to more advanced subject matter like reading charts and etc. If it makes your spouse feel better, you could prove that you know a lot about forex by taking some online quizzes and showing good results or by providing your demo account results from a period of time. 

Argument #5: It costs too much money to get started.

Most beginners choose to get started with a smaller deposit, oftentimes $100 or less. Most of us can afford to spare this much, so trading might not cost as much as your spouse is thinking. Of course, you can’t expect to make huge profits right off the bat with a smaller deposit, but you can still make some much-needed money while trading off a micro account. Try to compromise over the amount of money you will invest and make a deal that you will never deposit money into your trading account that is needed for household necessities. Once you start bringing in profits, your spouse will likely feel more comfortable with you investing a larger amount of money into trading.

Categories
Forex Basics

Proof That Forex is Exactly the Earnings Opportunity You’ve Been Looking For

Have you been looking to add a little more money to your wallet lately? It’s true that there are several rumors going around about ways to do it, especially when it comes to working from home options. Sadly, it’s difficult to pick out the reliable options from the hundreds of online scams that have been surfacing lately.

Many of these money-making schemes just seem too good to be true and there’s usually some sort of catch. For example, you might be able to find freelance work online, but you’ll literally be working for hours just to make a change. Fortunately, we do know of one proven work from home method that isn’t a scam – forex trading. 

If you’ve heard of forex trading before, you might have wondered if it’s just another waste of time. The reality is that trading is actually one of the best ways to make extra cash without taking out a second job or investing in a potential scam. Hear us out and we’ll explain the key reasons why forex trading is exactly what you’re looking for.

You Can Work from Home (Or Anywhere)

Working from home has always been a luxury compared to the hustle and bustle of a daily commute, even more so now that the nation is in the grip of a pandemic that doesn’t seem to be going away anytime soon. There’s nothing better than being in your own home, being able to wear pajamas all day if you want to, and making money. Most trading platforms can also be accessed from your mobile device, so you’ll be able to trade on the go if you have somewhere else to be. Being able to quickly check your trading account at a family function or in the waiting room at your doctor’s office brings working to a whole new level of convenience that you just can’t find with a regular job.

Flexible Hours

You don’t have to choose between forex trading and working a real job because you can set your own hours as a trader. In fact, trading could save you from having to go out and get a second job if you’re badly in need of money. It can also open the door to work for full-time students or stay at home parents that wouldn’t have the option otherwise. As long as you’re disciplined enough to work when you need to, you’ll be able to work around your own schedule and take time off when you have things to do. If you’re not a morning person, you don’t even have to force yourself to wake up early because you can simply trade later in the day. The flexibility offered by trading is definitely one of our favorite perks because it’s difficult to find this anywhere else. 

Safety

If you consider investing money through some other online option, you run the risk of being scammed. Most companies pay their sales representatives to convince you to invest, so you may think you’re talking with a stay at home mom that is telling you about her legitimate results when she’s actually just tempting you with false claims. You also might read online reviews that were written by the company themselves or edited. When it comes to forex trading, you don’t have to worry about this issue as long as you choose a trustworthy broker. Since most forex brokers are regulated by government entities, they are held to higher standards and you can be assured that you won’t lose your money if they go out of business. The profits you make are actually yours and your broker will definitely ensure that your money goes out to your bank account whenever you request a withdrawal. 

You Can Actually Make Money

A lot of these online promotions that claim to make your money don’t work. One common scam asks you to spend money on products that you’re supposed to sell, but you’re left with the bill once you can’t find buyers. With forex, you make an investment into your trading account, make trading decisions based on real evidence that suggests the way the market will perform, and then you make money. It’s true that there is always a chance you could lose money, but you’ll have every resource you need at your fingertips to make informed decisions that are more likely to bring in profits. Compared to gambling, forex trading is much more structured because it is based on solid evidence, rather than chance. 

It’s Easy to Get Started

You shouldn’t assume that opening a trading account is a headache. All you have to do is learn about trading online through sources like YouTube, Investopedia, etc., find a good broker, open an account, and make your first deposit. Learning the basics and mechanics of trading is the most time-consuming step, but you can learn everything you need to know for free at your own pace. People also assume that opening a trading account is difficult, but it truly isn’t. Most brokers will allow you to open an account for less than $100 and ask you a few simple questions before you can get started.

You Get to Be Your Own Boss!

Most of us have dealt with a boss that was…less than pleasant. In a normal workplace, you have to keep your composure and deal with it or else you run the risk of losing your job. With trading, you only have to report to yourself. If you need to take a sick day, want to go on vacation, need to stop early or have any other issue, you don’t have to ask anyone or stress about it. The same thing goes if you make a mistake – you may be disappointed in yourself, but you won’t have an angry boss breathing down your neck or asking for an explanation. You can work without the threat of being fired hanging over your head. 

People Will Admire You

Once you become a successful forex trader, your friends and family are likely to look up to you and see you as someone that is financially smart. You might even be able to help teach your family members or children how to trade, which can ease their financial burdens as well. This is a great conversation starter if you’re dating or your significant other is sure to be impressed once you start making extra money on the side!

Categories
Forex Basics

The Evolution of Forex Trading

So much has happened since the 90s once the internet started to connect the world. The evolution sparked many new things that unfortunately attracted some of the dangers too. Yet, where there is danger there is a secret, an opportunity uncovered. 

Generally, we can do so much more today than when the forex idea began. Actually, currency exchange is as old as the currency itself, but we are not going to go that deep into history, books will satisfy that hunger for knowledge. 

It is the beginning of a new era today, and most experts think It comes with the birth of a new type of currencies – cryptocurrencies. However, since the possibility for individuals to trade on the forex market, many opportunities opened for us and how we can manage our wealth, and yet few remember what made it all possible. Before we go into that, new traders should know how it was back then, when traders had to really warm the chair to get things done. Essential trading things for which we need a couple of minutes now. This article will cover how traders felt forex evolution. 

Traders and Copy Machines

How do you know your strategy or an idea works? You test it on the forex market. More precisely, you backtest and forward test. Only veterans remember how that part was very, very tedious in the 90s. They had to print the chart on their target time frame on a long paper sheet, take the ruler and start drawing. The “future” of the chart was covered so they have to decide to go long or short according to their strategy, without bias. Then write down the results and move the “future” cover by one period. 

Indicators you see today were not born yet. Price Action analysis and moving averages that were manually drawn is what most traders used, no one had the luxury of complex calculus merged into indicator coding we can just snap onto charts with one click. Access to the forex market was very rare, in the USA many traded from their workplaces if their company is connected to the broker. 

Contract For Difference

This little contract evolved forex and not only forex, it opened a new era of individual trading. The 2000s began and in Australia, CFDs were available to individuals finally. The interbank currency market was at traders’ grasp. Opportunities emerged, a new way to trade – CFDs allowed to go long and short on anything. Not only that, one could trade with more asset value than their accounts could handle usually. This was the CFDs and leverage. CFDs were essentially price trading, a trader could buy or sell at one moment and close the position after, without holding the CFD underlying asset. Suddenly you can also go short, not just long as people used to with stock trading. Even today some people do not know this. 

This ability opened new dangers, the risk was exposed and the masses lacked the skills to manage it. Regulations stepped in and closed some of the freedom traders could enjoy with CFDs, especially in the USA. Today, something similar is unraveling with the crypto DeFi idea. Interestingly, regulators did not try to change the broker business model, which leads us to the next part.

Broker Evolution

ECN, DMA, A book, B book broker, and so on, all terms that evolved with IT and communications. Back then with individual trading in its infancy, you could choose 2 or 3 brokers at best. IG Group was one of the pioneers and still exists today, which cannot be said for many others. 

Spreads and liquidity was an issue, you really had to be careful what currency pairs to choose and when. Of course, fast trading strategies that are popular now are out of the picture. With IT on the rise, brokers adapted the technologies, new companies emerged creating competition. Competition curbed the spread, commissions, and generally cost of trading for individuals. 

But new problems emerged, one of the most controversial is the conflict of interest between brokers and traders. The business model of a B-book broker does not externalize the risk, in other words, when a trader wins a broker loses and vice versa. The leverage we mentioned above just explodes the number of losing accounts, since beginner traders do not handle money management well. This profitable business sparked many new brokers to open with great trading conditions we see today. Unethical marketing emerged and evolved attracting many people that went in for the gamble. And as usual, the house always wins. 

However, it seems real brokers that externalize the risk, or true A book brokers are rare. It is considered that only 2% of them exist today. Regulators reduced the leverage more and more as the solution, while the toxic business model is not discussed. Offshore, shady business and fake investing platforms networks spoiled the industry to the point forex today is commonly associated with a scam. 

The latest developments in cryptocurrency technology paved the grounds for crypto-based brokerage. These investing platforms are not regulated and the trust is not backed by any contract. Still, even some of the crypto-based brokerages are not legit, but there are exceptions of brokers with very good reputations. 

Trading Access Evolution

Computers became more powerful, affordable, and interconnected. The Wall Street floor went quiet. No longer agents yelled at the phone line, everything is digitalized now. Computers got portable, so was forex. Platforms on mobiles are giving the traders accessibility to forex trading limited only by battery and internet connection. 

Some may argue this is not a good thing. Traders can get obsessed with following the market, overtrading, and even get health issues. Because of this and extreme marketing, it is never easier to blow your account. But let’s talk about the real benefits.

Platforms became more powerful, analysis went deep, wide, and quickly. MetaTrader platform became dominant on the market with a very good range of indicators with the ability to customize almost everything. Traders recognized they can make many strategies and make custom indicators that facilitated the introduction process to forex. Many professional traders are made in a few years. 

Social Networks and Community

This activity demanded a community, and social networks and forums came into play. Ideas and knowledge are exchanged without limits in a single digital place evolving trading to a whole new level. Information was very accessible, however, as before, this freedom pulled new dangers. 

Scammers could hide easily while picking victims in search of information on how to make money out of forex. Identity problems on social networks and communication platforms allowed forex trading to be plagued in yet another way. Unethical activity is really hard to miss now, making real forex trading harder to realize its true benefits to beginner traders. 

Nowadays, traders that dig deep and want to learn forex trading have to do good research and filter all the false info and noise out of this internet mess. It all became a very big marketing stage with media, government figures, news, and hypes that just are not aligned with the best interest of individual traders. 

Still, all the new tech and community allowed other trading forms to develop, such as automated trading, copy trading, signals providers, various trading proprietary firms, crypto-related exchanges, and staking, ETF types, indexes, and so much more on the horizon. 

The Forex Market Now

Forex, as a market is here to stay, however not much has changed recently. We are witnessing record-high equity levels, and when we see a steady rise of equities forex is waning in volume. The capital is always shifting, in 2019 we have seen record low volatility in forex. In 2020 similar happened except we had a disturbance caused by the COVID-19 pandemic. Whatsmore, the rise of crypto is now taking part in that capital flow. 

There are many fundamental signs of the upcoming crisis that are actually good for forex traders. On the other side, it stirs the need for financial education on how to protect individual wealth, something that is not much talked about. 

Categories
Forex Basics

40 Key Phrases About the World of Finance by Robert Kiyosaki

Robert Kiyosaki is an American entrepreneur, investor, writer, speaker, and motivational speaker of Japanese descent. He is the founder, CEO, and majority shareholder of Cashflow Technologies, a corporation that holds the licenses for the “Padre Rico Padre Pobre” brand, his best-known work.

Kiyosaki has provided us with excellent readings, those capable of inspiring and transforming the lives of anyone. If anything stands out Robert Kiyosaki, it is his vocation to teach, his vocation to serve others. This vocation has led him to write a book where his purpose is to teach what is the vision that children should have about the financial culture. A culture that, unfortunately, is neither taught nor encouraged in the classroom. We will focus on providing phrases that I think can be tremendously revealing when it comes to the concept that modern society has about financial education.

What follows are forty of Kiyosaki’s most notable phrases.

“Teaching about money is not given in schools. The school focuses on professional and curricular skills, but not on financial skills.”

“Making money work for you is a permanent topic of study. Most people attend college for four years and their education ends.”

“You have to learn to master money, not to be afraid of it. And they don’t teach that to kids, and if you don’t learn it, you can become a slave to money.”

“The main cause of poverty and financial hardship is fear and ignorance, not the economy or government of the rich.”

“For most people school is the end and not the beginning.”

“To spend your life in fear, without exploring your dreams, is cruel. Working hard to make money and thinking that money will allow you to buy things that will make you happy is also cruel.”

“A job is the solution for the short term but it will be a long-term problem.”

“We focus on the word education and not on financial education.”

“In accounting what matters is not the numbers but what the numbers tell you. It’s like words. The important thing is not the words, but the story that the words tell you.”

“An asset is something you put in my pocket. A passive is something you take out of my pocket. If you want to be rich, just spend your life building assets.”

“What is needed in education is not how to make money, but how to spend it; that is, what to do after earning it. That’s called financial fitness.”

“Making more money rarely solves a person’s money problems. Intelligence solves them. If you find out you’re in the hole… stop digging.”

“An intelligent person hires people who are smarter than her.”

“You need to learn how to make your efforts benefit you and your family directly.”

“The rich acquire assets. The poor have only expenses.”

“Financial problems are often the direct result of people working their whole lives for another investor. Most people will have nothing when their working lives are over.”

“Our current education system focuses on preparing young people today for good jobs, rather than developing their financial skills. Their lives will revolve around their salaries.”

“What often happens with school is that you will often become what you study. (…) The mistake in becoming what one studies is that many people forget to take care of their own business. They spend their lives running someone else’s business and making that person rich.”

“Start by running your own business. Keep your job, but start acquiring real assets, not liabilities or personal effects that have no real value once you are home.”

“The first lesson to make money work for me instead of me working for money is actually about power. If you work to make money, you give power to your employer. If your money works for you, you retain and control power.”

“Most people only contemplate for their lives to work hard, borrow and save.”

“Poor people, and in general the middle-class work only for money, the rich make money.”

“Saving money every month is a solid idea. It’s an option: the option most people follow. The problem is this: it blinds people to what is really happening.”

“My child is doing well in school and is getting a good education. It may be good, but will it be adequate?”

“Financial intelligence consists of four main skills:

  • Financial education. The ability to read numbers
  • Investment strategies. The science of money creates money.
  • The market. Supply and demand.
  • The law. Know accounting rules and regulations.”

“Real opportunities aren’t usually seen with your eyes, they are seen with the mind.”

“Unfortunately, people are not rich because they are terrified of losing. People who avoid failure also avoid success.”

“Work to learn, not to earn money.”

“There is an old cliché in English that states that the word JOB is the acronym for Just over broke.”

“Since the school considers financial intelligence to be a form of intelligence, most workers live according to their means. They work and pay their bills.”

“I now know people who are often too busy to take care of their wealth. And there are people who are too busy to take care of their health. The cause is the same. They’re busy and they’re busy as a way to avoid something they don’t want to face. No one’s told them. Deep down, they know.”

“The problem I detect today is that there are millions of people who feel guilty about their ambition.”

“The message repeated to us again and again is: Let us work hard, let us earn money, let us spend it; when we run out, we can always borrow. Unfortunately, 90 percent of the Western world adheres to this dogma simply because it is easier to find a job and work to earn money.”

“All of us have a choice. I simply chose to be rich and make that choice every day.”

“Invest first in education. Actually, the only real asset you have is your mind.”

“Most people simply buy investments instead of first investing in learning about investments.”

“The poor have bad habits. A very common bad habit is innocently known as «resorting to savings». The rich know that savings are only to create money, not to pay bills.”

“We go to school to learn a profession in order to work for money, when it’s about making money work for you.”

“You were all given two gifts: your mind and your time. It is up to you to do as you please with both.”

“There are five main reasons why people with financial literacy cannot develop their asset column:

  • Fear
  • Cynicism
  • Laziness
  • Bad habits
  • Arrogance”

The relationship between Robert Kiyosaki and Forex has always been close and has left us with a lot of lessons, but only that, good lessons and ways forward to achieve success as investors. Robert Kiyosaki has never encouraged trade of any kind but has confined himself to analyzing and trying to educate through his books and lectures to have a winning mentality, and that we can eliminate all our fears so that we have the best habits for our investments.

As a curiosity…, one of Robert Kiyosaki’s latest statements predicts that Bitcoin will be worth $75,000 in 3 years. This means the price of Bitcoin will increase by almost 100% a year over the next three years. Will it come true?

Categories
Forex Basics

Forex Books Recommended by Professional Swing Traders

Everyone who ever desired to become successful trading in the forex market understood how relevant getting proper education is. At times, we may watch videos or listen to podcasts, while some other times we might prefer blog posts or switch to some other media outlet. What we all understand is that forms of education are numerous and that in this day and age we can enjoy the luxury of being able to find the material that suits our needs, preferences, and most importantly our personality.

The choice of books can possibly best reflect these fine differences that exist among forex traders since everyone will eventually have their personal favorite according to the degree of the storyline or the message resonates with their own intentions, experiences, and goals. Many traders put extra effort into consuming as many facts as possible, which is understandably one way to go if you want to succeed. However, if you were to recommend a book to a complete newbie, which one would it be? Also, what would you base that choice on – technical aspect, indicators, success stories, or something entirely different? Today, we are diving into the pool of forex books in an attempt to offer a different perspective as opposed to what we commonly come across in terms of education in the general forex community.

One of the first factors we need to include in the book selection process is the existence of a wide variety of trading styles. Some may be more popular, whereas some others might not be as widely advertised thus creating a minority in the forex market. If you happen to feel passionate about support and resistance lines, price action, supply and demand, or fundamental analysis, among others, then the first book we are offering as a suggestion today is possibly the best material you can find on this approach to trading. The book’s author, Greg Michalowski, defines what makes a successful trader, defining some vital steps everyone should take to become a professional in detail. You may learn about the best techniques to enter and stay in trends as well as the manner in which you can manage your position or exit any trade.

This book is the most suitable choice for individuals who are keen on trying out different time frames, as the writer claims to use even the five-minute chart. One of the most unusual strategies he recommends is to move from the five-minute chart to the hour chart only to switch to the daily chart afterward. This, however, is not always possible from all locations because in some areas, such as Vegas, for example, it would require traders to stay awake from midnight until 10 a.m. Again, if you are keen on trying out this method and if you accept to include resistance lines, moving averages, and smaller time frames in your trading, this may be an interesting experience. 

The book above is, unfortunately (or fortunately), not a good fit for those who prefer a less popular approach to trading, avoiding the majority-like decision-making and the big banks. Due to the existence of so many high-quality forex-related materials online and the general lack of materials on psychology and mindset, the following recommendation of topics will chiefly boil down to the latter. Having a trading mindset and the right attitude can profoundly alter a trader’s experience. The right book choice can move a person from suffering from a scarcity mindset to seeing abundance in every step in and out of trading experiences. Everyone is different in so many ways – from trading to living, but we can all find some common grounds where the search for materials that can help us grow and further explore our options come in place. Many people are happy with what they have got at the moment, but nobody can tell you that you cannot do better.

Books can be such eye-openers even, or especially when, they do not concern some of the most discussed topics. The problem is that many traders, and particularly those who failed countless times, assume that technical knowledge or facts about strategies and methods of trading are the only items of knowledge that one needs to possess. Such an assumption is, however, entirely faulty, as trading, especially in this market, is a very unique package that, in addition to forex-specific technical knowledge, needs to consist of money management skills and trading psychology as well. Some experts even claim to owe their levels of success to the right choice of mindset books, which is why you can at least try reading one of the books below and see the impact it may have on your personal and professional lives.

Dubbed the predecessor of all motivational books, this 1937 masterpiece is the place to start growing your mindset. Naturally, all forex traders dream of becoming wealthy, affluent individuals, who wish to stop spending long hours working behind the desk. Luckily, the book is focusing on an extensive study of people who have accumulated a lot of wealth, based on which it provides a list of key principles to live by. If you are a career-driven professional and you feel passionate about expanding your opportunities, Think and Grow rich may just open a new window in your mind. Media all around the world praises the book to the extent that it even provided scientific evidence of how some of the suggestions from the book can truly and tangibly alter your everyday life.

As a uniquely philosophical, verging on the spiritual piece, you may find it to be a light material even if you have previously never had experiences with mindset work. If you are willing to test this book out, make sure that you apply the advice consistently as some of these pieces of advice are timeless but they do require some effort on your behalf. Even if you are not really interested in psychology, you may still want to give this road a try, at least just to be sure that this is not something you truly want to be doing in your life. Even though it is an entry-level read, you will find that Think and Grow Rich can proudly enjoy its nickname.

This is such a profoundly unique piece that many different people of various backgrounds still praise it. Written in the 90s, the book was such a revelation and is still one of the most captivating reads you will ever get to experience. Some traders vigorously claim that their entire lives completely changed purely after reading Rich Dad, Poor Dad as it covers topics very few people can see at this depth and level of understanding. The book discusses a road less traveled, or a path that we are typically not taught in our households or school systems, and helps its readers to see live from an entirely different standpoint.

The mindset Robert Kiyosaki describes is exactly what a forex trader should aim to incorporate in his/her trading toolbox. If you are a beginner or an experienced trader, this book can help you feel like the potential to be the most successful trader in the world. After finishing the book, many people started seeing the world in a different light because they finally found a way to get rid of the weight of constant self-doubt and anxiety, which traders are quite prone to. Naturally, we do not always need the same advice or strategies, but you owe it to yourself to at least read the book and see whether and to what degree it affects you. Unlike anything you have ever read before, Rich Dad, Poor Dad will surely leave a mark in your lives and your trading as a result.

A natural successor of Rich Dad, Poor Dad, this book is a logical continuation for anyone who has given work hours and schedules a thought. If you are keen on changing your daily routine and ready to take on new challenges, be prepared to be astounded by some amazing facts. While the title of this piece may invoke feelings of disbelief or doubt, it does not fall short of its name. You can learn from the author’s personal experience of growing his finances from $40,000 per year and 80 hours per week to $40,000 per month and 4 hours per week. This approach is particularly important for forex traders since we, as people, tend to try to copy the same type of mindset (e.g., belief that you need to work hard to earn more money) onto trading currencies, which need not be the case.

Moreover, if you are trading long hours and cannot seem to see any difference from the previous 40+-hour week, this book will provide invaluable advice in the form of creative solutions that you can start applying today. The book’s review points to its excellent use even in times of an unpredictable economy, which is another reason why forex traders should consider this book as a creative and practical assistant. Last, as you can find some prominent forex traders who feel passionate about this book because of the changes they witnessed upon reading it, the time you will put into reading this should be viewed as a smart investment.

Another more recent mindset masterpiece, Choose Yourself, combines the lessons you could learn from the previous two books we mentioned above. The book is often described as a source of refreshment and motivation, which everyone in this market needs – be it at the beginning of a forex trading career, after a major loss, or upon spending many years trading the same way. The book is particularly good in describing how in this world full of changes the only thing we can control is ourselves. The economies, retirement plans, governments, and even our age can change, but it is the perspective we adopt that will determine the quality of experience we get to have.

Are we putting available tools to good use in the times we live in? Are we exploring any creative solutions to alter reality and generate more happiness and health? Is our internal world in accordance with the external one? Are we getting the financial rewards we believe are rightfully ours? These and many other questions are discussed in detail in Choose Yourself along with numerous practical advice which stems from a plethora of real-life case studies and interviews. If you want to learn how to let go and properly enjoy your life, James Altucher has the remedy you need.

As the name suggests, Jocko Willink’s book discusses the topics of discipline and preparedness to be patient. The author’s immeasurable quality and variety of experience have been cleverly focused in such a way that you will never feel like you are reading a mindset book alone. If you are the type of person who is not a big fan of so-called self-help books, this one will teach you something you may not learn anywhere else. We can at last read about how a well-organized and orderly style of living can bring about the positive changes we aspire to see. No longer are people told to only visualize positive outcomes or a windfall of money because now we have a clear and straightforward instruction based on what constitutes a successful person. Human beings are heavily prone to procrastination, fear, and weakness regardless of their chosen profession.

Forex traders have had the opportunity to witness the same in their lives as well. Nonetheless, the same vortexes of turning off the alarm (whether figuratively or literally) can now stop with the help of this down-to-the-point yet light read. Traders do need to adopt some healthy everyday habits and routines because it will not only help them manage their trades more peacefully and successfully but will also improve their ability to discern when they are acting upon their impulses and weaknesses instead of using skills and tools. Furthermore, if you are someone who is currently working two jobs, with forex trading being your second endeavor, this book will teach you how to achieve the level of organization that such lifestyle and level of responsibility required.

The concept of stoicism implies the endurance of any hardship and acceptance that both good and bad with all the in-between shades that exist in this world. This Greek school of thought originates from the third century BC and the book cleverly and practically covers the thought patterns that many great minds have incorporated in their daily lives to this day. Traders are often compelled to do exactly what the majority does, without feeling the right to make any changes due to the fear of being different and experiencing losses as a consequence. This book, however, will show you how it is not what is happening on the outside that you should be worried about, but your own reflection of it. This crucial idea is key for surviving and being on top of situations, such as negative news or other external events that traders inevitably face quite a few times in their careers.

In addition, through this read, Ryan Holiday will teach us to look within and discover what motivates us to take a certain action. If you are ready to really let go of some unhealthy patterns that you have been clinging to, this book will shake you to the core not leaving any stone unturned. Traders in the spot forex market can finally enjoy a book that can teach them about principles of motivation, shed light on some personality traits they may not be aware of, and, most importantly, provide a long-term strategy that will prevent compulsive reactions which are both reckless and dangerous for this type of business. Last but not least, if you decide to go on this 365-day-long journey, you will learn how to stop being concerned with the things you cannot control (e.g. elections, news, big banks, etc.) which is one of the most important lessons a forex trader should constantly bear in mind. 

One of the richest men on this planet wrote a book about the importance of understanding the relationship between cause and effect in analyzing some existing patterns in life. The book so skillfully elaborates on the topic of life principles, covering many different points that traders may at times disregard as irrelevant. Concepts such as humility and open-mindedness are dexterously combined with practical tips on how to reach the level of success you desire. Traders who mostly sit at their computers may find some ingenious lessons on people in this book as it points to the belief that all industries inevitably fall on individuals. Although the forex market appears to be made of people making individual decisions, the chart often shows how the majority acts in the same way with everyone losing their money at the same time.

The book can also help you give meaning to your every day steps and discover a new sense of peace upon making a mistake. Through this unbelievably human and humane rhetoric, Ray Dalio can inspire traders to maintain control over the progress while constantly investing in growth. Principles will easily motivate you to think of the ways in which you can adapt to some circumstances or changes. What is more, if you are an experienced trader, this book will effortlessly encourage you to keep searching for ways to improve your trading. This is another important lesson for beginners who have yet to learn how forex is an ever-changing market that requires the preparedness to keep exploring both as a routine and as a way to salvage your account. Open yourself to the potential of learning from this successful individual who managed to evolve from an everyday medium-class family to a wealth exceeding 150 billion USD and enjoy the changes you experience in your trading as a result.

As we could see from the selection above, many self-made people do not fear delving into the depths of their personalities because they understand that technical and theoretical knowledge can get them only that far. Numerous excellent books can provide these other types of information, and if you feel inclined, do take time to do additional research on the aspects of trading you personally feel passionate about. Today’s choice of materials was inspired by a story of a trader who decided to leave his well-paid job and a 70-hour week upon reading one of the books we discussed today. This individual never looked back, and as Greg Michalowski shared in one of his interviews, neither should you. The choice and the determination to trade in this market do not shield you from making (many) losses, but your attitude and your readiness to keep fighting will help you wait for the success that will result from learning.

If you are in the middle of the process of completely tuning to forex trading, rest assured that the patience of postponing your vacation times, car purchases, and other enjoyable activities other people are having at the moment to a later time will double your chances to succeed and grow your finances. The lessons that come from withstanding hardship and investing in psychology will get you to the point where you wake up feeling elevated and ready to take on the world all on your own. You will feel confident and at peace with your decisions and your daily life and proper education can only make this path quicker.

Many of the books we discussed today are seen as the reason behind some traders’ success. The knowledge and wisdom contained in these pieces are the very constituent parts of these professionals’ approaches to trading. Whatever you resonate with and incorporate in your trading, whether it is a tool or some belief, will have an impact on your trading. The more you allow yourself to accumulate, the greater your vision will be. With a comprehensive and deep overview of oneself and the market, any trader can enjoy the perks that come from trading currencies. While many materials share the same pieces of information and go into too much detail, it is your task to cover as many sources as possible and continuously employ your critical thinking and analytical skills.

Even though you will often come across some overused words and phrases, try to not limit yourself to only what is popular. In addition, you may find that even though some people do not support your choice of literature, they can still share the same values and viewpoints concerning life and work. Having written that, we do insist that learning can come in many shapes and forms. An individual who is more of an audio learning type may prefer podcasts and videos, while someone else might choose written content over anything else. Some of the main hubs for learning about the forex market nowadays are YouTube and Twitter although many websites offer coaching materials as well. Whichever path you choose, aspire to grow as an independent trader capable of making impartial decisions. Whether you choose to read books only or you make a selection of various materials and advice, this choice will reflect on your career, as it will mold you into a forex trader. The knowledge you accumulate will always interact with your personality, and together they will make your personal system or approach to trading.

If you desire to be successful, go deep in exploration of what this word means to you and how you can make daily changes to get to that place. The work you put in education and mindset will always reflect you alone and besides being an inherent task attached to one’s desire to become a forex trader, it is also an art of choosing the right puzzle pieces to create a final masterpiece. 

Categories
Forex Basics

Five Questions Answered by Forex Mentors

Some statistics suggest that 90% of beginners lose the same percentage of their trading capital in the first 90 days of trading. As it appears, the odds of someone failing right from the start are staggeringly high, which is why a number of newbies decide to enter coaching programs. With a massive quantity of available information and websites where they rate various mentors, we cannot but wonder if this is the path we should be taking ourselves.

To answer this question in the most objective and straightforward manner, we have collected extensive data on mentors in the spot forex market and analyzed individual motivation behind a decision to start working with one. We know by now how forex trading neither requires any formal degree or certification nor it is a determinant of a trader’s success, so we naturally want to know why traders seek this form of certification. We also know how traders nowadays have such an incredible amount of data at their disposal – be it in the form of videos, blogs, books, and seminars, among others, and we would like to understand what pushes them towards individualized one-on-one coaching.

Moreover, what place does a trading mentor essentially hold, and how significant and determining is it for traders to immerse themselves in such programs? Before we give our final verdict on whether a mentor is a necessity for a forex trader to be good at trading currencies, we need to clearly and impartially group all relevant facts under common threads.

What is a Forex Trading Mentor?

Owing to the expansion of the media and technical support, we can naturally take on many different paths to learning, and finding a forex mentor you can look up to is certainly one way to do it. In the era of coaching programs, many assume that a mentor needs to be an individual who will be there to constantly give you tips and hints so that you could know what to do next. A mentor, however, can be a person who will serve as a guide or a source of information both as part of a specific program or a persona present in some social media outlet sharing his/her experience. The term mentor is, therefore, not completely (or always) equivalent to the word coach because the former entails a professional who provides guidance and advice in general, whereas the latter more often than not signifies some form of a program (either 1:1 or group work).

While mentors can offer coaching to traders, they need not offer structured programs per se, since the whole idea behind their work is knowledge sharing. The vehicles of this information transfer can be different, as some professionals share their expertise through videos or podcasts, while others prefer some other, written forms of communication. The materials young traders are then exposed to can diverge significantly as can different people’s approaches to trading. Forex mentors who sell various coaching programs may decide what the best learning method for a particular trader is or suggest additional learning materials.

On the other hand, mentors you see as your guide or a person you look up to will be sharing the content they feel is the most relevant as they please, without necessarily accommodating to the viewers’ preferences or needs. Personal preferences may also differ fundamentally, but mentors should essentially serve to save you time and prevent you from making some common mistakes and lose money as a result. You should expect your mentor to have experience in trading currencies and provide information on skills and tricks to become a successful trader.

What is more, a good mentor is always someone who shares their experience without holding back information that would help you grow. Your mentor should be someone who will want you to test and assess all facts they share with you, as assistance should be given without the expectation to stop searching. On the contrary, your coach should encourage you to keep exploring the market and assessing the tools you have been taught about. While some of the best and most prosperous forex traders do accredit their success to their mentors, you really need to see the difference between coaching as a program and a mentor as a guide or a role model. 

What Should a Forex Mentor Have to Offer?

Firstly, your mentor should be a person who will be happy sharing their knowledge and seeing you succeed. This individual must have relevant experience to base their judgment on or draw upon when giving advice and knowledge you require to achieve your goals. Many traders are people who are accustomed to formal education, as they come from backgrounds where academic certification is considered to be a requirement. Forex trading, however, is based on different principles, so you should rather look for other proofs of these professionals’ success, such as whether they have been hired or offered a job by a prop firm for example. Many traders nowadays did not have the luxury of relying on other people’s advice when they first started in this market, so they did not have the opportunity to read or watch any content that would help them evade or tackle some common forex challenges.

Your coach should be the type of trader who experiences the ups as well as the downs of trading in this market and a person who can justify why a certain approach is simply not going to work. A Forex trading mentor should possess the necessary know-how to effectively trade the market, based on which he/she can suggest how you can improve your trading performance. Whether your meaning of the word mentor implies paid or free content on one hand or structured programs or randomly following some professional’s content on the other, your mentor must have a structured system they follow in trading.

Such a system should be based on tools, skills, information, and mindset that together form a specific approach to trading. Sometimes we will be able to learn about excellent indicators from one person, while someone else will teach us about specific psychological skills traders need to adapt to become successful. We cannot expect one person to know everything, although there are a number of professional traders whose algorithms and trading styles reflect their comprehensive knowledge of the forex market. Do not fear looking for additional information elsewhere because it is your money that you will be investing and you have all the right to seek clarification.

While forex experts do commonly share the challenges they have faced in the past, the explanation or the content need not always coincide with your current needs. Moreover, a mentor should always explain for whom their content is meant as beginners may not naturally know as much as some more experienced traders. Always look for practical and applicable information that you can immediately apply to your trading. What is more, be mindful of the content which has been copied and shared as a mantra because retail traders for example, whose success rate is quite low, always rely on some popular information that is shared in the community.

Look for original and specific rather than popular and well-advertised. Search for testimonials to discover what traders who follow the individuals in question say about their individual growth, as good mentors will always have the support of the followers. You can also look for some Q&A sessions where different professionals discuss their approaches to dealing with some problematic areas. Whomever you choose to be your mentor, always do thorough analyses beforehand, invest in learning as much as you can about the person’s capabilities, and, most importantly, test everything you learn.

Should Traders Pay?

The topic of money is always a sensitive one especially because we know that experts devote a great amount of time to learn what they willfully share with others. Sometimes you can discover a book praised by many traders, which you will either order online or buy from the nearest bookshop. Other times, you will look up a company’s website to search for forex training courses you may find suitable. Aside from these paid materials, you can find some invaluable advice on YouTube or Twitter, which are common free online learning hubs. Regardless of the form or the medium, all these sources have one goal in common – to teach you how to do profitable trading.

We know how these items of knowledge and information you need will be the basis of your future success, so the decision of whether you should pay or not should be based solely on the practicality and applicability of the provided content. Some of the best professional traders have decided against charging for their content, whereas others of equal understanding and skills ask for donations or specific fees. There is so much free information available nowadays that you should again be looking for traders who are committed to one specific style of coaching and who are ready to point you in the right direction. Whether this is paid or not does not necessarily talk about the material’s quality as it does talk about individual preferences and choices.

If you pay, you may expect to learn about the entire system these mentors use in their trading, while some professional traders on YouTube, for example, would rather have you follow hints to be able to grow more profoundly and independently. Whatever you choose to do, remember that time is money and that your mentor is there to make this road easier for you, without needing to waste time and wander in the market not knowing what to do. Be mindful of possible scams and instant gratification that many false experts like to use to get to beginners hoping to quickly become successful. No one can teach you to become successful in a matter of weeks as learning how to be a good trader can take a few months, if not years.  

What If A Specific Approach Is Not Working for You?

An experienced forex trader should know what information to share so that beginners would know what to do next. Nonetheless, sometimes after spending time and effort into understanding what someone is saying, we still find that such an approach is not doing us any good. Therefore, we wonder if it is us who should be worried or can we blame it on the mentors. Even some professional traders who are known for their videos, podcasts, and blogs explain how they only developed their approach after they had realized that they could not be successful following someone else’s system. Some systems suggest that you should be awake all night, waiting for some important news event, only to go to bed not knowing if the move you took is the right one.

Others will tell you to stop relying on the community as much and be as independent as possible. Naturally, there are as many approaches as there are traders, but if you find that whatever system you were taught is not working, move on. Whether you initially paid for it or not, your individual personality and skills may require a different approach, so do not limit yourself or torture yourself with something that is not working. Trading is a skill, just like any other, but this market is extremely specific in comparison to other markets, which is why the information you receive from a stock trader will rarely work in reality.

Some traders like to trade lower time frames for example, while others insist that it is a waste of time providing facts to back this opinion. If you see that some approach is not working for someone else, research this phenomenon and the reasons why you should decide to follow some other approach. If you made a mistake while trading when you applied the advice you received from your mentor, go to the comments section or ask them directly why that happened. Sometimes traders overlook some minor move they made that put the whole trade at risk, so sharing and looking for similar experiences may help you a lot. If you have done all of this and still feel that a specific system is not leading you to the results you are meant to have, it is time to find another mentor and approach.

Should Traders Consider 1:1 Coaching?

Traders’ individual needs, abilities, and preferences may differ, but is there a uniform approach that all forex enthusiasts should take into consideration? When we think of some professional traders’ statements, we cannot but think of the concept of time. Some of the experts who refuse to provide this form of one-on-one coaching state how one of the main goals for growing as a trader in this market was to have more time. While they willingly provide lessons in the form of videos, podcasts, and social media/website posts, they still refrain from committing to coaching sessions of this type.

The reasons behind this decision are two-fold: on one hand, they primarily do not wish to engage in activities that would limit the amount of their free time; on the other hand, however, they fervently believe that mentorship involving such intense collaboration between the educator and the learner may do more damage than good. Education can come in many forms, but we need to ask ourselves what we are looking for. Are we in need of knowledge or a clutch? Many beginners assume that they would cut the time needed to absorb all important pieces of information by taking 1:1 classes. However, with the ability to explore various educational resources that the most experienced individuals in the spot forex market provide (often for free), this requirement would reflect the desire to enjoy special treatment. Such a desire need not necessarily be defined as bad, but it could potentially endanger your future trading.

If you do not equip yourself with skills and knowledge that are supported by critical thinking, you may have difficulty managing your trade at some important points in the future. Once your external support is gone, what do you envision your trading will be like? Some sources go as far as to say that a mentor should be a companion, which shifts the focal point from independence to a friend-like form of support. While some assistance and knowledge sharing can be positive, traders must think about mental skills and psychology as inseparable and indispensable parts of trading. Unless you incorporate self-sufficiency and analytical thinking, you will discover how sooner or later any other mindset proves to be insufficient.

If you invest in growing as an independent trader who has mastered the skill of impartial decision-making, you will be creating a solid long-term foundation that will serve you regardless of news or any other external factors. Education is truly essential for anyone who aims to be a forex trader, but paying for someone to hold your hand at all times will inevitably make you heavily reliant on external support. Therefore, when assessing education opportunities, always analyze your intentions and aims because you may find yourself in dire straits once the helping hand goes away.

After all the advice and the questions, we really need to think deeply about all the professional traders who managed to find their way to becoming successful in the forex market. How did they get to this stage when they had very few resources to rely on? Most of them claim to have many countless mistakes that were not only grave in terms of numbers but in terms of the impact on their finances as well. Nonetheless, they still managed to learn from their mistakes and build on their critical thinking and money management skills along with growing their experience. Most of them now say how there is no single situation they cannot handle or understand in a short period of time, which they attribute to the steep learning curve that shaped their personalities and skills.

If traders fail to acknowledge the lessons that originate from their mistakes or fear making mistakes so they keep clinging on to coaching companions, they will hardly grow as an independent thinker who makes lucrative decisions. What you must never do, if you want to become a professional forex trader, is to say how learning takes too much work. It reveals that you are unprepared to devote whatever is needed to be good at this type of business and, to become good (and financially stable), the exact opposite is required. What you do want to do is maximize your chances of becoming successful. Learn how to say no and make hard decisions and forget about instant gratifications. Hard work will pay off after a while, but scarcity in terms of mindset will only block any attempt to develop. Your impatience can only make the matters worse than they are at this stage. Build your confidence through knowledge accumulation and remember that many forex traders across the globe can barely speak English, yet they still succeeded.

What is more, remember that you do not need to feel pressured to take everything from a single mentor. You can always combine several pieces of advice from different professionals that you can follow to develop your own approach to trading. Sometimes it will be of technical nature, and other times, more theoretical or factual, such as the lesson concerning the involvement of the big banks. Sometimes some coaches can tell you to read trading books, while other professional traders will insist that mindset books are a much better investment. There is no bad knowledge as long as it is applicable.

Let your mentors guide you, but never lose sight of your independence and freedom, as you will be fighting in the arena alone in the end. Finally, aim to establish your own system consisting of a tested algorithm, money management, and crucial thinking skills that will be the support who may be currently asking for on the outside. Go within and build that independence that will propel you right to the top. 

Categories
Forex Basics

Complete Trading Procedure Example (Courtesy of a Professional Technical Prop Trader)

When you start your journey into forex trading, there is so much to know you do not know where to start. The internet is so full of information and yet sources that show you where to go are rare. What is abundant is the marketing mechanisms whose point is to extract more cash out of you, offering education that is otherwise free. You will undoubtedly on your first searches find multiple channels, websites, brokerages, and investment platforms full of attractive numbers and “professional” traders promoting their story as skilled promoters. Very rarely you will find a real example of what a prop trader does practically every day, how a trader’s day looks like. Based on these examples you can mold your own trading strategy or have an overview of what to develop first. 

The First Steps

The first steps are not easy to find among all the material without substance. Whatsmore, the material you find will likely point to a direction where 90% of traders end – giving up on trading after a very fast account busting. Even though forex trading is hard to master on a psychological and technical level, once mastered it offers a very attractive lifestyle most would put into the ideal category. Getting there is the hardest part, but it does not take long, especially if you have great educational and forex technical sources. Beginners always have good motivation once they find something interesting like forex trading. The motivation becomes a mix of many other emotions after failures, eventually giving up because they have followed bad advice. In this article, we will present an example of how a developed prop trader trades, the complete process on a developed algorithm based on indicators. Your future actions can be built on the same or give you an idea of what to aim for. 

On the forex market scene, traders behave as the most disciplined soldiers. They have structure and procedure before trades are entered. This structure is the algorithm and the procedure is a plan. Even though beginners should start developing a concept by concept, in the end, they build a system. Each element has a role, and each element needs to be found, tested, and incorporated into the system. So as a starter, trading education is done in small steps. Consequently, you may lose sight of the zoomed out picture of the complete system put in action. 

From A to Z

Taking the information from our previous articles, let’s present the procedure from A to Z. You should be familiar with the previous topics to understand what is really going on here, yet it is not required, it is also an intro into the forex trading end result. Note that the exact system elements will not be disclosed, and it does not have to be. Traders develop according to their personality, lifestyle, mindset, and psychological context. No trader system is the same, you will likely fail if a system is given to you. If the need arises, there are already made systems you can download and plugin as a template in the Metatrader 4 and 5. Some other platforms also have this ability but you will find that availability is an issue. Additionally, copying another’s work is a shortcut leading to failure because you have not developed the two most important aspects of trading – psychology and money management. 

This example is focused on the daily timeframe only. Of course, you do not have to trade on the daily only, the system is good for all, it is just this system is designed for it. The benefits of the daily chart lie in a good life-work balance, trading sessions avoidance, and so on. The daily timeframe is also a topic in one of our previous articles. Since this is a technical analysis algorithm, it is based on indicators. You probably know about the negative talk about them. Negativity comes from bad results with them and it comes from people who did not go beyond the popular indicators which are actually bad performers.

Pure Price Action Trading

Another group against indicators are pure Price Action traders who rely on blank charts to make a decision. Some of these traders are the best in the industry although it requires a special psychological set to trade this way, it takes a long time (experience) to develop such skill and it does not prove to be better when compared to technical traders. However, Price Action traders still have a procedure and a plan, similar to our example. After all, our technical prop trader example does not spend more than 15 minutes to trade per day and still have better performance than shorter timeframe trades according to testing. As per his words, you can spend a day trading on a 15-minute chart or spend 15 minutes on a daily. Trading should not own your time, and you do not have to sacrifice results to do so. 

Each of the system elements has an article (on our website). After you have tested them, classified them as the best, and incorporated them into your system, it is time to apply the plan and the procedure. Backtesting is a necessary prerequisite, and it is what you can work on when not trading. Exploring interesting tools, methods and ideas are what you will do as a professional, it is how you stay at the top in this business. Testing them for your system is a must. Improper back and forward testing will cause future losses, be it by mistake or in purpose, forex will reflect your work. The procedure for backtesting is explained in detail in previous articles, it is adapted to the system structure we are using but it can be applied to other systems. 

Technical Trading

Our technical trader does not look at the charts until the day session is about to close. It is the time when all the day trading activity is recorded in one candle since we are on the daily chart. We have all the data we need to make a decision. 30 minutes before closing there is not much activity on the market, most of the trading volume has subdued as banks are closed around the world. 30 minutes before day close is all we need to do all the trading per day. Depending on where you are or what is your broker server time, it can be during the working hours or in the middle of the night. If the timing is not convenient for you for various reasons, there is an alternative of course. You can trade a bit later the next day but using the data from the previous period or use pending orders instead of the market.

The first thing to check is the $EVZ, VIX Index, or other global forex volatility benchmark. It is our first information about the market conditions that affect our money management mode. Markets move in cycles, from chaotic to calm. Flat markets do not have trends we need to produce the difference or profitable trades. Calm markets also lack the momentum to push the price and trigger our Take Profit after which we are safe from losses (according to our system money management). This is a riskier environment so we adjust accordingly. Using the VIX levels we also set up exact rules on how large our position sizes are. According to our rules, if $EVZ is below 8 we risk 1% per currency, below 7 – 0.5%, and below 6 we do not trade at all. Whatsmore, our Take Profit orders close 100% of the positions, we do not follow scaling out methods we usually do when the $EVZ is above 8. Refer to our article about money management to know more about where we initially set up the Stop Loss and Take Profit orders and how it affects our position size entry. 

The next step is checking the news events. We want to know if there is an event that can affect our potential trades or active trades. Such events are mostly classified as of high importance. Forex Factory is a good source for the events calendar where you have enough filters. Of course, some events are not reoccurring or recorded in a calendar, such as trade wars, Brexit, and so on, so you need to pay attention to these too. For example, we have avoided the GBP during the Brexit process, you cannot foresee a speech or some agreement result that has an immense effect on the trends, better to avoid this risk altogether. If an event is due in 24 hours that is important, you skip on that currency. If you have active trades, you exit before the event.

Tool Options

Some traders like to customize their MetaTrader platform with a plugin tool like an indicator or EA that pulls the feedback from other sources about the upcoming events and see them on the chart. These tools are not uncommon and can be found on forex-station.com, for example. Avoiding what we cannot control is just as important as getting into the right trends. Note that trading on the daily chart absorbs any small impacts less important events cause. You can write down the currencies which have an event coming up if you do not want to import any MT4 tools and keep the list with you for the chart analysis step.

If you like have a whiteboard with key info to consult before the charts are opened. Write down your active trades here. You will have them visible on the platform but writing them down and putting them in front has a positive effect on your mind. The next column is potential trades. Here you can write down pairs that are very close to generating a signal such as a volume indicator lag clearance, possible continuation trades, and similar that require attention our system does not explicitly alert. Pullbacks require a special column. All currency pairs that have shot past our baseline-ATR range can be written down for a pullback entry one candle later, if applicable. Trading other asset categories, such as Metals, Commodities, Indexes, etc, write them separately. Your whiteboard can also have your favorite quote to keep you on, companies often do this on a wall their employees can see. 

Now we open the platform and first we take care of our active trades. We need to adjust the levels to new conditions. Make sure your Stop Loss and Take Profit levels are executed properly. These pending orders rely on server execution if you do not use any EA that keeps them internally. Cases where your pending orders are not executed because of the broker issues are rare, and it is most likely our mistake when entering them. Any issues with the broker need to be resolved right away, it is your capital. The broker should revert the trade if it proves it is their issue. Consider if the broker is reliable enough if these errors continue, though these are extremely rare issues.

Entry & Exit Decisions

The next step with the active trades is to check our system exit indicators. Take a look at your whiteboard, paper, or the platform and see if you need to exit. Exiting a trade does not come into question here, follow your system to the letter. Do not exit sooner or later, only when a signal is given. Your active trades might still be running and reached Take Profit level. Consider moving your Stop Loss to breakeven if it is, you can celebrate now, you can only win. Scaling out like this is done only when the market is flowing enough, you can set multiple scaling out levels if needed but do not overcomplicate trade maintenance. Setting up Trailing Stops is also an option, especially if your trade is following a long trend. You can try various trailing methods just try not to complicate, the differences are not substantial. 

Once the active trades management is done we can move on to looking for new opportunities. Our whiteboard will show what currency pairs we should pay attention to. On the platform, we have a list of all currency pairs, we focus on the majors and crosses. Exotic currency pairs are not a very good proposition when it comes to risk, although if you are familiar with any adjust the risk management accordingly, and include them into trading. The first thing we look at when looking at the charts one by one is the baseline.

Once the price crosses it and about to close for the day, it is the moment we make trade entry decisions. For that, we need confirmation indicators signals to give us a green light. If not, we move on. It does not take more than a few seconds to decide, even if there are 28+ currency pairs to trade, the whole process does not take more than about 15 minutes per day. When the system generates a signal to enter, including the volume filter, we measure the ATR range from the baseline. If the price has moved beyond the 1xATR value from the baseline, we do not trade. We might write down this pair as a pullback opportunity if the price moves back into the ATR range but for now, we move on. 

The system will tell when it is good to go when all elements agree, only then you enter trade if everything is according to the money management plan and our rulebook. And you do not enter a trade immediately once you find the currency pair, write it down. There might be more signals for that particular currency and splitting the risk on two or more positions is always good. Risk is proportionally lower with better diversification. Remember not to overexpose, too much capital on one currency can be easily entered by mistake.

Whatsmore, a common mistake is also to buy and short one currency at the same time by trading two pairs. You end up basically with one trade but with two different positions. For example, trading short GBP/NZD and NZD/USD. The NZD is canceled out here, better just short GBP/USD. An overexposure example is when we short GBP/NZD and buy NZD/USD, the NZD has double investments. Writing the pairs down will eliminate overexposure and redundant trades. Additionally, you will have better efficiency, organization, and overview you need to refrain from entering into the first signal you stumble on. 

Continuation trades, of course, do not have baseline cross signals, they are eligible for trends that continue after a break but the price is still above or below the baseline depending if the trend is downward or up. As per our rulebook, we only check our confirmation indicators for a new signal here, ignoring the volume filter and the ATR-baseline range. Continuation trades are common, pay attention not to miss them and write them down with the rest of the signals. 

After all of the assets are checked, we move on and enter the trades from the list. Now the money management plan is applied. We need to know how big the position needs to be for each pair to have optimal risk. Where our Take Profit and Stop Losses are going to be. For this, we use the ATR indicator on each currency pair to determine volatility based on which we calculate the exposure. According to our example, we use 1.5xATR for Stop Loss and 1xATR value for Take Profit level, but you can adjust this to your preference. For more details on how exactly we calculate the position size, consult our previous articles about money management. We end the process by entering the market order with the Stop Loss and Take profit levels, make sure that the trade is correct and close the platform. The rest of the day is yours, do not look at the charts, the decision has been made. Do not let market movements also move your emotions that lead to messing around with the system. 

In conclusion, be like a soldier. Have a structure, build one, now you have the recipe. Take the above example and the system how you see fit. The structure you make has to be followed to the letter to get on top of the forex game. If you keep changing the structure, or the system, you will not get the consistency. Day to day procedures have to be as crisp as the algorithm, which is also an excellent way to control your emotions. Come back to this article if you ever need a guide on what to do next when you are starting your forex journey.

Categories
Forex Basics

Professional Technical Trader’s Guide to Increasing Your Odds

General guides on trading outline what you need to have if you want to have a career but will not solve problems every trader will face. The experience calls for mistakes no guide will save you from even if you are warned about possible setbacks. Reading about trading alone will not make you a good trader but knowing where to focus will inspire some ideas and probably spark the initiative in an open mind. This article will cover some trading elements typical for professional technical traders although it could be a guide for any trader type. 

People who are yet to make a plan out of their trading attempts or experiments are always looking for a guide and could be lost in so many resources pointing to very diversified ways of trading and personalities. For such is forex trading, endlessly deep and yet very simple depending on what you make out of it. The common question is where do I start? Yet once you know your destination and basics understood, you need to pack for the trip. We will cover what you need to have to have above-average attempt probabilities on forex. 

There are no shortcuts to becoming a trader, there is no substitute for experience so if you are looking for a guide to set you up and ready to go you may be disappointed. If you are looking for guidance on your determined long way of becoming a trader, get ready for putting the work before you even take a step into forex. Every percentage on your side has to be earned with careful analysis, discipline, and lots of ideas testing. Trading is fun and exciting, the part before that winning percentage above 50% is hard work, which is essentially the biggest part of professional traders’ activity. The difference between 50% sports better and 51% is extreme. If you are playing poker that 1% is also decisive in the long run. 

Forex is the same long-run statistical or odds game, but with more complexity. When you do not have one of the must-haves, such as optimal money management, 50% trading is not a very slow way to account default but a very fast one. Once your odds are 55% and you have all measures in place, the system, you can be called a pro. Wherever you trade, you are consistently winning in the long run. Casinos typically ban such players after they realize they have a system, luckily forex does not have anyone above your head. Sports betting with a 55% system can also be a career if you have enough capital to work with. That 5% is a big difference you need to work for. Some prop firms dare to say you can do a coin flip decision making for every trade direction and have optimal money management to have some success on forex. Yet it is likely you would need a lot of time to have any benefit out of that system. 

Have a guide in your eyesight as a reminder. Having a physical presence of such a guide affects your mind subconsciously, you will have all the details in your head without reading it again. The whole setup you make will be in your mind because the memory of it will refresh every time your eyes see it. It is so easy to get off track, you will forget an important step that makes 1% odds in your favor. This trick will keep you sharp especially when you are new to trading coping with so many factors. Now let’s dive into the guide and know there is no particular ranking to each of the elements. All of them are important and give you the edge. 

Having a structure. There are three names for this structure.  Money management, risk management, or account management. It comes down to optimize your risk, positions sizing, when and why you are putting that capital percentage at risk. A rule set that will guide you so you do not stray from a good decision but with bad risk management. You can be the best, high percentage trader but without the money management to keep your losses in control you do not stand a chance. A structure technical traders follow for their money management is very strict, based on indicators or additional measurements (typically volatility) that define how much their position sizes are going to be for that trade on that currency pair at that moment. Whatsmore, they will have a structure on how much to close after their trade has progressed. So it will be a mix of pending orders, rules, measurements, and fundamental factors. 

Emotional control. You will develop your money management to the point it is worthy and on the pro level. It will increase your odds to endure the long game and retain consistency. Piece by piece your money management will leave no cracks but all of it is for nothing without emotional control. Developing this element could be the hardest as it is tied to your personality which is already defined. You now need to change your habits with an adverse effect on your account. First, you need to recognize them and then create methods to “bend” them so they do not stay in your way to profitable trading. Prop firms like to start with personality tests so they can tell right away what emotional control flaws you will likely have when trading. Most people do not have this element, the stress is too high or habits too deep. 

The emotional control level is easy to spot. People who complain, rant, conflict, are the loudest and probably most present on social media. It is easy to understand their emotional control is nonexistent, and are consequently unsuccessful traders. It is logical to conclude their comments or advice are not worth taking.

Forex psychology subjects are not popular unfortunately because people focus on technical or analysis thinking this is the main part of trading. Luckily, you now know trading is a holistic project. Take interest in other pro traders’ management structures once you find them, and build on that. This step will take you to the pro level very quickly.

Your next development point is finding your target time frame. For some prop traders, the daily timeframe has advantages over other standard timeframes. Your selection should be based on your personality but here is what is considered for the daily time frame example. The chart is slow-moving, one candle represents 24 hours price movements. This means you have enough time to react and prepare your next move right before the end of the day session. It is also stress friendly, you do not have to monitor the market, just focus on other things during the day, and see the results at the end of the session.

Also, prop traders think the daily timeframe is better for trading. News events are absorbed better, do not have to worry or wait for certain trading sessions, and it is even easier for trend following. The transition to the daily timeframe is harder than moving from, for example, 15M to hourly. If you like the thrill of action during the intraday moves over the easy-going and to some better performance on the daily, then this is the timeframe matching your personality. Again, as trading is a holistic project, your timeframe selection will also mean different strategies, emotional control, money management, and so on. 

Trade entry system. This part of trading is the most popular. Traders want to improve their odds by creating a system for trade entries, exits, and staying out of trading. Finding things that could increase your odds is fun but sometimes the fun can cloud the importance of other elements. However, the hard work of testing and backtesting your interesting finds is rewarded by having a high percentage trading system that stays with you forever. Such a system should be universal, strict, that does not leave you second-guessing any decision. Some prop firms like to stick to the KISS method, Keep It Simple, Stupid. Overcomplicating your system with too many indicators or prerequisites creates diminishing effects.

More often than not, the simplest trading entry systems are very simple but strict. As you develop your system, try to stay original. If you are using the MT4 platform, you may find many made systems by other traders. Plugging these into your MT4 might look like an easy solution so you do not have to work on your own but you will find there are no shortcuts to forex trading, this system will probably not fit your personality or more likely not be profitable. Still, taking some elements out of it you think would fit yours is one of the best ways to create custom high percentage technical systems. Additionally, understand that eliminating losses is as important as creating good entries. 

Avoid or accept what you cannot control on the market. You cannot foresee the price action after the news event. Even if the trade direction is logical according to the report result, the market will not obey logic. This is an uncontrollable risk we can avoid. Avoidance cuts the losses we make out of these moments where our odds are lower than usual. Consequently, this brings our odds higher. If you do not know by now, there are actors on the forex market that move the prices, these are the big banks mostly. We cannot control or know how they will react.

The risk out of the most important events can be avoided simply by not trading before them. Create a rule set to manage this risk, it is quite enough to avoid trading 1 candle before the news announcement if you are trading on the daily chart. Pay attention to the most important events, like Brexit, elections, NFP reports, and so on. Recognizing the periods or environments where many unpredictable factors can mess with your trades is paramount to increase your odds. Just play where you can win. 

Having a source for support. Trading can be lonesome, if you are following and working alone as most of the traders, you may feel you need some clarification on the particular structure you are trying to implement. When you apply to a prop firm, you can easily evaluate them by how supportive they are. Providing a structure without support is not going to get you moving forward. When you do not understand an element in the system, you are missing out on part of the high percentage trading you need. Now, there is a thin line when you need support, and when you abuse it.

Every professional had or still has a mentor. Mentorship will help you get to the pro level fast but when you rely on support on every problem, you become dependent. You will not know how to manage alone once the support is gone because you have not developed a trading problem-solving mindset. Your trading is at risk of becoming a disaster, you panic when you lose the support you once had and make terrible trading decisions as a result. To avoid this, ask for support only when you really need it when you have exhausted all other sources and no one has faced the same problem (unlikely) before. 

There is another positive side of having support or belonging to a trading community. Every trader will face losing streaks, doubts, and other psychological issues. A prop firm, a community that provides support in such times is invaluable to traders. They come out of much better traders with a steel mindset, beneficial to the prop firm and the trader. On top of all this, belonging to a community or a prop firm will generate a lot of ideas, tools, and strategies out of which some could be critical to your winning odds increase. 

After all, know that your guide should contain specific instructions covering these general areas, especially if you rely on technical analysis. Each of these areas is covered in separate articles.

Categories
Forex Basics

How NOT to Sabotage Your Own Forex Trades

You are in a trade, you have managed your settings prior to the entry, and everything seems to be running smoothly when all of a sudden the price starts plunging downward fast. The tension may be building up and you are now faced with two options to resolve this situation – you can either get involved and tweak the settings or stay put and refrain from making any changes. While the fear is usually quite real, there is only one correct answer to this challenge – do nothing.

Even though such manner of conduct may seem to be foolish on the outside, the implications of your actions at this crucial step will inevitably determine the future of your trading. Naturally, this may be easier said than done, maintaining the sense of discipline will turn out to be of vital importance for each trader’s forex career. In this article, you will be able to learn how not to sabotage your own trade and understand why most traders cannot surpass this hurdle.

You may be taking a course with a trading company or consulting with a professional trader with the hope of becoming better at forex, but in the end, no one can constantly be there to hold your hand. We all seek to accumulate as much information as possible and learn about the ways to acquire more pips; however, in order to be an excellent trader, you do need to be an independent one too. Any form of dependence is a prerequisite for failure, which is why the compulsion to make a move in some critical stages in a trade in an attempt to control it can also have disastrous consequences for your trading as a whole. 

The First Step

In order to better yourself and overcome the issue of not finding support within, you firstly need to create a solid, functioning system, which will take over some responsibility off your back and save you from needing to get involved. Unfortunately, many assume that the only effort they need to make is to create a system that will direct the entry and exit points in each trade they enter, yet they easily forget that the whole idea behind creating a system is so you need not worry about these steps yourself. Therefore, once they finally manage to put together an effective system, many traders fail to practice consistency.

If you have already invested time into assembling your own system and you put effort into proper testing, you should know by now that it functions well. Any divergence from what you built is then only counterproductive and will lead to inconsistency and thus disappointment due to failure. This is, in actuality, a key moment where one needs to separate emotions from logic because your decision-making must not, under any circumstances, depend on your feelings.

Impact of Emotions

Emotions can always fluctuate and they are colored by our own prejudiced, biased perspective, whilst a system is a structure that is aimed at navigating through this $4—5 trillion/day market. The system is there to both support you and help you steer clear of letting your emotions get the best of you and your trading. In addition, if you allow yourself to recollect and go back in time mentally, you will probably be able to remember the unfortunate part your emotions had in some important decision-making processes. You may think of all the anger that caused the people you know to utter words that they regretted later in life or the choices they made to stay in bad relationships for too long for example both have to do with one mutual culprit – emotions. Whenever traders allow emotions to rule their critical thinking, they are in fact making themselves vulnerable to misjudgment, subjecting their trades to the impact of the fleeting nature of their feelings.

The only way for any trader to truly feel in control of trading in this market is to make a clear distinction between their emotions and logical thinking. If we allow ourselves to enter and exit trades solely based on how we feel, we are then making vital money-related decisions grounded in our subjective idea of where the market is going to move. This sentiment-governed action is not based on any actual plan or structure, which is why a system is very much needed to bypass the dangers of our human nature. If you have developed and tested one, you have a tool that can certainly work and get you to where you wish to go, unlike this emotion-driven, reckless approach that will undeniably make all your fears come alive sooner or later. 

Doctors cannot carry out surgeries based on what they at first glance believe will happen with the patient or refuse to conduct a proper examination giving in to anger because that patient offended them upon meeting. You will always find these healthcare workers take a look at the blood results and use special medical instruments to assess the situation, leaving their personal opinions behind. Whichever job involving a great deal of responsibility you can think of requires this approach to decision-making, and certainly no doctor, army general, or president will ever allow himself/herself to put the future of people or countries in the hands of a passing sensation. 

Solution for Success

The proposition of action sounds quite simple – choose the one vehicle that will lead you to financial prosperity and leave the emotions out of the equation. Trading psychology is the very essence of trading that you will ever do and is responsible for the success acquired by professional traders too. While systems, algorithms, preferred tools, or charts may differ, the strong sense of what a “difficult” decision looks and feels like is something all experts share. No one can deny that a price spiraling downward brings up a negative feeling, but we can all agree that the only way traders can get to the exit with a smile on their faces is by ignoring that red alert button that is blinking from the inside.  

The battle is simply ever-present and we need to constantly remind ourselves what our purpose is, ensuring the conditions that help us offer our very best. Therefore, in order to go about this sensitive topic carefully and systematically, traders should think of the following steps: first, they should thoroughly develop their own system, which further implies that they should always know when you should enter or exit your trades; secondly, all traders should learn how to recognize the trade that can prove to be beneficial and execute it; last, traders must allow the market activities to envelop naturally without any interference, as it is a display of distrust in one’s own system and inevitably involves a higher degree of possibility to make things worse. 

The last step is of immense importance especially if you turn out to be right because your success in trading should be largely predicted by the efficacy of the system you worked hard to develop. Therefore, if your subjective impression of the current market situation leads to the predicted outcome and you end up being right, it will only give you green light to pursue trading by feel. Such an approach will surely prove to be detrimental to your future as a forex trader largely because forex trading requires mathematical precision that is free of any bias or preconception. The event where the close of your last trade aligns with your fear may even arouse more fear of your system being greatly flawed and that all the work you invested before was all in vain, and this is a vicious circle that can only draw you in deeper and deeper. 

If you are certain that you properly tested out your system, simplify all these steps in your mind and allow the events to unfold naturally. While a series of passing feelings of doubt and anxiety may come and go, the most important step is to refuse to listen and simply follow the process. The key here is to repeat the same steps each and every time, without giving in to the need to execute more control over the trade that is needed. Even if you feel tempted to step in and make adjustments, go back to this list and remind yourself of the ways in which you can help or endanger your trading.

Biggest Trading Mistakes 

Naturally, all traders are prone to making mistakes and these can creep up in a rather subtle fashion. Nonetheless, this does not give any trader the right to evade the educational segment of trading, especially due to the assumption that the job is done once the system is set up. There are a few typical mistakes that many traders make because, in terms of involvement, they often forget that in forex trading less is more. What is more, many traders forget that, apart from the technical aspect and the required precision, the trading is carried out by humans which are simply imperfect beings susceptible to emotional reactions. A number of traders thus only invest in learning about the market and the tools, failing to recognize the impact of their own psychology. 

Intraday trading is a perfect example of how traders easily sabotage their trades because they are pulled towards checking the progression of their trades, which leaves more room for doubt and makes them take action they would otherwise not consider. The best strategy in terms of trading applications and easy access to information is to completely ignore their existence and carry on as if they never existed. While this may seem like a silly idea, you are in fact allowing the market to perform the way it would naturally do on its own. By not looking at the apps and your trades, you are preventing yourself from meddling in and thus making huge mistakes. Professional traders around the world choose to trade just shortly before the close of the daily candle precisely because they understand their human weakness and the need to reduce the risk of doing something they could regret later. 

If they have already made some mistakes or lost more than they planned to, traders also tend to overcompensate by trying to do more than they should. In such cases, traders find themselves trying hard to find trades that would bring their account to where it was prior to losing. This way, traders actually chase losses while unfortunately, more often than not, the whole dissatisfaction with one’s account slowly but surely lures the individual into sinking deeply and fast. The lesson here is that losses are an inevitable part of trading in this market, and, the sooner you learn how to deal with them, the better you will be at keeping your account. Money management is not about compensating for your losses but preventing them. Therefore, the more you try to go back and return what is lost, the greater the chance for amplifying the loss is. 

An essential part of making mistakes such as the ones described above is panicking because traders are generally less likely to make an irrational decision willingly or consciously. Rather, traders are easily pushed into thinking that they better make a move because of the cold sweat going down their necks. This exact way many traders assume that taking money off the table once they start losing many pips is the best solution when, in fact, their accounts would most probably do much better without making this choice. Taking losses is an essential part of trading in the spot forex market and your task is to learn how to process the anxiety that stems from taking drawdown. Many a time, traders cut bait just because they start panicking and particularly as a result of looking at their traders more often than they should. 

On the other end of the spectrum, we have another situation where traders find themselves entering a particularly satisfying trade that is generating a great number of pips. Now, after a 2.5% gain, these traders can start feeling markedly satisfied with this outstanding achievement that they end up not making the crucial decisions that would keep their account safe. At this point, they are probably looking at their accounts, hoping not to fall below their new totals, so they completely disregard their proven system and money management process that they would naturally use under different conditions. What this often means is that these traders would take everything off, admiring the great sum appearing in their accounts, when in fact they would fail to recognize the possibility of the trade moving much further than that. Many experts have shared their past experiences where they missed out on long trades because they feared to keep going once they earned a great amount of money. 

Fearing risk can be a blessing in disguise as much as it can make your worst nightmare real. Therefore, just as we say that one swallow does not make a summer in terms of losses and your account being finished as a result, so we can move towards understanding that one big win cannot possibly imply that a trade is over. Instead of failing to earn a few additional hundreds of pips next time, learn to trust your system to tell you when to exit the trade. As you can exit too early while losing, you can do the same when winning, so the perfect solution for traders to stop doing anything prematurely is to simply allow the system to process information without micromanaging the trade or ignoring its signals. Traders must not, under any circumstances, deviate from their tested, proven systems and accept the imperfection of the human mind. 

Last but not least, among the greatest mistakes made in trading, forex traders increasingly fail because they simply do not understand the concept of playing the long game. Unlike other mistakes listed above, this one implies more of a process than a single mistake one can make in one second. What this essentially means is that earning an impressive percentage of the money you started out with should not make you feel entitled to winning. Many traders often earn great amounts of money quickly, increasing their total unbelievably fast, only to go back where they were in the beginning even more quickly. At this point, after feeling so proud of yourself and after putting so much effort into trading, you end up losing everything you earned, feeling completely shattered. This is such a sensitive spot for many traders because they are incredibly prone to acting impulsively at this stage and the least sensible and rational decisions are made precisely when one starts losing. 

The point after losing is the moment where even good traders need to keep their eyes open and control themselves so as not to let their emotions lead the way. While also common among experts, this issue can be tackled easily just by understanding the relevance of the data you get after a 12-month period. If you have completed the testing process and you are done with demo trading, you should feel pressured to experience wins constantly. Just like currency pairs, our trading accounts naturally oscillate up and down and this is an innate part of the forex market. Even if your account goes down more than you expected, you should aim to stay on the course, understanding the decline as a natural fluctuation. The main idea that you should constantly remind yourself of is that you are playing the long game which requires that you keep the same course as before, maintain a sense of direction despite the passing losses.

The top traders are precisely the traders who can maintain a clear picture of their goals regardless of the short-term losses. The best traders are those who know how not to quit or sabotage their trades by making rash decisions. These are the key points that will either place you among the losing majority or the winning minority. Even if you find yourself slipping in the unwanted direction, you can always consciously choose to correct yourself and return to the course you wish to follow. The winners are also those individuals who know how to recognize and accept that they have slipped because this is the mentality that will propel you, as well as every other trader, towards success. 

Actual Steps to Take

If you are a self-aware trader who understands his/her shortcomings, you are also probably the type of person who is ready to invest in psychological growth. As we have come to witness in this article and in real life too, sabotaging one’s trades often has to do more with discipline than any other aspect of trading, which is why reading useful material on this topic has proved to be extremely beneficial for a great number of traders. Discipline Equals Freedom by Jocko Williks, for example, is an essential read that has helped numerous traders get out of the slump of succumbing to their habits and impulses which often prove to be fairly unhealthy and unproductive. While many people assume that self-help books are light reads that are meant to make you forget your troubles, mindset books such as the one mentioned above are vital educational materials that will surely change your life for the better and thus your trading as well.

If you wish to be proactive and are at the beginning of your trading career, make sure that you leave enough time to set up and test out your system. The internet and various social media outlets provide numerous resources that will help you start devising your own system. Start applying the advice shared online and, most importantly, choose to give yourself the chance to demo test everything you learn before you actually invest your own money. The desire to make money is what we all share, but do not let it get the best of you if you are looking forward to achieving and maintaining sustainable, long-term success in the spot forex market. 

Another important piece of advice to consider is to make yourself aware of your own criteria because you will eventually need to make decisions based on your needs and standards. If you have a list of indicators that you need to use to get a green light to enter a trade, you should not by any means ignore your system and try to take a shorter path. Exercise discipline in every aspect of your trade and do not let yourself sabotage your success just because you are eager to earn more money. Wait for all of your indicators to tell you to proceed and, once you enter a trade, let it run its course naturally. Refrain from giving yourself the chance to check the trades you are in and possibly interfere, whilst nurturing a sense of trust in your system.

Lastly, do not allow yourself to be triggered by passing losses, understanding that your only point of reference should be the number you get upon the completion of a 12-month period. These steps may certainly turn out to be slightly more difficult to follow in real life, yet they are absolutely vital if you are a committed and self-aware trader who wishes to evade the common, repetitive mistakes that make many forex enthusiasts sabotage their trading. 

Categories
Forex Basics

20 (More) Quick Answers to Common Forex Trading Questions

We’re back again! This time with twenty more simple answers for very common questions related to Forex trading. If you haven’t yet read our first twenty, we invite you to check that article out! Now let’s get to it…

Q1: How many people trade forex?

A1: It is estimated that there are around 10 million traders in the world, with the number growing higher every single day.

Q2: Why do so many traders give up?

A2: Most traders walk away because they have unrealistic expectations and realize that they won’t get rich overnight or because they blow their account balance due to trading with no idea of what they’re really doing. 

Q3: How much money can you make as a forex trader?

A3: This depends on a variety of factors, including the amount of money you’ve invested, your trading plan, how educated you are, how much time you have for trading, etc. 

Q4: What are the best currency pairs to trade?

A4: Many traders stick with major currency pairs, while EURUSD, GBPUSD, USDJPY, USDCHF, and AUDUSD move most often. Gold (XAUUSD) is also very liquid. 

Q5: Which forex pairs are the most volatile?

A5: GBPJPY, AUDJPY, and NZDJPY (currency pairs with the Japanese Yen).

Q6: Is it hard to learn how to trade?

A6: While some claim that trading is difficult, we would say it is simply more time consuming to learn everything you need to know. Those that just want to make money with little effort often walk away because they do not want to invest the time needed to learn what they need to know. 

Q7: Are demo accounts rigged to convince you to open a real account?

A7: Conditions on demo accounts are not rigged. However, some traders get better results on their demo accounts because real-world emotions are not involved. Things change when real money is on the line. 

Q8: What percentage of traders lose money?

A8: Every trader loses money at some point, but an estimated 20% wind up losing money when you’re talking about the big picture. 

Q9: How can I limit the amount of money I lose trading?

A9: You’ll need to practice risk-management by setting a stop loss for your trades, monitoring your position sizes, etc. Also, be careful when using high leverages. 

Q10: How do I know when I’m ready to open a trading account?

A10: Start by trading on a demo account and checking for consistent profits over time. You can also try taking quizzes online to test your knowledge. If you come across anything that you don’t know, be sure to look it up. 

Q11: How much money do I need to start trading?

A11: This depends on the broker you’re looking at, although many brokers offer very low entry minimums of around $1-$100. 

Q12: How much money does it cost to learn to trade?

A12: You can actually learn everything you need to know online for free, although you might want to participate in a paid course or spend some money for one-on-one training if you feel it is needed. 

Q13: What if they decide to ban trading? 

A13: While some countries don’t allow forex trading, it is highly unlikely that every single country would ever ban it. Some countries, like the USA, enforce stricter rules, but trading will never go away. 

Q14: Are there benefits to trading forex full-time?

A14: Trading is considered to be a great job because you can be your own boss, work from home, and take advantage of flexible hours. However, it does require self-discipline that some may not possess. 

Q15: Can I really rely on forex signals?

A15: This depends on whether the signal provider is reliable or not. Try to do research beforehand to check on the validity. 

Q16: Can forex robots make me rich?

A16: Some Expert Advisors do make money for you, but none of these systems can predict the market 100% accurately. You also have to be careful considering that most providers want you to pay for their systems and be very skeptical if something is “guaranteed” to make you money. 

Q17: Can the money I make trading be taxed?

A17: The answer differs based on the country you live in, so be sure to look this question up directly. 

Q18: How many brokers are out there?

A18: If you’re looking at regulated brokers, you’ll find more than 200 options, while there are thousands of unregulated brokers with new options opening every day.

Q19: What’s the best forex trading platform?

A19: In our opinion, MetaTrader 4 and 5 are the best, but this doesn’t mean you shouldn’t consider other options as well. 

Q20: Will trading always be available?

A20: Traders won’t have to worry about losing the opportunity to trade forex because it isn’t going anywhere – ever. You’ll be able to trade until the end of time so don’t let this stop you from opening an account. 

Categories
Forex Basics

20 Quick Answers to Common Forex Trading Questions

Without a doubt, the topic of Forex trading brings with it many questions. There are questions related to strategies, brokers, fund management, and much more. Here, we’ll answer many of those questions for you in a clear and concise manner. Watch for a follow-up with additional questions and answers to come soon after!

Q1: What is forex?

A1: The term forex refers to the foreign exchange market, where traders buy and sell currency pairs in an attempt to make a profit.

Q2: How do you start trading?

A2: You’ll need to find an online broker, open a trading account, and make your first deposit.

Q3: How do you learn to trade forex?

A3: The internet is filled with resources, from articles and courses to videos, seminars, webinars, and more interactive options. Try starting with a google search for “beginner trading courses” and go from there.

Q4: What drives the price in the forex market?

A4: The price is driven by multiple factors, including economics and geopolitical factors. Central banks, politics, disasters, wars, and other news events have a huge impact on the forex market.

Q5: Isn’t trading the same as gambling?

A5: Trading is different than gambling because you’re using real information to make informed decisions about what and when to trade. It’s true that you can’t predict what the market will do with 100% certainty, but trading decisions are much more structured than gambling.

Q6: Is it legal to trade forex?

A6: In some countries, like North Korea, Israel, France, etc., trading is illegal. It is legal in the US as long as your broker is regulated and is legal in most other countries.  

Q7: Can you make money trading forex?

A7: Absolutely, so long as you know what you’re doing and you have a solid trading plan behind you. 

Q8: Do you have to be rich to get started trading forex?

A8: You can actually open a trading account with as little as $1 to $100 through some brokers. Just remember that the amount you make does depend on how much you invest.

Q9: Is trading really worth it?

A9: If you’re willing to invest your time into trading, it can be a great way to earn extra income or even to support yourself or your family, especially in retirement. 

Q10: When do the forex markets open and close? 

A10: The market opens at 00:00 GMT on Monday and closes at 00:00 GMT on Saturday. 

Q11: What pairs should you trade?

A11: This is a personal decision, although beginners might want to start with major currency pairs like EURUSD, GBPUSD, and so on. 

Q12: Do brokers scam people?

A12: Some do, but there are many trustworthy options out there. This is why it’s important to do accurate research before choosing a broker. 

Q13: What kind of people trade forex?

A13: Many forex traders are simply regular people with smartphones or laptops. You don’t have to be a billionaire investor to do it!

Q14: What is leverage?

A14: Leverage allows you to trade with much more money than what is actually in your trading account. This can help you grow your account balance quickly, but leverage is often the downfall of many beginners that don’t know how to use it safely. 

Q15: Why does trading get such a bad reputation?

A15: Many people rush into trading without proper education and lose their money quickly. This can be avoided if you educate yourself and start with a plan and realistic expectations. 

Q16: What’s the best forex broker?

A16: You’ll have to decide this for yourself but do know that more popular options tend to be safer. Try looking online for articles that outline some of the best brokers out there. 

Q17: How many trades should I make per day?

A17: As many as you want, but you’ll want to avoid overtrading. Different strategies call for a different amount of trades to be entered, so this varies widely.  

Q18: Is forex a 24-hour market?

A18: You can trade 24 hours a day from Monday up until Friday night at midnight. 

Q19: How will my broker make money?

A19: Your broker makes money by charging you commission fees and through the spreads that you pay when you make trades. 

Q20: Can trading make me rich?

A20: It can, but you’ll need to invest time and money into trading if you want to get rich. This isn’t something that can be done with no effort – but it is an achievable goal for those that are determined. 

Categories
Forex Basics

Is Forex Trading Legal in India?

When it comes to forex trading rules and regulations, things can get confusing for traders located in certain countries. Residents of the United States, North Korea, Sudan, and other specific locations often have trouble deciphering whether trading is actually legal in their country, and finding a trading account can be difficult at best for some of these traders. For United States traders, this is because trading is legal but there are stricter rules on regulation, meaning that there are fewer brokers to choose from and some brokers won’t give straight answers when asked whether US-based traders are allowed. 

Traders in India also face their own problems when it comes to opening a trading account because of several restrictions that are placed on them. The good news is that trading is legal in India, but you’ll want to keep reading to find out exactly what restrictions are enforced on Indian traders so that you can ensure you’re in compliance with laws and regulations. 

Indian traders are legally allowed to trade forex through certain Indian brokerages via these Indian exchanges:

  • BSE
  • NSE
  • MCX-SX

Note that Indian residents are not allowed to open accounts through International brokerages. You might find an option that allows you to choose India as your country, but be wary. Unregistered brokers sometimes allow traders to open accounts from certain locations, even though it isn’t legal.  

The government also places restrictions on which currency pairs can be traded in India. Traditionally, residents were only allowed to trade cross-pairs that included the Indian Rupee, but three major currency pairs that don’t involve the Rupee were added back in 2015. This is the list of currencies that are supported:

  • USD/EUR
  • USD/JPY
  • USD/GBP
  • USD/INR
  • GBP/INR
  • EUR/INR
  • JPY/INR

Although the list is somewhat short, this doesn’t mean that Indian residents can’t benefit from trading, especially when it comes to the highly liquid pairs USD/EUR, USD/JPY, and USD/GBP. The Reserve Bank of India explains that these restrictions are imposed to help stop Indian residents from losing large amounts of money through trading, but many people also believe that they are hoping to limit currency outflow that would occur when other currencies are traded. 

It’s important to ensure that you do follow these rules, otherwise, you could face a fine or imprisonment for illegal trading activity in India. Keep in mind that trading through international brokers is considered illegal, so you’ll want to ensure that you’ve chosen a broker that complies with the Indian Government’s laws. Know that some brokers do stoop to shady tactics in order to offer illegal accounts, like registering as another type of service that might focus on trading education. You’ll want to avoid these brokers at all costs, as most of them are eventually reported and shut down. 

The Bottom Line

Forex trading is legal in India; however, residents must adhere to the Indian Government’s laws, which require traders to use only registered Indian brokers with any of the legally approved currency pairs. Fortunately, laws have become less strict over time, for example, the currency pairs USD/EUR, USD/GBP, and USD/JPY were added to the list of government-approved trading instruments within the past few years. Hopefully, the RBI will decide to offer more trading instruments and will soften on some of their stricter rules as time goes on, but there is no reason why Indian residents should miss out on trading in the meantime, as long as it is done legally.

Categories
Beginners Forex Education Forex Basics

Here’s How to Take the Stress Out of Forex Trading

Forex trading can be undeniably stressful at times, especially when the market becomes volatile or if you find yourself on the end of a losing streak. Many traders keep going long after this stress sets in, which leads to poor decision making because of clouded judgment. Eventually, some traders even give up because they just can’t perform well enough under all of this pressure. If you’ve also been feeling tense lately, chances are that it’s affecting your profits more than you realize. The good news is that there are some simple steps you can take to make forex trading less stressful so that you can maximize your profit potential. 

Simplify Your Strategy

Are you currently using a complicated trading strategy or one that confuses you? When it comes to your trading system, simple is actually better. It may seem as though more detailed plans work better because there are more components, but these systems are just really good at stressing traders out and causing confusion. If you use indicators, you may want to cut down on those as well. Having too much information to look at is overwhelming and leads us to overlook the most important things, so you can take it easier on your brain by switching to a simpler trading plan and decluttering your charts by removing less useful indicators. 

Take a Break

Have you ever made a bad decision during a moment when you were feeling completely overwhelmed? Forex traders do this every day – they lose out on a trade and frantically try to regain the money by risking more, they enter a trade they shouldn’t because they can’t think straight, they start pulling out of trades at the wrong time because their brain feels foggy – you get the picture. Instead of forcing yourself to keep going when you’re overwhelmed, simply take a break and step away from your computer or phone screen until you calm down. You might worry that you’re missing out on trading opportunities, but you’ll really be avoiding the urge to make emotional trading mistakes. Then you can come back with a clear head without feeling like you’ve been pushed to your limits.

Try a Relaxing Activity Before Trading

If you’re already tense when you first log into your trading account for the day, the anxiety of trading will likely add to your tension, even if you’re making money. The best thing you can do is to start fresh each day in a great mood, so we suggest finding something that helps you relax beforehand. This could be as simple as drinking a morning cup of coffee or listening to your favorite song. Exercise is another popular option that makes people feel good, so consider yoga, meditation, going for a jog, or some other form of exercise to get those endorphins flowing. 

Trade in a Quiet Place

It isn’t a great idea to trade with any type of distractions. Just think, children running around, dogs barking, loud background noise like a television or someone talking on the phone, a vacuum, or any other type of noise is annoying enough on its own when you’re trying to concentrate. Once you add the high-pressure act of trading to the mix, you’re bound to be left feeling stressed out. In this case, you’ll need to find a quieter environment so that you can fully focus and make the best decisions without having your brain jump from one thing to another. Also, don’t discount small distractions if your house is fairly quiet, as even social media notifications can be a pesky distraction for forex traders that are trying to concentrate. 

Don’t Let Losses Rule You

Nobody is ever going to be happy about losing money, but forex traders need to know that this is going to inevitably happen from time to time. The important thing is that you’re making more than you lose and this can be accomplished even if you have more losing trades than winning ones. Of course, losing one or more trades in a row is still one of the best ways to become stressed while you’re trading. If you want to avoid this, you can start by accepting the fact that everyone loses sometimes, even the best traders out there, and promising that you won’t be too hard on yourself when this happens. Then, consider taking certain measures to reduce the frustration you feel over those losses. For example, you could risk less on each trade so those losses don’t hit so hard. 

Be Confident

If you’re constantly doubting yourself as a forex trader by questioning your abilities in general along with every move you make, you’re always going to be stressed out. In order to be more self-confident, you’ll need to ensure that you can trust your trading strategy and spend time learning more about forex trading. If you aren’t confident with your plan, try testing it on a demo account to reassure yourself that it works or for a sign that you should change things up. If you want to test your own knowledge, try taking online quizzes, and research anything you get wrong. In the end, you’ll be more confident once you enter trades, so you won’t be as likely to pull out too early because you’re doubting yourself.

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Forex Basics

Forex Trading: The Good, the Bad, and the Ugly

Within the last 20 years or so, forex trading has become a popular online financial source that has attracted millions of aspiring traders worldwide. For some, the trading experience is pleasant, and they walk away at the end of each day with a little (or a lot) more money in their pockets. For others, trading doesn’t come as easily. What separates the success stories from the traders that give up and how is it possible that trading can be a savior for some, but a nightmare for others? The truth is that there are good and bad things about trading – and you need to know the differences.

The Good 

Let’s start out with the positive. We’ve got a long list of reasons why forex trading is such an attractive and unique way to make money online. This list covers the very best things about forex trading and will probably help convince you to open a trading account if you’ve been on the fence about it. 

  1. You can make a lot of real money IF you make informed investment decisions.
  2. Opening a trading account is quick and easy – no prequalification or tests needed. 
  3. You don’t have to invest an arm and a leg to open a trading account. In fact, $100 or less is fine. 
  4. You get to work from home, set your own hours, and be your own boss. 
  5. You can choose a trading strategy that doesn’t require a large time investment if you have a busy lifestyle. Most traders also take weekends and holidays off, so that’s an added bonus. 
  6. Trading saves many people from getting second jobs because they can do it along with their real job on their own time. You could even check your trading account during your daily breaks. 
  7. Learning to trade has long-term benefits. One day, you can teach your children to do it and it can help you float through retirement much more easily. If you start young, there’s no doubt you’ll amass much more wealth in your life, so as long as you use a solid trading plan.
  8. Once you start trading, you can decide how much money to risk. Certain risk management precautions are available if you’d like to play it safe with your money, or you can risk more in hopes of a higher return. 
  9. You might be able to get free money from your broker in the form of a welcome bonus, deposit bonus, or some other sort of promotion. 

The Bad

Okay, so trading sounds pretty good so far, but it isn’t for everybody. Let’s go over some of the downsides that affect traders. 

  1. A lot of aspiring traders don’t want to spend the time learning how to trade, so they open an account without the proper knowledge needed to make smart decisions.
  2. There are scammers out there – a little research on your potential broker can save you from this problem, but some beginners don’t know how to spot the brokers you should steer clear of.
  3. If you can only afford to make a small investment, you’ll probably miss out on certain benefits and will be subject to paying higher fees through most brokers. 
  4. You might not make any money – or you could even lose your investment. 
  5. You need to be self-motivated and disciplined if you want to make it as a successful trader.
  6. Many people fall for the illusion that trading is a quick and easy way to make money with little effort. When they realize this isn’t the case, they give up. 

The Ugly

As you can see so far, forex trading has both good and bad qualities. On the bright side, some of the bad aspects of trading can be avoided. For example, if you ensure that you are properly educated before opening your trading account, your chances of success will skyrocket. If you spend time researching each broker that you’re considering and check regulation statuses you will also be able to avoid scammers, using risk-management precautions can ensure that you don’t lose any significant amount of money, and so on. Still, there are some things that can’t be avoided. For example, you may be stuck with an account that charges higher fees because you simply can’t afford to make a larger deposit.  

So, what’s the worst part of forex trading? In our opinion, it’s the fact that so many beginners fail. If you research those statistics, the results are pretty grim, as reports indicate as much as 90% of first time traders lose their deposit and give up from the start. The reason why we hate this so much is because this is completely avoidable, but most beginners just don’t know the insider facts they need to know to avoid making common mistakes, like using too much leverage, overtrading, emotion-based errors, risking too much money, choosing the wrong broker, and etc. This is why it’s so important to ensure that you are properly educated BEFORE you open a trading account or make an investment. If you’ve already jumped in too soon, take a step back and spend more time learning before you resume trading. This is the best way to ensure that you can enjoy all of the benefits of trading without worrying about the ugly parts. 

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Forex Basics

What You Need to Know About Trading Forex In the U.K.

So, you are currently living in the UK and want to be a forex trader? Great! Wanting to do something is always the first step, and wanting to trade forex opens up a lot of new opportunities for you. You will be joining a large number of people. In fact, there are currently over 400,000 active online traders in the UK, making it one of the leading financial online trading hubs in the world. If you are from the United Kingdom and starting with forex, you are joining a large community of like minded people with various skills and knowledge available to be shared.

The first thing that you need to do is to get a basic knowledge of what forex actually is. The sad truth is that a lot of people are starting to trade without actually understanding what it is that they are trading or how it actually works, so that is going to be our first port of call here. The interesting fact is that even without doing any reading, you have probably experienced something similar to forex trading at some point in your life, such as when you go on holiday, you are exchanging one currency for another, that in a sense is exactly what trading on the forex markets is.

The main difference to that is that as a trader, you won’t simply be trading just one currency for another like when you go on holiday. Instead, you will be making predictions on what you think the price will be, whether it will go up or go down in relation to another currency. There is a huge selection of currency pairs from majors to minors and then on to exotics (we will look at them briefly later). There is always something to trade and so it is becoming an ever popular thing for people within the UK to do. The good news is that it is highly accessible and you will be able to do it from pretty much any location within the UK where there is an internet connection available.

Why exactly is forex trading good for people in the UK? Simply because it is so accessible. There are all sorts of people trading, from wealthy investors to central banks, to individual traders sat in their bedrooms, there are no limits on who can be trading on the markets, as there are always opportunities available. There is also a wide range of strategies. In fact, there are hundreds of them, loads of forex pairs, tons of different account types to choose from, and in addition to that, you are able to trade from whenever you like.

Another thing that makes it quite accessible, is the fact that the minimum amount of capital required has fallen dramatically over the years. It used to be that you needed at least £10,000 in order to open up an account, but today you can open an account from as little as £1. Of course, you will need a little more than that if you want to be successful, but it just shows you how easy it is to gain access to the global markets of forex trading. You can also trade with leverage, pretty much every retail trader at home does, making profits even more accessible to you.

A lot of people also choose to be a trader, especially those in the UK, in order to help supplement their current income. They don’t necessarily do it in order to quit their job and trade full time (although a lot of people do), they simply do it to make a little extra money on the side. You do need to remember though, that trading the forex markets is not a 100% guarantee of profits. There will be losses and a lot of people actually end up losing all the money that they have put in, so it certainly does come with some risks. Due to the number of traders in the UK, it also shouldn’t come as no surprise that one of the most popular currencies to trade in the GBP.

Many traders within the United Kingdom like to trade there because there are very strict policies put in place to help protect the traders. This makes the UK one of the more trustworthy places to trade from. There are also very flexible tax laws when it comes to trading. As a trader, you will be classed as either a private investor, a self-employed trader, or a speculative trader which is actually completely tax-free. There Are also a huge number of regulated brokers within the UK. In order to function as a broker within the UK, you need to be regulated by the Financial Conduct Authority (FCA) which oversees a lot of the operations of the brokers and that they are adequately protecting their clients.

So you have decided to start trading which is great, but how and where exactly do you begin? Here are a few things that you should do as a starting point for your trading career. Of course, you can do other things, these are just some things that may help you to get a little jump start.

Educate Yourself: It is vital that you get yourself some proper education when it comes to trading, forex and trading as a whole is such a vast beast that you will never be able to learn everything by simply trying. It is one of the things in life that’s actually takes a lot of learning and dedication to truly understand and to become competent at. There are a lot of courses available out there, both free and paid. We would suggest sticking with the free ones just until you realize that you are 100% ready to be a trader. There is no point wasting that little bit of money only to find out that you don’t really like trading at all. A good education on forex is the basic foundation for becoming a successful trader.

Learn Forex Terms: There are a lot of them, including terms like pips, spread, bull markets, bear markets, breakouts, trends, base currency, quote currency, and more. There are hundreds of terms that you will come across. Try to learn the majority of the more frequent ones. You won’t be able to learn all of them, but getting to know the basics will make understanding some of the education or things that people are saying a lot easier. Then as you progress in your career and come across new terms, you can simply look them up as you come across them, but make sure you understand the meaning of at least the most common ones.

Conduct Analysis: Before you start trading, start trying to analyse the markets and the way that they work. The markets are influenced by pretty much everything in the world and they are influenced in different ways. Try taking a look when something comes out on the news to see how it affects the markets. A great way for someone just starting out to gain a little knowledge about the markets is to look at the important influential aspects of the arts and to understand them. Think about things like the trading positions, market sentiment, the Gross Domestic Product (GDP), the current political climate, any social protests or turmoil and more.

Broker Selection: Start thinking about what broker you may want to use. This is a big decision, but the good news is that any selection is not final. If you start with a broker and then later decide to change to a new one, there is no problem with that at all. In fact, a lot of traders jump around multiple brokers at the start until they manage to find one that suits them. You may want to think about joining one that is in and regulated within the United Kingdom, but this is not always necessary. There are some great brokers available from outside the UK that offer different features due to different regulations. What is important is that the one you pick has the features that you need and is right for you.

So those are some of the things that you should be looking to do before you start trading, but how about when you are actually trading? There are of course a number of different tips that we can give you for that too, so we have put together a few small tips and tricks that may help you once you are starting your trading career.

Education, Again: As previously mentioned, only start trading once you have gotten yourself a little forex education. It doesn’t need to be the world’s knowledge of forex, you will never get everything, but at least a basic understanding of how things work.

Study Charts: Learn how to read the charts, each time frame will work a little differently, and each currency pair works slightly differently on the charts. There are hundreds of different patterns to be on the lookout for, so getting an idea of how to read the charts is vital. After all, this is how you are going to be working out when and what to trade.

Using Strategies: When you have worked out what your strategy or trading style is, make sure you stick to it. You will only know if it works and suits you after a longer period of time. There is no point in jumping between different ones every other day, as this will only lead to confusion and lack of direction for your trading.

Using Stop Losses: Make sure you are using stop losses, these are there to protect your account and your sanity. If you do not use them you are potentially going to lose your account with just a single trade, so make sure that you are implementing them into your trading.

Implement Limits: Limit the number of trades that you execute daily. When starting out you will be excited about trading and will want to do as much as you can but you need to slow yourself down. Remember you are new to trading so you need to make sure that each and every trade that you make is right, Trading too much can confuse you and can also cause you to overspend. Trading too much often equates to endangering your account.

Trading Journals: Create and use a trading journal. This is something that you will hear about a lot. Trade journals are a place to write down everything that you are doing, all the trades you make, the reasons behind it, how long you hold the trades, your profit and loss, and more. This journal then gives you a way to analyse your own trading to find your strong and weak points and to ultimately make it a lot easier for you to improve your own trading.

Don’t Overshoot: Be realistic with your trading. Do not go into it thinking that you are going to be making £100,000 in your first month. The fact is that you will most likely lose a bit, as most people do. Be realistic with your expectations while you are in the learning phase.

Trading Buddies: Find someone for support, and do not be afraid to ask for help. The trading community is helpful and will always offer a hand. Find someone that you can get support from, especially when things start to become stressful. It is good to have someone who understands what you are going through can offer some support on how to get through it.

So you have started trading and have made a few trades and know that you need to be able to protect yourself and your account. So let’s work out what we can do in order to help protect your account. One of the most powerful yet hardest things to do in order to manage your risk is to tell yourself to stop, to tell yourself when to take a break. This is a great way of reducing the number of trades that you are making and thus avoiding the pitfall of overtrading. You should also be using stop losses and take profits to ensure that your trades are closing at the right time and that you’re not risking more with each trade than you should be. Create your risk management plan and then stick to it, if you have one and then make sure that you stick to it, any deviation is a danger.

So those are the things that you should and can be doing to get yourself ready to be a trader within the UK. There is a lot of information out there, so take your time, there is no rush to get into it as it will be there for a long time to come, so try not to rush into it. Learn, get the right broker and then practice on a demo account, but if you are choosing this as your next endeavor, then best of luck.

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Forex Basics

Faux Pas That Are Actually Okay to Make With Your Trading

Much like anything in life, trading offers a lot of variety and so there are a lot of different people doing a lot of different things, meaning that we all have different experiences and abilities. Due to this, there are a lot of things that can be considered a faux pas. Things that traders will look back at as embarrassing, things that they probably would like no one to remember, but these things happen and they happen to all of us. The thing is that a lot of them are actually okay to make, regardless of what others may think. They could potentially benefit you and your trading or at least not have the negative effect that some people may presume. So let’s look at some of the faux pas in trading that are actually ok to make.

Blowing An Account

Let’s be honest, the worst thing that can happen to you as a trader is to have your account blow. Many people believe that this means that you are a bad trader, you do not know how to use proper risk management, you do not know how to trade or you are just bad at it. This is completely untrue. In fact, if you look at any successful trader today, we can almost guarantee that the majority of them would have blown their accounts at some point. The question is though, do you think that they are embarrassed by it? Most likely not.

This is simply due to the reason that it is something that nearly everyone will do, those that do not blow accounts simply have not traded for long enough. It will happen, it’s inevitable and it will most likely happen near the start. It can feel embarrassing but it really shouldn’t be. Instead, the blown account should act as a fantastic learning opportunity. They allow you to see exactly what you did wrong and what you can do to help prevent doing anything similar in the future. There is nothing wrong with a blown account (apart from the lost money) and it certainly does not mean that you are a bad trader. Use them. Learn from them and you will most likely not blow another one in the future and you will end up as a much safer trader in the long run.

Not Understanding Something, or Anything

Forex and trading as a whole can be incredibly complicated. There is so much information out there, far too much for any one person to even think about learning all of. In fact, you probably won’t ever learn more than 2% or 3% of what is out there. Due to this, you should never feel embarrassed that you do not understand something or in fact not understanding anything. We have all been in that situation, especially when we first started out as traders. We didn’t know a thing, everything that we read or watched was confusing, all these new words and meanings that we had never heard before.

So you should not feel embarrassed. Everyone has been in the exact same situation. Instead, you should ask what things mean, you should ask how to do things and you should question things that you do not understand. No one will hold this against you, in fact, the trading community is more often than not a very helpful one. People will be willing to help you to understand, they will explain things and help you to understand. Just know that absolutely every trader has been in the same situation and even those at the top of the game will still come across things that they do not understand, they are not embarrassed by that, and neither should you be.

Becoming Stressed

Stress can get the better of a lot of us. It is an emotion that the majority of traders will go through and is completely natural. If you are feeling stressed, do not try and keep it inside. Instead, you need to take action against it, you need to step away and you need to take breaks. Do not feel bad that you are needing to step away from the terminal because you are feeling a little stressed. We all have to do it at some point as do the world’s best traders. They take breaks because things are getting too tense and so should you.

Forgetting Stop Losses

Stop losses are vital for anyone to be trading in a safe way, but when you do something with every single trade. There will of course be times where you may forget to place them, and of course, the time that you forget is the time where the markets go against you and you lose a much larger chunk of your balance than you were planning for. It happens, you know you should be using them and so you feel embarrassed that you lost a lot more simply because you forgot to place it. Do not worry, use that as a learning experience and as you feel bad about it, it is much less likely that you will do something the same again. You need to learn from this mistake, we still do it from time to time. But each time we do it, there is a long period of time where we never forget to place it. Simply because we are remembering the losses that we took before. So do not feel embarrassed that you forgot the stop loss, just use that feeling as a reminder so you do not forget again in the future.

Not Having Enough Money to Trade

Trading can be expensive. It takes money to make money. At times in our lives, other things may come up, a broken boiler, a broken car or a wedding. These things cost money, and you may need to take money out of or even all of the money out of your account in order to pay for these things. Now you have no money to trade, that is fine. The other parts of your life are more important at that point in time, and the forex markets are not going anywhere. If you need to use your trading funds for things then use them. In the future, when you get more money again you can start to trade again. Do not make your life suffer just because you don’t want to be in a position where you cannot trade.

Those are some of the things that people find embarrassing about their trading or the things that they have done. It is important to remember that these things should not embarrass you. We all go through them and millions of people will go through them in the future too. Use them as learning opportunities or simply talk to others, you will discover just how common they actually are.

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Forex Basics

Top 5 Things You’re Forgetting to Do While Trading Forex

Forex trading is a massive beast, there is so much involved in it, you will be forgiven if you were to forget something. In fact, it is probably expected that you at some point will start to miss things with your trading. No matter how experienced you are and how many years you have been trading, you will make mistakes and you will forget to do things that you otherwise know you should be doing. So let’s take a look at some of the things that people often forget to do even if they have been doing it or are meant to be doing it.

#1 – Placing Stop Losses

Stop losses are a vital part of any strategy. They are designed to be used to protect your account and they prevent you from losing any more of your money than you are intending with each trade. This very important aspect of a trade is unfortunately something that is quite often forgotten. While forgetting things now and then is not normally an issue, when it is something that will prevent you from losing money it can have a very big effect on your overall trading and your profits. A single missed stop loss could have the potential to completely blow your account, so it is vital that we remember to use them. It is easy to miss out yes, but you need to ensure that you place them as they are so important.

#2 – Creating a Trade Journal

A trading journal is a fantastic thing, it allows you to work out exactly what you are doing well and what you need to work on, and it will potentially help you to become a really profitable trader. Yet it remains something that a lot of traders seem to ignore or to forget to fill out. While this won’t have a negative effect on your trading, it will prevent you from improving over time, as you need to use the information that you have written down to work out what you need to change or what you are already doing well. You need to try and remember to write down things like the entry price, the exit price, how long you help the reader, the profit and loss, and pretty much everything that you do. This way you can use that information. A lot of people simply forget to do it, either through actually forgetting or from being too lazy to do it. It’s not the end of the world to forget, but if you want to be a successful trader, then you should certainly try and get it done.

#3 – Withdrawing Funds

This one may seem a little strange to say, but you will be surprised at how many people actually forget to withdraw any of their funds. One of the basic rules of trading forex is that you should be withdrawing your funds until you have at least withdrawn the same amount that you have deposited. This way while you can of course still lose money, you will not lose any of the money that you initially put in. Each month, withdraw your profits until you have withdrawn as much as you have put in. Many people forget to do this and some of them will then go on to lose whatever they have made if they had withdrawn, they would not be out of pocket as they would have taken out everything that they put in. So remember, withdraw a little bit each month. Even if it is not all the profits, a little bit each month will ensure that you do not lose everything that was put in.

#4 – Take Breaks

Trading can be addicting, really addicting, so much so that a lot of traders especially when first starting out actually forget to take breaks. Yes, you heard us right and we have been guilty of this ourselves. Breaks are incredibly important, simply because they allow us to refresh and to clear our minds, they are particularly good when our emotions are starting to come up or even take over. Yet so many people forget to take them. You need to, if you want to be a successful trader then you need to learn how to take breaks and you should be taking them regularly. If you can, take a break every hour or so. Don’t be like us and sit there for hours and hours on end, as this will only lead to burnout and you probably won’t be doing anything for most of that time anyway.

#5 – Adjusting Goals

Goals are fantastic. They are things that we are working towards, things that we wish to achieve at some point in our trading future. Some are short term and others are long term, but there is one thing that a lot of people forget to do, adjust them. When we achieve something, it kind of gets left behind, but it really shouldn’t. Instead, it should be adapted and pushed further forward, this way we still have something to aim towards and to trade towards. If we do not we will lose a lot of our motivation. So when you achieve something, be sure to adjust it so it will then become your next target, this way you will keep motivated and will always have something to work towards.

Those are some of the things that a lot of traders forget to do. Some may seem a little silly to you or some may not actually seem all that important, and that is fine. Not everything matters the same to each person, so you may not want to withdraw where someone else probably should. Are there things that you should be doing but forget? Probably, but once you can recognise that you should be doing something then you will be able to ensure that you are actively doing it in the future.

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Forex Basics

How Technology Is Changing How We Trade Forex

The world is changing, technology is changing and so the way that we trade is also changing based on the new technology that is coming out. It is changing and it will continue to change as the world progresses. 

How Forex Used to Be Traded

Do you remember paper? It is a thin sheet of wood that we often use for writing, that is how forex used to be traded in modern times. If we go back even further though, people used to exchange their goods and services for a price that was often represented with things like raw materials or food. The problem with this sort of transaction was that it was hard to decide on what price was actually correct, different people put a different value on different things. Someone who has a lot of ish would value it low, but someone who has none but likes it would value it a lot higher.  It was due to this that early civilisations developed things like commodity money and then eventually they created metal coin and paper currencies, similar to the ones that we still use today.

This development of currencies made the exchange between different countries and nations a lot easier, as it meant that you no longer had to transport one product to a nation and to then transfer the other product back. As time went on into the 17th century, the first forex market was established in Amsterdam, and this allowed for far easier exchanges and transactions between the different global markets. Back then, it was only large organisations or even countries that were able to take part, as well as that, the lack of technology that was available meant that the communication was slow between the nations. This made it hard for traders to get information quickly and therefore harder to reduce the risks involved.

How Is It Traded Today? 

These days things have changed a lot, updates take seconds to get to us, it is far easier to get updates and to find information from pretty much any part of the internet. Things like news events and exchange rates are updated in real-time and are accessible by pretty much anyone. Pretty much anyone is able to trade, brokers are there and available for anyone to sign up with and it only costs you a few dollars to do it, rather than the millions that it used to require. There are far more currencies and assets available to trade and it takes seconds to put a trade on, not to mention that we no longer need to use paper to place the trades, instead we use our computers or phones.

How Did Technology Get Us Here?

Technology has made the world of difference to trading and for those that wish to trade. The first thing s that you no longer need to be there in person. Originally you would have had to of been there in person to make the trade or to at least give the indication that you will make the trade, things then progressed with the telephone, making a call to a broker to put on the trade or to close one. Now though, technology has progressed even further. Now, all we need to do is to log onto our phone or computer and to place the tree using our trading platform. There is no longer a need for any interactions with a person, something that a lot of people like, however, some do prefer the days when they could actually speak to someone to place trades. The rise of those sorts of trading has made it far more accessible and also easier and quicker to place trades.

As technology progresses, the types of platforms that we have are also changing. Previously the platforms used were not user friendly at all, they are designed for function only, you would look at it to see the charts and other information and then would make a call to place a trade. Now, the charts and platforms have been created to be user friendly, with nicer colours, easier to understand user interfaces, and just a lot prettier. While this doesn’t really affect the functionality, it does make it easier to understand which again makes things more accessible for newer traders.

There are also robots and expert advisors available for us to use. Years back there was nothing, you or someone else would have to do all of the analysis themselves by hand. It would take time and it would be hard work, with humans doing the work there is also a lot more potential for human errors. Now though, we have indicators and robots, these can do the analysis for us, in regards to indicators, they can show us various information that it has already sorted through and so only shows the relevant info. Then there are robots that will do pretty much everything for us. They will analyse and then even place the trades for us, meaning that there is very little work for us to do at all.

What Does the Future Hold?

The current state of trading is currently going down the route of automation, so it is expected that things will continue this way. The problem with that is that if everyone is using robots, the markets will ultimately come to a halt. Thankfully there are those that will refuse to use robots and those will be the people keeping it moving. However, robots and indicators will continue to improve and the information that they provide to traders will continue to improve. The improvement of communication technology and the speed that it provides will continue to allow high-frequency traders to make even faster trades. It will also continue to become easier and more accessible to more people and potential traders.

These are just some of the ways that technology is affecting our trading. There have been huge leaps in things like the speeds, the accessibility, and the way that we trade. We went from physically handing over money to pressing a single button in our bedrooms, from needing millions to just needing $10. Technology will continue to improve and with that, so will the way that we trade, some will say for the better, others will say for worse. Only time will tell when the improvements in technology will really take us.

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Beginners Forex Education Forex Basics

The Best Advice Forex Trading Advice You’ll Ever Receive

We all like a little bit of advice, don’t we? The entire point of advice is that it allows us to get better, as other people can see the things that we are doing and point out what we need to improve. Of course, not all advice is actually helpful. Some of it will not impact our trading but it is still good to hear. Today we are going to be looking at some of the better advice that you could use to help improve your trading. You may already be doing a lot of these things, or you may not be. If you aren’t, try implementing this information into your trading plans to see if they make an improvement.

Use a Demo Account

First off, we must stress how important it is to test your strategies and any changes that you make. This is something that a lot of traders, especially newer ones, simply do not do. They just chuck the changes into their main trades and hope for the best. Those that do test may still do this on a live account. While the trades are smaller, you are still risking your own money on something that you have no idea whether it works or not. So instead, what you need to do is to trade and test any changes that you make, no matter how big or small, on a demo account. This way you are not risking any of your own money on the changes, and if the change makes things a lot worse, you have not lost anything. As soon as you can see that the change is working consistently, only then should you try and implement that change on your live account where your actual money is.

Have a Risk Management Plan

One of the main elements of any trading plan or strategy is the risk management that comes with it. You can set this up before placing a single trade and you should, it will then be used for every trade that you place. The thing is though, that a risk management plan that works at one point, won’t always, and so you will need to be making constant changes and constantly reviewing the plan. Different market conditions may require you to change the locations of your stop losses and take profit levels. It may even cause you to change your risk to reward ratio. That is fine if you need to, just be sure that you are constantly monitoring the levels they are at and what risk management techniques you are using. You never know when they need to change, just remember our first point, test them on a demo account. Never accept your risk management plan as final.

Do Not Blindly Follow Others

A lot of traders will come into forex and simply follow what others are doing or what they say. While it is perfectly fine to get ideas from others or to trade the same as someone else, (some people make a lot of money by doing that) what is not right is to simply follow their trades blind. This means that you do not know why the trade is being put on or what to do if things go wrong. Each trader that you are following will have a reason as to why they have placed the take that they have, you need to know this too. As soon as you trade without knowing, you are risking your money on a blind gamble, and what will you do if things go the wrong way? That trader may not be there to tell you what to do, you will need to work it out, so if you follow blindly, you won’t be able to. Always work out why someone is placing a trade and what the requirements of that trade are before you place it. If you do not know any of these things, then do not place the trade.

Never Trade With Bill Money

The golden rule of anything to do with trading or investing, do not take any more than you can afford to lose. The best way of doing this is to consider any money that you deposit into your broker’s account as lost money, it is lost to you until you withdraw it back to your account. You also need to consider whether you need that money. We have seen countless traders trade with money they cannot afford to lose, money that they needed for food or for rent. They lost it and so cannot afford their rent that month, or even worse, traders that borrow, get into debt for trading and then lose it, leaving them with the debt to pay. If the money you are using will negatively affect your life if you lost it, then you should not be using it to trade at all.

Research EVERYTHING

This leads on from the previous point, you need to research everything, and we mean everything. If you are looking for a broker, research them. Find the one that has the right features that you need, and that has a good reputation of honoring what they are meant to be doing. If you are looking at signals, research them. Look at how they have done previously, the people behind it, everything. Creating a new strategy? You know the drill, you need to research everything that you can about it, the risk management that comes with it, the best trading conditions for it, your own requirements such as time required. Anything you do in trading, you need to research, this is how you get to know what it is that you are doing and why and it is the best way to ensure that the way you are going to do is correct. Do not do anything blind in forex or trading, that will only lead to losses and potential blown accounts.

That is some of the advice that you will hear quite a lot over the internet. It is all fantastic advice that can really help you to become a profitable and successful trader to at least save you some potential headaches down the road, not to mention some of your capital. Whether you already do them or not, take them into consideration next time you plan on trading and think about what you could potentially be doing differently which could help to improve your overall trading.

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Forex Basics

What NOT to Do When Trading Forex For the First Time

Let’s be honest with each other, we have all made some silly mistakes when we do something for the first time. This is certainly true when it comes to forex trading. We have made a number of mistakes and when we look back at them now, we can see how silly some of those mistakes were. We also aren’t alone, many people are making the same mistakes that we were back then. They can be easily avoided, but you need to know what they are first. So we are going to be looking at some of the things that traders should not be doing when they first start trading the forex markets.

Trading Too Soon

Many new traders are excited about actually placing their trades. The problem with this excitement is that it means that a lot of traders do not actually learn enough before they decide to place those first trades. They learned the basics, what a trade is, and how to put it on, but that is about where the learning ended before trades have been placed. The problems that you will not be using a proper strategy with proper risk management, and so you are taking a lot of risks by placing trades too soon. Instead, you need to ensure that you know what you are doing. You need to have a strategy in place that will tell you how to place your trades and you need to have risk management in place in order to ensure that your account is protected and that you won’t be losing too much of your account balance with a single trade that goes wrong. Take your time, there is no need to start placing trades as quickly as possible.

Diversifying Too Early

There are a lot of currencies and a lot of assets available to trade, the variety is great and can really help us to be profitable as we can always find something to trade. There are however downsides to it, each and every currency and asset behaves slightly differently and is affected differently to real world events and news events. So there is a lot to learn. What a lot of newer traders do is that they start to pick a lot of assets at once and try to trade them all, this can be really confusing and ultimately overwhelming as you cannot learn about all of them at the same time. Instead, it is always recommended that you take your time to learn a single currency or asset at a time. Learn everything that there is to do with it, master it, and only then should you look at trading another asset. Of course, just one at a time until you learn all that there is about it and then another. Continue like this and it will help to keep you from overwhelming yourself or getting mixed up between a number of different currencies or assets.

Not Continuing to Learn

Forex is ever-evolving. Things are always changing. The markets are always changing and what you need to know is always changing. There is also an incredible amount of information, so much so that not a single person will know everything about everything when it comes to trading. So it is always a mystery why some people think that they do not need to learn anymore, and this is more often than not those that are newer to trading. They have learned their first strategy, they have placed some winning trades and so they believe that they know all that they need to know. You need to keep learning though. Every day you can learn something new, as soon as you stop, the market conditions will change and this will basically throw off anyone that is not learning anymore. They will not know how to adjust in order to match the markets and so they will begin to make losses. One major rule of trading is that you never know everything, you need to always be on the lookout for new things to learn.

Devoting Everything to One Trade

Something that newer traders don’t necessarily take as seriously as long term traders do is risk management. What we see a lot of traders do is to place trades that are far too large for their account size. This can be due to a lack of understanding, or it can be due to the fact that they want to make more money or that they are desperate to make more. Either way, it is not a sensible thing to do and it will ultimately only lead to losses or even completely blown accounts, especially if they are not using the proper risk management techniques in their trades. It is always better to trade too small than too big, at least that way your account will be safe should the markets turn against you.

Trading Too Much

Another thing that a lot of new traders do along with placing trades that are too large is to simply place too many trades. Whether or not someone is using a strategy for their trades, when you begin to place a lot of trades it can only lead to disaster. When we place a trade we use up a little bit of our available margin, as we place more we use more and more up, as we begin to use up a lot of it. It won’t take much for the markets to move against us and for the account to blow. We will also be placing trades that may not be considered as good trades, trades that are on a hunch or that are not in line with any strategies, we need to avoid doing these. More is not always better, you need to place trades that you are more sure of, rather than lots and hoping for more wins than losses.

Not Using Stop Losses

Stop losses are amazing things. These can be set for each trade. When the markets reach that level they will automatically close the trade at a loss. Why would we want to close a loss? To protect our account. If you do not use them, then a single trade could potentially blow an account. The stop losses are there to ensure that we only lose what we are prepared to lose on that single trade. Any more will be prevented which is how a trader remains profitable, by controlling how much they lose with each trade. Yet we see a lot of newer traders trading without them. Maybe they do not know about them or fully understand the importance of them, or some just don’t want to as they do not want to lose. Instead, they hold trades until the markets turn, if they turn. This is dangerous and not something we would recommend. Always use stop losses when trading,with every single trade.

Those are just some of the things that newer traders do not seem to do. There are, of course, other mistakes that are quite common. Consider whether you did or still do some of the things mentioned above. If you do, what do you think you can do to help change this? Try ad work on your trading to take out some of these things that you probably should not be doing.

 

Categories
Forex Basics

The Most Hilarious Complaints We’ve Heard About Forex

There are a lot of people that like to complain about things when it comes to trading. Some of them are genuine complaints, while others are pretty funny to look at and are clearly made up in order to try and justify the reason why they have lost some money or to cover up their misunderstanding of what it is that they are actually doing. Today we are going to be looking at some of the most hilarious complaints that we have heard about trading forex.

“It’s Fake!”

One of the best that we have heard and we have heard it quite a few times is the fact that there are people out here that are claiming that forex trading is fake. That the entire system that we use is fake, something made up by some people in order to take all of our money. That million of traders are all falling for something that isn’t even real. You can probably tell how silly this is, and yet people still complain about it. They complain that forex even exists.

While we can see their point of view when it comes to certain things, like the people promising ridiculous income or the fake brokers, calling the entire industry a trillion dollar industry fake is just a little on the absurd side. Normally when there is enough proof out there to clearly show that something is real, the people claiming it to be fake often stay quiet, but when it comes to forex trading, they like to be vocal, which ultimately just ends up making them a spectacle to be laughed at.

Look on social media, you will constantly see people telling others to stop because it is fake, completely ignoring the fact that the people they are telling to stop are actively trading the thing they are calling fake…

“My Strategy Was Right…The Markets Were Wrong.”

There are some very stubborn people out there, some that seem to think that everything that they do has to be right. This could be a form of narcissism where someone is completely on their own side, they know best and they are right. We see people basically telling us that the strategy that they have used is right, the trade that they put on should be a win, but it ends up losing. Is this their fault, no, a good strategy will still have losses, no matter how good it is, but when you start to blame the markets, saying that the markets are wrong, it just gets silly. The markets are not wrong, they never will be, you are trading the markets, the markets aren’t moving for you If your trade loses, it is not the jets fault, you just put on the wing trade you need to accept that, but that is something that a lot of people do not seem willing to do.

We have seen the complaints of someone asking why the markets didn’t move up. They had placed a trade and it should have gone up. They just couldn’t accept the fact that he did not control the market.

“My broker scammed me!”

We Have to make it clear – for some, this could actually be true. There are some very underhanded brokers out there that are created for the simple reason of taking your money. Yet we see people shouting about being scammed by some of the major brokers, the biggest and most trustworthy brokers. When in reality, they just traded badly and lost their money, but of course it is not their fault, it is the brokers fault, using foul play to take their money. If you are to ask them for evidence of this, the only thing that they can ever show you is their blown account or some losing trades, which only confirms the idea that they traded badly, nothing to do with the broker. They very very rarely have any proof that the broker did wrong, making their excuses and complaints pretty pointless and worthless.

People have complained about brokers calling them up and asking for more money. They have then paid them, only to never see the money again. We are not sure how you can complain about that. If that happened to us, we would be keeping our mouths shut out of embarrassment.

“There is too much info out there.”

There is a lot of information when it comes to forex trading. The good news is that you do not need to learn about all of it. In fact, you probably don’t even need to know even 5% of it in order to be a very successful trader. There is loads of stuff when it comes to trading that we know very little about, that is not a problem. Yet some people come into trading forex thinking that they need to know everything, that if they do not learn it all they won’t be able to be successful. They see all the information that here is and decide that there is too much, complain about it and then leave. Yet they do not want to listen to the answers given to thm which clearly tell them that they don’t need to learn everything, instead they simply want to complain rather than actually giving it a proper go. 

One of the best complaints we’ve read was when someone claimed to have spent hours learning everything they can, but they still didn’t understand what a PIP was. When asked if they had looked it up and they simply answered no, stating that there was too much other information clouding their ability to find the answer. 

“It costs too much.”

Trading forex costs a lot if you lose, that is the simple fact behind it. Some traders are fixated on using just one or two brokers that they may have used before or that were recommended to them, these brokers may require a larger deposit in order to start trading with them, but not all brokers do. There are some very good brokers around that allow you to open up an account for as little as $10, making it very cheap and very accessible. Of course you won’t be able to make much with that amount and it is easy to lose it, so it is recommended to have more, but the opportunity is there and it does not cost much. Some brokers also offer larger than usual commissions or spreads, something that you should avoid, but you can certainly find ones that offer low deposit limits, low spreads and recent commissions. Yes it costs money to trade, and the more money that you have the more you can make, but it is certainly not costing too much to trade at all.

We have seen complaints from people saying they need $10,000 to open an account and that they are being charged $20 per lot traded…The solution is simple. Choose another broker, there are enough of them out there.

Those are some of the complaints that we hear quite a lot. Some of them are legitimate, however, they are more often than not blown vastly out of proportion, to the extent where they just become ridiculous and you can’t do anything but laugh at them. We are sure you have heard some of them and we are sure that you will hear them again, that is just the nature of people and forex trading.

Categories
Forex Basics

Tips for Increasing Your Forex Productivity

Forex trading can take a long time. In fact, in order to place a single trade, it could take you up to a few hours of analysis before you actually place it. That doesn’t sound like the most efficient thing in the world and you would be right, it isn’t. Traders are always looking for things that they can do that will help them to speed up their trading abilities. To improve their productivity and to basically make trading forex quicker and simpler. That is why we are going to be looking at some of the things that you can do that will help speed up your productivity when it comes to forex trading.

Have A Predefined Plan

Having a plan already set out can make things incredibly simple and a lot quicker when it comes to actually placing your trades. This predefined plan basically means that you have your entry requirements already set up, a set of rules that dictate what trades you are going to be putting on and how you are going to put them on. These rules should be set in stone and go inline with your strategy. Having them there clear and simple means that you do not need to think as hard when you are there to place a trade which can increase your productivity as you are no longer needing to work out whether it is a good trade or not, you know whether it is or is not based on whether it matches your rules. If it does, then place the tread, if it does not then do not place it, as it would be a bad trade. Having these rules are paramount for being efficient, as well as profitable.

Remove Any Distractions

Distractions can be a real nightmare for your productivity, not just with forex trading but with pretty much anything that you are doing. Distractions can come from a lot of different sources from the TV, a radio, your phone, internet browsers, or even other people. If there is something around that can distract you, try and get rid of it. This may mean that your trading room is a little bare, and that is fine, as long as it enables you to concentrate on what you are doing. As soon as you start to procrastinate, looking at or doing other things, your productivity will plummet. Avoid this as best as you can. Of course some distractions you cannot avoid, the postman at your door for example, but as long as you control the ones that you are able to, you should be able to keep your productivity high.

Avoid Bad Trades

Productivity is not all about placing trades. You could place 100 trades a day, but this does not mean that you are being productive. All it means is that you are placing a lot of trades. Instead, you should try and focus on placing good trades, trades that are in line with your trading strategy, and trades that will give you the best chances of being profitable. If you simply place random or lots of trades, then there is a good chance that some of them will be losers. As soon as you lose a trade, your overall productivity will decrease. So instead you will want to focus on the good trades, each one will have a better chance of profits, which is your overall goal and the overall measurement of your productivity.

Reward Yourself

There is no better motivator to work hard than a reward, so reward yourself. It will help you to want to keep going and to work harder. If we constantly work and don’t receive anything back, why are we doing it? It will demotivate us, make us not want to bother doing too much which will be detrimental to our overall trading productivity, it will drop if we are not motivated to work. So reward yourself regularly. It doesn’t need to be very large rewards. A little bit of your profits or a nice meal out should be enough. Reward yourself, motivate yourself often and you will see your overall productivity levels rise.

Take Breaks

This may seem to be counter-productive. Taking a break means that you will be away from your computer and away from making trades, but this is not necessarily a bad thing. In fact, it is a good thing and can very easily improve your overall productivity. Taking breaks allows you to refresh both your mind and your body. If we do the same thing over and over for a long period of time we will become bored. We will become tired and we will start to make mistakes. That is why taking breaks is so important, it allows us to remain fresh when we are trading. This freshness means that we are able to concentrate more and will be able to better ensure that we are placing good trades, not to mention the speed at which we can place them will also improve.

Get Plenty of Rest

There is nothing better to refresh us than a good night’s sleep. Your brain needs time to switch off and to recover, not to mention the fact that we have all experienced what it is like to not sleep properly. You are sluggish, make mistakes, and are far more irritable than when we have had a good night’s sleep. This is why it is so important to try and sleep. Along with this, it may be beneficial to choose a trading strategy that does not require you to be up in the middle of the night, one that allows you to take advantage of your bed and to sleep the entire way through the night. If not, then at least try to get a minimum of 6 hours sleep a night, at a minimum to ensure that you are up and alert the next day ready to trade.

Set Alarms

Let’s be honest, we have all had those trading sessions where we are sat at the computer for hours and absolutely nothing happens, there have been no trade opportunities available to us. We can avoid this by simply setting up alarms and alerts. These alerts can let us know when the market conditions are favourable for us and this will enable us to get away from the screen and to avoid wasting time simply sitting there. We can take a break, we can do some laundry, cooking anything rather than simply sitting there doing nothing, and becoming frustrated. These alerts mean that we are only actively trading when the markets are in the right condition, which will also keep our mind free and fresh for when we actually need to place our trades. These Arts can also work forever, meaning that we can set them and they will alert us every time in the future when the conditions are right.

Those are just a few of the things that you can do that will help to ensure that your trading productivity remains high. They will enable you to place far better trades at a much quicker pace, will help you to become profitable, and will enable you to be a better trader overall.

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Beginners Forex Education Forex Basics

To People That Want To Start Forex But Are Afraid To Get Started…

Getting started with new things is often the hardest step, and it is no different when it comes to trading and forex. People can sometimes find it hard to actually place that first trade or to deposit that first bit of money. There are be a number of different things that are stopping you from starting, from your anxiety, to simply not liking the risks that are involved. We are going to be looking at some of the reasons why people are afraid of starting the whole trading process. We will also look at some of the things that you can do to try and get that jump-start and to actually start trading.

Jump In

Honestly, it may not sound like the most helpful advice, but sometimes you just need to just jump in with both feet. This doesn’t mean be reckless. Don’t jump in and throw your money about, simply get that first trade placed. Yes, you will need to do some learning beforehand, or analyze the markets for potential trades, but getting that first trade out the way will seriously help with your anxiety about placing those trades. It will also give you an idea and feel of what it is that you are doing and how it actually works first hand rather than just from what you have previously read about.

Use A Demo Account

One way of getting around the fear of putting on some trades is to practice doing it. You can do this on a demo account. The majority of brokers will have this service available to you, all you need to do is to sign up for the demo account. These accounts often have the same features and trading conditions the live accounts so they are perfect for testing out your strategies and just simply getting used to trading. Do not worry about using the demo account for an extended period of time. Use it until you are ready to go live. This could be a week, a month, or even a year for some people, but use it to get used to it until you are confident about how things work and that your strategy is effective.

Use Money You Can Afford to Lose

As with anything when it comes to money, you should only use money that you can afford to lose. What this means is that you need to imagine that any money that you put into the account is automatically lost, imagine that you will never see that money again. How Does this make you feel? If you are just a little annoyed then that is fine, but if you are now worried about being able to pay the rest, or that you are going to have to cut back on things then you should not be trading with this money. If losing it will affect your life, then you need to avoid trading with it at all costs. Only use what you can afford to lose, that is a saying that will be around for as long as money exists.

It’s Complicated, But Not Too Complicated

Trading can be complicated. There is a lot to learn and it can be incredibly overwhelming. In fact, we were in the exact same position at the start of our trading careers. There’s so much info out there that it can make you want to simply give up as it can confuse you as to what it is that you actually need to do. Do not worry if you are in this same situation. Take your time. There is no time limit on how quickly you need to learn things. In fact, you can take as long as you need. Go over one subject at a time, learn what there is to know about it, and then move on to the next. As you begin to learn more and more it will all begin to fall into place and it will start to make sense for you. Of course, there is still a lot to learn, and it is still complicated, but it will start to become clear the more you learn, and the more you begin to understand it.

Too Much Risk Is Involved

For many people, risk is a voodoo word. It is something they do not want to think about and something that they would want to avoid. This is perfectly understandable. Afterall, with risk can come loss, however on the other side, with risk can come rewards. That is why we set up strict risk management plans. These plans outline what we will trade when we will trade it, and how much we will trade. It also tells us the maximum loss that we can have with each trade. If you are worried about putting your money at risk, know that you’ll have these plans in place which will prevent you from losing everything at once. In fact, you can set it up so that you only need to win 25% to 30% of your trades in order to be profitable. This is all done through your risk to reward ratio, which is part of your risk management plan. Ensure that you have this in place before you start trading and you will be in a good position.

Plan Your Trades – Plan Your Losses

Fear and being afraid of something is all about your anticipation that something will go wrong or that something bad is going to happen. In the case of Forex trading, this is often the fact that you can lose some of your money. What we need to do is to plan for these losses. It sounds strange saying that we are going to plan for them, as if we want them. Of course, we don’t, but we know that they are going to happen at some point in the future. The very near future. Losses are a part of trading, all traders experience them, even the best in the world. What they do though, is that they plan for them, they know that the losses are coming and so they limit the damage that they cause. Within our risk management plan, they have their risk to reward ratio that we mentioned before. Those prevent the losses from being too large. Some go for a max 1% loss, which means you can lose nearly 100 trades in a  row before busting out. Others a little more, but that means that even though you have made a loss, it is small, and a single win will bring you back to breakeven or even profit.

We understand that it can be hard to get started. As we mentioned, starting is often the very hardest part of it. Once you have your first trade and you understand what you are doing, those worries and anxieties that you had about trading will fly out the window. You will have confidence, you will know what you are doing and you will be able to trade more and more. It is simply getting started that is hard, but push yourself over that hurdle, and you will be on your way to a new career in forex trading.

Categories
Forex Basics

What I Wish I Knew About Forex Trading A Year Ago

One thing that we can all be sure about, hindsight is a fantastic thing. It allows us to look back at what we have done in the past and to then consider what we maybe could have done differently. While we are not able to change the past, although it would be great if we could, we can still learn from it and that is what we will be doing today. Now that we have been in the trading game for quite a few years, we have learned a lot of new things, things that would have been very helpful for us back in the past. So let’s take a look at some of the things that we wish we had known a year ago that most likely would have helped us to be far better traders.

Do Not Trade Too Soon

One thing that we did quite a lot a year ago was to trade too soon. This is not in relation to not having the knowledge, we had already been trading for a bit of time before this so we had an idea of what we were doing. What we did keep doing though is putting on the trades too early, we had a trade lined up, did a little bit of analysis, but then did not wait for the additional confirmations that were needed. Instead, we simply placed the trades. Some went well, some did not, and those that went into a loss were easily avoided if we had just waited to place the trade and we would have seen that the markets went against us. So we simply wish that we had a little more patience when it came to policing out trades.

You Will Be Profitable

This is one quite personal to me. A year ago, I had a lot of doubts. I have a lot of thoughts that I may not be successful and that made me go days or even weeks without actually trading. In the position that I am in now, I am profitable month on month. I just wish that I had known that I was going to be successful. I would have had the motivation to trade every day and the motivation to put in more effort along the way. However, I am happy with the position that I am in now and will not dwell on the lost potential that would have been there.

No Single Strategy Will Always Work

About a year ago I only used a single strategy. It was my go-to strategy and it is what I used pretty much all the time, no matter what the conditions of the markets were. This is something that we know now is not the best way of going about things. In fact, it really held us back and prevented us from making quite a lot of profit. What we know now is that we need to have a number of different strategies in our arsenal if we want to really be successful. It will also allow us to trade better in different market conditions rather than trying to always adapt our single strategy, which can only stretch so far. So we just wish that a year ago we have learned a number of different strategies instead of sticking to just the one.

Use Stop Losses With Every Single Trade

We did use stop losses, just to make that clear, but we did not use them with every single trade. Due to this, we made a few losses that are a little larger than they probably should have been. This ultimately would have saved us a bit of money in the long run. We now know that we need to have the stop loss set on every single trade, every single one, no matter how sure we are around no matter how small or big the trade is. Always have one set, regardless of anything else, it will save you money and the one that you miss could be the one that would have saved your account.

Covid-19 Is Coming

If we take the tragedy out of the Covid-19 pandemic, then the pandemic gave us a lot of opportunities as well as a devastating effect on the world economy. A lot of people lost a lot of money when the markets decided to fall. However, while the stock market collapsed, the forex markets were a little more stable. It was, of course, a lot more volatile but it wasn’t blowing accounts every single day. What it did offer though was a lot of opportunities. As different countries went into lockdown at different times, the markets reacted accordingly. We stood back from the markets as a lot of trades did, but this meant that we missed out on some fantastic chances to make a lot of money.

Some traders took advantage of this. As the UK went into lockdown, they shorted the GBP currency. As the USA went into lockdown they shorted the USD currency, the same for Europe and other countries. As the countries went into lockdown, their economies shrunk which in turn made their currencies a lot weaker. The perfect opportunity to profit from them. There were, of course, still a lot of dangers in the as it was very unpredictable, but there was certainly a lot of money to be made and as it happened. We wished we were involved but didn’t want to take the risk. Now though with hindsight, we still wish we were more involved.

Those are some of the things that we wish we knew a year ago. Some of them would have helped to save us a little bit of our profits by reducing losses, others would have helped us to have made a lot more profit, and some would have just made us a more knowledgeable and consistent trader. Whatever you are doing now, think back to a year ago, were you doing the same things? You were most likely not, some of them yes, but some of them no. We are all developing as time goes on, so while hindsight is good. Looking back at how far you have come is good. Try not to dwell on the past or the mistakes that you have made, look to the future and the successes that you can make in the future.

Categories
Forex Basics

The Seven Deadly Sins of the Forex Trader

Most of us have heard of the biblical seven deadly sins, but few know about the seven deadly sins of Forex. Part of achieving success is knowing what not to do, and these “sins” work to help you understand and avoid potential problems. Without further adieu, let’s get into it!

Pride

Wow! What a great trading session! There is no one to stop me! Tomorrow I will double my profits! 

Little grasshopper, you’ve had a good day, and yes, you got your positions right, enjoy your joy in moderation, and share with others the reason for those entries, and be aware that tomorrow that euphoria may cloud your vision today. Remember also that the one who calls himself a donkey and who today is crying out, perhaps it will be the genius tomorrow and you will be the one crying out.

Avarice

I’ve achieved my goals, and this looks like it’s going to turn, but there’s another target up there pending, so I’m going to continue with all my positions without partial withdrawal because I’ll gain a lot more.

Small grasshopper, already assures part of your profits, reduces risk situation and leverage, in this way, perhaps you will find opportunity in another market that you can take advantage of.

Sloth

Well, I’ve already won a TrADE today, and although this one I’m looking at now is very clear, I’m going to stOP. tomorrow will be another day.

Little grasshopper, if this new operation is clear, do it! And do it now!, do not leave for tomorrow what you can do today, but not simply by following the proverbs, but because tomorrow may not present you any clear opportunity in the market, And maybe you’ll force an entry of dubious signal, causing you losses in the end.

Gluttony

Today I will catch all of the price movements. Not one will escape me! Today I will recover everything that I’VE lost RECENTLY.

Little grasshopper, that’s called overtrading. It’s not advisable, you’re gonna get obfuscated. You’re gonna spiral into wanting to put a pulse on the market, and this one’s a lot stronger than you.

Envy

Wow! Look at this guy with the big profits. It’s just dumb luck. He has no real idea of how to trade Forex

Little grasshopper, congratulate him and share his joy, get in touch with him, maybe there’s something he can teach you. Keep in mind that trading is not only about skills but also about attitudes.

Lust

look how good that XD directive is! Go all out! I would hit with it XD. Wow, look how good that XD support is! Go all out! I would hit with it XD. (This is a joke, By THE WAY!)

More seriously, after a good run, your worst enemies will be overconfidence and self-confidence that can be lethal in trading, as well as excessive leverage. Minimal risk control and uncontrolled GM management can lead to failure.

Anger

they’ll be cursed! They’ve got me going in all directions. I don’t know where to turn any more! And look how stupid they all are, everyone buying! Do you not see that this has to fall?

Little grasshopper, don’t fight the market, the market must be your friend, listen to him, understand him and everything will go smoothly, be receptive, get in tune with him, and don’t get angry. It won’t lead to anything positive, you’ll only aggravate your lack of control. Enjoy trading. And don’t marry any position, after all, they don’t want you forever either.
Categories
Beginners Forex Education Forex Basics

Top 5 Qualities the Best Forex Traders Tend to Have

If you want to make it to the top as one of the forex industry’s most successful traders, you’ll need to learn to act like one. While being educated is one of the most important steps on the road to success, possessing certain qualities is yet another crucial requirement that can make or break your trading career. If you’re wondering if you have what it takes, take a look at our list below – and don’t worry if you’re missing any of these qualities because we’re here with tips and tricks just in case.

The Best Traders are Disciplined 

Self-discipline is a major must-have for forex traders. The fact that you get to be your own boss is just the start, considering that you have to make the choice to get up and get online every single day when you could be sleeping in with nobody to answer to but yourself. Self-discipline also comes in when you want to deviate from your trading plan by making mistakes like risking more money than your plan allows, entering a trade without solid evidence you should do so, overtrading, and so on. Traders need to be able to stay focused and follow their trading plan at all times, or else they put themselves at risk of losing money. 

TIP: Here are some of the top tips for practicing self-discipline:

  • Set realistic goals and make a plan to meet them
  • Practice healthy trading habits
  • Hold yourself accountable if you don’t stick to your plan
  • Set a schedule around your most productive times
  • Figure out what your weaknesses are and find ways to overcome them

Patience is Key

There are a lot of ways that patience can benefit forex traders. To start, you’ll need patience when you’re learning to trade. It’s important that you don’t rush out there and open a trading account too quickly, or else you may not be prepared and you could lose a lot of money. Learning everything step-by-step can be a long process and creating a detailed trading plan can take quite a while as well. Once you start trading, patience can help you to avoid making emotion-based decisions, to wait for the right market setups, entering and exiting positions at the proper time, and so on. Many people have claimed that they feel that trading can be boring, therefore, patience comes in handy when things are moving slowly. 

TIP: If you’re generally an impatient person, the first step is realizing that and dealing with some of that anxiety so that it doesn’t spill over into your trading decisions. Try relaxing activities before you trade, like yoga, listening to music, going for a jog, or whatever helps you relax. You can also commit to your trading plan and promise yourself that you will not make trading decisions that don’t fit, even if you’re feeling overly anxious or don’t feel like waiting for the right market setup. 

Being Well-Educated

You can’t become a successful trader without pursuing a well-rounded education of everything that has to do with the forex market. Only learning beginner concepts like terminology, simple facts about the market, and how to use a trading platform just aren’t going to cut it. The best traders invest a lot of time into research and education, even those that have been trading for decades. Some of this time is spent researching more complicated strategies and techniques, watching videos, and participating in discussions with traders that have alternative views, and so on. It’s also important to stay up to date on important news that might affect the market, otherwise, you could be left behind. Successful traders always make time to do these things and never assume that they know everything there is to know about trading. 

TIP: If you want to get a good trading education, you’ll need to be willing to invest time into research. Fortunately, the internet offers a wide variety of educational websites and content like YouTube videos that focus on all types of trading subjects, from beginner materials to trading psychology, strategies, news, and other important material. 

Thinking Realistically 

You can’t expect to take up forex trading with little knowledge of the market and become a millionaire in a week. Having unrealistic goals and expectations can be a huge downfall for beginners because many of them get an idea of the results they want to see and feel discouraged or disinterested once they realize how much time they actually need to put into trading to reach those goals. Successful traders set realistic goals and think rationally when trading decisions need to be made.

TIP: The best way to get yourself into this mindset is to set reachable goals that focus on improving your trading abilities, rather than trying to reach a certain dollar amount. Here are a few examples of realistic goals for beginning traders:

  • To spend a certain amount of time each day learning about forex topics
  • To practice trading on a demo account x hours per week
  • To keep a detailed trading journal and review it often

These are just a few examples of positive goals traders can have that will help with self-improvement. If you set your mind to accomplishing these kinds of goals, you will see increases in the amount of profit you bring home because you’ll be a smarter trader at the end of the day. 

The Ability to Let Losses Go

The unpredictability of the forex market makes it impossible to avoid losing money every now and then. Even the best forex traders lose money at times. Some traders handle these losses much better than others because they understand that it is unavoidable, but other traders have a hard time letting this go. They might feel like they’ve taken a hit to their ego and try to blame others, they may become depressed, or they might begin to risk even more money in an attempt to gain back what they’ve lost. Meanwhile, professional traders aren’t losing any sleep over their losses and they are able to stay level-headed without deviating from their trading plan when this occurs. 

TIP: It’s understandably difficult to lose money, but there are some things you can do if you’re having trouble coping with forex losses. Here are a few ideas that could help:

  • Never risk more money than you’re willing to lose so that losses don’t seem like such a big deal
  • Remember that coming out with some type of profit is still worth celebrating.
  • Review what happened when you lose money and try to diagnose the problem. If it was your fault, think of it as a learning opportunity rather than a personal failure.
  • Don’t beat yourself up over losses. Remind yourself that this happens to every trader in the world.
  • Never succumb to revenge trading – which is the act of risking larger amounts of money to win back money you’ve just lost. 
  • If you feel upset every time you lose money, try risking less on each trade.
Categories
Forex Basics Forex Brokers

Tell-Tale Signs You Need to Get a New Forex Broker

Are you here because your forex broker hasn’t been meeting your expectations lately? If so, then you don’t have to settle. New brokers open their doors every single day and hundreds of options have probably popped up since you first signed up for that old trading account. Finding a new broker can offer multiple benefits, from reduced fees to a wider selection of trading instruments, the chance to make extra money through bonuses, and more. If you’re seriously considering switching, then take a look at our list of tell-tale signs that you need to find a new forex broker.

Sign #1: You’re Paying Too Much in Fees

You’re likely paying commissions, spreads, and possibly withdrawal fees for trading through your broker. In some cases, you might not be paying commissions but you’re dealing with a higher spread to make up for it. If you’ve been trading with the same company for some time, you may not have been paying much attention to these fees, but have you compared them to any other brokers lately? If your broker is charging you a spread that is above 1.5 pips on EURUSD, we can almost guarantee that their other prices are too high, which means that you could be walking away with more of your own money in your pocket at the end of the day if you simply switch to a broker with cheaper fees. There’s also a good chance you could find a broker with no withdrawal fees for debit cards versus the 7% fees we’ve seen listed through several brokerages. 

Another thing to watch out for are extra charges, like inactivity fees or account maintenance charges. Some brokers do charge small inactivity fees to clear out balances that are left behind forever, but others charge high fees after about a month of zero trading activity. Account maintenance charges are basically like made-up charges that your cell phone provider would come up with to make a few extra dollars. Now is a good time to check your broker’s terms & conditions to see if any of these fees apply. If so, you might want to switch, especially if you’ve been hit with inactivity fees before. 

Sign #2:LacklusterCustomer Service

When it comes to customer service, a good broker offers flexible hours, quick and convenient contact methods, and polite service representatives. Sadly, you won’t find this available with every broker and you’d have an easier time pulling teeth than getting in touch with an agent through some shadier brokerages. Imagine having an issue where you never received a withdrawal you desperately needed, but you couldn’t get in touch with anyone to find out what happened. Or perhaps you simply get locked out of your account and can’t reset your password, so you’re stuck missing out on trading opportunities for days while you wait for an agent to respond to you. If you haven’t been there before, there’s always a chance that this will affect you in the future. Rudeness is another thing that you shouldn’t have to tolerate and is a sure sign that you’ll do better with another company. 

Sign #3: Limited Trading Opportunities

If you’re a trader that is only interested in currency pairs, then this one might not matter to you as much, as long as your broker offers a good selection of majors, minors, and exotics. However, many traders do look to diversify their trading portfolio over time, even if they started out focusing only on currency pairs. If this is the case for you, then you’ve probably outgrown your forex broker if they don’t offer much in the way of commodities, stocks, or cryptocurrencies. If you’re in this situation, you might want to switch to gain access to a wider diversity of investment options – or you could open a secondary account through another broker and continue to trade currencies on your current account if your broker offers competitive prices. 

Sign #4: An Unsatisfactory Trading Platform

Some brokers offer access to award-winning platforms like MetaTrader 4 and/or 5, or they have their own trading platform for users to trade on. If you’re dealing with a broker that lets you trade on MT4 or MT5, then you already have access to one of the best platforms out there, but don’t hesitate to switch if you don’t personally like those options. If your broker offers their own platform, you’ll need to think about how satisfied you are with the features and tools within it. Does it seem basic? If your trading platform is missing out on all the tech you’re looking for, consider switching. Also, know that more popular brokers are more likely to offer outstanding platforms, while smaller shadier brokers are likely offering up more basic trading platforms. 

Sign #5: Your Broker Is Too Basic

Some brokers have a lot to offer in the way of extra perks, like bonuses and promotional opportunities, a wide selection of assets to choose from, a wide array of educational resources, trading tools like calculators, amazing trading platforms, and etc. Others only offer a basic trading platform with zero resources or extra perks on their site. Obviously, the latter is rather boring when there are so many companies offering so much more out there. If your broker only offers the bare minimum, we highly recommend looking at other options so that you can benefit more from the trading experience.

Categories
Beginners Forex Education Forex Basics

The Ultimate Checklist for First-Time Forex Traders

Congratulations on your decision to become a forex trader! This self-made career path can really open the door to a lot of financial opportunities in your life and might even help you through retirement or hard times later on. You might have had some doubts when you started considering trading as an alternative way to make extra money, especially if you’ve heard the rumors that most traders fail, but we’re here with good news.

There are guaranteed ways to start off on the path to success, so long as you complete all the necessary steps BEFORE you actually open your very first trading account. If you follow along with our ultimate checklist, we can guarantee that you’ll start off on the right path with an advantage over other beginner traders. 

Start with Beginner Education

If you want to trade, you need to start by educating yourself, or else you won’t know what’s going on. Here’s a list of some of the first things you’ll need to know:

  • Terminology 
  • Factors that affect prices in the forex market and how the market works
  • Information about the different currency pairs and instruments
  • Forex trading sessions and hours
  • Leverage and margin
  • How to manage risk as a beginner
  • Tips for beginners
  • Trading psychology
  • Navigating a trading platform

Of course, there’s a lot more to know, but these are some of the first topics you’ll want to tackle as a beginner so that you can understand more complicated topics later on. If you don’t understand common trading terms like leverage, pip, or spread, then you will be lost once you move on. 

Fortunately, all of this information can be found on the internet for free. You can simply perform a quick Google search for “beginner trading topics” to get started, or head over to YouTube and type the same thing into the search bar if you’d prefer to watch educational videos. Once you think you have beginner education covered, we’d suggest taking some online quizzes to make sure you fully understood all of the content, then you’ll know you’re ready to move on.  

Move On to More Advanced Material

Once you understand beginner related content, you’ll be more prepared to learn about more complicated subjects without becoming frustrated. Here are a few examples of the kind of content you should be looking for:

  • Trading strategies
  • Candlestick patterns
  • Using indicators, signals, EAs
  • Fibonacci tools
  • Reading charts
  • Technical and fundamental analysis

Once again, there’s a lot to learn here, and you’ll want to pay extra attention to content that teaches you how to develop and manage a trading strategy. Reading articles or books that have been written by expert traders is a great way to learn, as you might be able to find trading tips that inspire you. Also, be sure to research multiple types of trading styles and strategies so that you’ll be more knowledgeable when it’s time to develop your trading plan. 

Choose a Forex Broker

At this point, you need to find a broker. This isn’t a decision that should be made with haste, as your choice will affect your entire trading experience. You should know that there are hundreds of options out there, but each broker wasn’t created equally. Here are some things to research and consider when it comes to choosing the broker that is best for you:

  • Deposit minimums and associated account types
  • Fees and charges (spread, commissions, withdrawal fees, inactivity charges, etc.)
  • Available assets (currency pairs, commodities, stocks, cryptocurrency, etc.)
  • Available trading platforms
  • Customer service (hours and contact methods)
  • Extra perks like bonuses and promotions
  • Access to educational resources 
  • Regulation status

It’s a good idea to compare some of your favorite options and always lean towards regulated brokers to keep yourself safe in the event that your broker was to go out of business. One of the best ways to get an idea of whether a broker is trustworthy is to read user reviews online, but make sure these are coming from other websites besides your broker and take some of the bad reviews with a grain of salt, as some traders may blame the broker when they lost money at their own fault. If you can’t find any reviews online, you’re probably looking at a less established broker or possibly a scammer. 

Develop a Trading Plan

One of the biggest beginner mistakes is opening a trading account with no plan. If you don’t know when, why, or what you want to trade, then you’ll be making random moves that don’t make much sense. Fortunately, you should know a lot about different types of trading plans and strategies from step 2, but you might need to do a little more research as you work to develop your plan. This is what your plan will need to cover:

  • How often you will be trading (part-time, full-time, etc.)
  • Rules for entering and exiting trades
  • Factors you’ll look at when deciding to make a trade
  • Goals you want to meet
  • The types of instruments you want to trade
  • How much money you’re willing to invest and risk on each trade
  • Steps you’ll take to limit losses

It’s crucial to ensure that your time schedule will fit with your trading plan. Some plans require a lot more time in front of the computer screen, while others will allow you to remain less active. Remember that you’re setting yourself up for failure if you try to set a plan that requires you to trade during times when you may not be able to or if your plan is too complex for your skill level. Often times, the simplest plans produce the best results. 

Practice on a Demo Account

At this point, you’re almost ready to open your first trading account! You’ve learned beginner and intermediate content, chosen a forex broker and developed a comprehensive trading plan. You’re probably feeling eager to get started, but you don’t want to skip out on using a demo account. This is the most hands-on tool you’ll have used so far and will help you to gauge your preparedness for trading on a real account. 

You’ll want to start by opening a free demo account through your chosen broker’s website (Almost every forex broker offers this option). This will allow you to practice trading under the broker’s current conditions, become more familiar with navigating their trading platform and tools, and most importantly, to test out your trading plan with no financial risk. 

As you practice on your demo account, you should keep a record of each trade just as if you were using a live account. Check for any issues that might need to be addressed so that you can tweak your strategy to perfection before you put any money on the line. Once you have a consistently profitable strategy that works, you can move on with confidence. 

Open Your Trading Account

Congratulations! Once you reach this point, you’ve done everything you need to ensure that you’re starting off on the right path. Your broker will likely ask you for proof of identity and proof of address documents, so you’ll want to be sure to have these handy. Most people simply use a copy of their driver’s license and a utility bill for this step. 

Of course, you should never stop pursuing a trading education along the way, and be sure to keep a detailed trading journal to keep a good record of your profits/losses. Now, get out there and open your first trading account!

Categories
Beginners Forex Education Forex Basics

These Small Changes Will Make a Huge Difference in Your Profits

It’s no secret that every single forex trader wants to make as much money as possible, otherwise, what’s the point? Even if you’re already bringing in consistent profits, you might be surprised to learn that there are some very simple changes you can make to put more money in your pocket. If you’re a beginner, this could even be the difference between having a positive or negative profit ratio. Would you put in the effort to make the difference? 

Change #1: Use a Simple Trading System

It might seem like more complicated trading plans bring in more money. After all, these plans seemingly account for more factors and are more technical, so it’s easy to think that they’re better. In reality, simplicity is key to making consistent profits and avoiding all that unnecessary confusion. If you know what you’re doing, you’ll be less stressed and you won’t have to spend as much time in front of your computer screen, so this is definitely a win-win for everyone. If you’re currently using an overcomplicated plan, do yourself a favor and switch to a simpler version.

Change #2: Trade During the Best Times

Did you know that there are certain times when it’s better to trade? The best trading times occur whenever sessions overlap and things tend to heat up towards the middle of the week. Mondays and Friday evenings are slow, and nobody wants to trade on the weekends, so you should give yourself the much needed time off when there aren’t good trading opportunities. Other times to avoid trading? Major holidays and whenever big news is expected to be released. If you trade during the best times and avoid the worst ones, you’ll be able to profit more efficiently without making the mistake of trading in more volatile market environments. 

Change #3: Check Your Broker’s Costs

Whether you recently signed up with a broker or you’ve been using the same one for years, it’s a good idea to go back and check out their rates, then compare them with a few other options. You might find that switching to a new broker will save you a ton of money, plus, several new companies have probably opened up since you opened that old trading account. Say your broker charges a 5% withdrawal fee for withdrawing via card but you’re able to switch to a broker with no withdrawal fees. Or perhaps you could save 0.5% or more on the spread or commission charges. At the end of the day, these small changes will really add up and leave you with more of your money. Another added bonus is that your new broker may offer some extra perks like a deposit bonus that will add to your money when you switch over. 

Change #4: Limit the Pairs you Trade With

Some traders like to trade a variety of assets, which can be profitable, but it might be more helpful to stick with around three pairs so that you don’t have to keep up with as many factors affecting prices across different markets. If you’re able to focus more clearly on what you’re trading, your profits are bound to increase as you’ll avoid missing out on important news or becoming overwhelmed. 

Change #5: Make Smarter Leverage Choices

The more leverage you use, the more money you might make…or lose. If you’re looking to increase your profits, now is a good time to consider the leverage you’ve been using and to think about your profits. If you’ve been losing money, you might want to lower the leverage you’re using, as this will lower the amount of losses you take from losing trades. On the other hand, those that are making consistent profits might want to increase their leverage slightly, as these traders are more likely to benefit from doing so. Every now and then, you can increase your leverage in increments as long as your profits stay consistent. 

Change #6: Be Patient

Some traders have a difficult time sitting around without entering trades, especially after some time has passed. However, you shouldn’t trade for the sake of doing so. If the market isn’t throwing out any good opportunities, simply don’t trade. Otherwise, you run the risk of losing money on a trade when you could have opted not to trade at all. In times like these, remember to stick to your trading plan and know that the market will give you more opportunities later on. 

Change #7: Never Stop Learning

It’s easy to start thinking you know everything you need to once you’ve been trading for a while with consistent profits; however, you should never stop seeking out more trading knowledge. Learning about trading psychology and reading about different or new kinds of strategies are a couple of examples of topics you can look up, but you shouldn’t stop there. The more you know, the more chance you’ll have to increase your profits, and you might even find a better trading system along the way.

Categories
Beginners Forex Education Forex Basics

Top 7 Biggest and Most Embarrassing Forex Blunders

When it comes to forex trading, there are a few factors that can make or break your career. Beginners are very prone to making these mistakes, but even intermediate level traders are susceptible to some of the biggest forex blunders out there. If you’re looking to increase your profit margin while dodging unavoidable mistakes, keep reading. 

Forex Blunder #1: Blindly Trading

When we say refer to blind trading, we mean trading without the proper knowledge needed to make informed decisions. This could stem from opening a trading account too soon without learning all of the components that actually go into trading or failing to keep up with important news and other factors that can affect the forex market. Traders that don’t know what’s happening with the forex market are bound to feel confused and fall behind their colleagues that keep up with world events. Fortunately, you can avoid this mistake by ensuring that you have a proper education and by keeping up with forex news through an economic calendar and other means of acquiring that important information. 

Forex Blunder #2: Risking too Much

From the beginning, forex traders need to work out how much money they can afford to invest in their trading account. From there, it’s crucial to manage that money by deciding how much you are willing to risk on each individual trade and by taking measures to limit your risk, like placing a stop loss. One of the biggest mistakes you can make involves using high leverage amounts, failing to use risk management precautions, and simply risking too much money on each trade. Together, these mistakes can blow through your account balance and leave you feeling defeated, which might even cause you to give up on trading for good. One simple tip is to stick with an average leverage (many experts use a 1:100 ratio) and to risk about 1% of your account balance on each trade. 

Forex Blunder #3: Emotional Trading

Forex trading is often compared to a rollercoaster ride because of the range of emotions that traders can go through. Feelings of anger, frustration, doubt of one’s ability to be a good trader, and panic over the loss of funds are common, especially with traders that don’t have a lot of experience. This leads to irrational decisions and issues like revenge trading, which involves risking too much in an attempt to gain back funds that were lost quickly. Since traders are already feeling the adrenaline and aren’t thinking clearly, these types of measures usually end with even more losses. If this sounds familiar, some of the best tips are to lower the amount you’re risking on each trade so that losses won’t have as much of an impact on you, stick with your trading plan, and take a break when you need to calm down. 

Forex Blunder #4: Choosing the Wrong Broker

There is an overwhelming number of forex brokers out there, each of which offers its own unique conditions and perks. Some traders might not realize just how much goes into choosing a broker, as you need to compare account types, funding methods and fees, leverage options, tradable assets, and more. If you choose the first broker that pops up on your search engine, there’s a good chance that you could have found an option that was better suited for your needs with a little research. It’s also important to know that your choice affects the amount of your profits that wind up in your pocket at the end of the day once broker and withdrawal fees are subtracted.  

Forex Blunder #5: Not Having a Trading Plan

What types of instruments will you trade? How much money will you risk? What type of evidence are you looking for before you enter a trade? At what point do you plan to exit trades? All of these questions and more are addressed in a trading plan. Without one, you’re essentially just making random moves and trading all over the place. Even if you make money with some of these random trades, your history will be so inconsistent that it will be impossible to pin down what is causing you to win or lose money. Meanwhile, trading with an organized plan helps you to know exactly what you’re looking for and you will be able to figure out what is and isn’t working much more easily. 

Forex Blunder #6: No Trading Journal

We mentioned that you might need to review your trading plan at some point in the event that you start losing money or whenever you’re looking to increase your profits. The best way to do this is by keeping a trading journal where you detail each trade you make, why you entered the trade when you did, how much money you made or lost, and etc. Whenever you need to go back and check on something, your journal will serve as a map that shows how well your plan is working, point out issues, and show you what you should keep doing the same. Unfortunately, many beginners never start a journal at all and feel lost when they start losing money because they can’t figure out the problem. Others might start a journal and abandon it after a few entries because they don’t realize how helpful it can be. 

Forex Blunder #7: Setting Unrealistic Goals

When you first opened your trading account, you probably had an idea of how much money you wanted to make. Traders that set realistic goals and accomplish them feel a huge sense of satisfaction, however, having the opposite experience only sets traders up for disappointment. When it comes to trading goals, this is why it is important to have a realistic outlook based on your experience and the amount of money you’ve invested. Rather than focusing on the exact amount of money you want to make in a period of time, you can set short-term and long-term goals that focus on improving your abilities as a trader. You’ll see an increase in profits in return, and you’ll also avoid beating yourself up because you couldn’t meet the unreachable expectations you placed on yourself.

Categories
Beginners Forex Education Forex Basics

Tips for Avoiding Forex Burnout

Has forex trading left you feeling tired, frustrated, and just plain burnt out lately? Some might be under the impression that trading is an easy job. After all, you just sit in front of your computer, make a few trades, and sit back while the money comes in, right? True forex traders know that this is far from the truth. The reality is that trading can actually become quite stressful once the constant risk, undesirable market conditions, overtrading, pressures to succeed, and failing to meet your own expectations all set in. Add a string of losses to the mixture and you’ll find yourself with one stressed out trader. 

Experiencing mental burnout is something that nobody wants to deal with, but it can be especially harmful when it happens to forex traders. This is because we need to be awake and alert so that we can make the smartest financial decisions. Once we become tired and frustrated, our cloudy head might lead us to overlook things, enter trades we shouldn’t or leave trades open too long, overtrade, practice revenge trading when we’re losing – you get the picture. Think about the things you were told when it was time to take a test in grammar school. You were advised to get plenty of rest, eat a big breakfast, and show up feeling energized to get the best results. Are you treating yourself the same way as a forex trader

Step 1: Recognizing Burnout

Mental burnout is not something that will hit you right off the bat once you start trading. In fact, you might be able to go a long time without experiencing it. This is because it is something that sets in over time once a variety of stressful factors start to pile up on you. Did you know that some of the signs that you’re burnt out can even be physical, rather than only mental? If you want to avoid becoming a total trading zombie, you can start by recognizing the signs and symptoms of mental burnout:

  • You’ve started to deviate from your trading plan and no longer care about your trading rules.
  • You’re experiencing headaches or other physical symptoms like muscle aches or generally just feeling sick with no real explanation.
  • You’re falling into a depression that leaves you tired and unmotivated.
  • You become frustrated at everyone and everything for no real reason, both in everyday life and while trading.
  • You begin to doubt your abilities as a forex trader, even though you’ve been successful before.
  • You just don’t care much about trading anymore and you consider giving up despite past success.

If this sounds familiar, you are probably already dealing with mental burnout as a forex trader. Fortunately, there are some things you can do to get your head back in the game and to overcome those debilitating symptoms.

Step 2:  Take Yourself Back to the Beginning

Do you remember how you felt when you opened your very first trading account? Were you an eager, starry-eyed beginner that had big plans and dreams? Try to take yourself back to those feelings. Think of the way you felt the first time you entered a trade, made money, and when you made your first withdrawal. Over time, trading probably became a habit and you no longer felt the excitement from those little things, but this doesn’t mean that you can’t renew your happiness with trading. Every dollar made is worth celebrating, so give yourself some credit for coming so far and try to soak in the small victories. 

Step 3: Find Other Traders to Confide In

If you’re dealing with trading burnout alone, it only makes it that much more overwhelming. Having other traders to talk to who can say they’ve also been there and give you advice about how they overcame it is a great way to remind yourself that you aren’t the only trader that has experienced this. It can also be reassuring to talk with someone else that has experienced physical symptoms from the stress because you may feel more validated. If you confirm that this is happening to others and they’ve overcome it, then you may feel more confident that you can pull yourself out of the slump too.

If you personally know someone that trades, you should ask them if they’d like to get together and become trading buddies. Don’t worry if you don’t know anyone in person because there are online forums and communities designed just for this purpose. You shouldn’t have an issue finding one (or more) traders that relate to the way your feeling and your trading style. You can probably even find a more experienced trader that will also give you great advice that goes above and beyond dealing with trading burnout. 

Step 4: Relax and Refresh

Whenever you’re dealing with stress from forex trading or anything else going on in your life, the best thing to do is take some time for yourself to unwind. Of course, this looks different for everyone. Some of us would prefer to sleep in or take a nap, relax on the couch, and maybe watch a movie. Others might be more into exercising or partaking in yoga or meditational activities. Sometimes, a night out can really do the trick, so consider treating yourself to a nice dinner, heading to the movies, or doing anything else you find fun. The key is to find something that you really enjoy doing and to do it often enough to keep yourself calm. If you start to feel stressed, simply take a break from trading, unwind, and come back with a clear head and zero frustration. It might seem unproductive to stop trading, but you will find that you get better results because you won’t be making trading decisions out of sheer frustration. 

Categories
Forex Basics Forex Daily Topic

The Trading Log: Key Component for a Pro Trader

At forex.academy, we understand that a trading record is a decisive component to be successful in Forex. That’s why we took the time to create a free trading log on an Excel Spreadsheet. It was designed to present all the needed information at a glance. Here we present its guide.

The Stats Section

The top of the spreadsheet shows the Main statistics of your trading record. 

Total net P/L: The net profits after the trading costs. You can set an average cost in the bottom right cell named “LOT Costs”. If you enter the lot cost, the sheet will compute every trade cost by multiplying it by the actual lots of the trade. Of course, you can set it manually on every trade with the exact costs your broker charged.

Gross P/L: The total profit without costs.

Total R won. R is the measure of your risk. The “R multiple” column converts the net profit into a ratio Net Profit/$Risk. R is a measure of the profit/loss for every dollar risked.  This helps you plan your objectives and calculate the risk needed to achieve them. For example, if you find that you are making 20R per month and plan to earn 3000$ monthly, you will need to risk $3000/20 = $150 on every trade.

% Winners: The winner percent figure.

% Losers: The percent of losers

AVG P/L per Trade: The average dollar won/lost. It is the Total net won/lost divided by the number of trades.

Avg % loss on losers: The average percent capital lost on losing trades.

Avg % profit on winners: The average percent capital won on winning trades.

Expectancy: A measure of what you can expect to gain in the next trade for every dollar risked. The example shown is 0.79, which means you can expect to earn $79 every time you trade if your risk is $100.

Expectancy’s Standard Dev: A statistical measure of the variability of the expectancy figure. You can expect that 95% of  Expectancy’s values are plus and minus two stdev from 0.79.

#winners: The number of winners.

#losers: the number of losers.

Hours Spent: this is a manual input of your time spent in trading.

P/L per hour: It will compute your profit per hour spent in trading.

Net Profits: These are the net profits on winning trades.

Net Losses: The losses on losing trades.

% Gains on account: The total sum of the percent gained on winning trades.

% Losses: The sum of the percent lost on losing trades.

Reward:risk: The average reward/risk of your trades.

LOT Costs: This is a manual entry for the average costs per lot your broker charges you.

Running Balance: The initial capital ( Cell B17) plus the total net P/L amount (on closed trades).  Please note that this balance does not take into account open trades.

Total costs: The sum of the cost of spreads and commissions of your trades. This parameter will help you understand how much of your money goes to your broker. It could be handy if you want to negotiate rebates or shift your business to another cheaper broker.

The trades

The cells in columns with a yellow heading are for you to enter manually. The rest were filled with the needed formulas to get the stats figures, so there is no need to touch them when trading.

The exception is The Trade Cost column. This column is also filled with the formula to approximate your costs if you supply the average cost per lot in the B12 cell. But you can also manually enter your true cost.

Entering a Trade

We have designed the sheet so that you have total control over your risk on every trade. Therefore, we should begin to enter the desired percent risk for the coming trade. Let’s say 1%.  With this figure, the sheet computes the dollar-risk based on your current account balance.

After entering the entry price and stop-loss level, it will also compute the recommended trade size in lots. You should then input the real lot number in the following column, “Real lots.” It was designed that way because we must take into account several open trades at the same time.

How the sheet computes the risk of the next trade?

When allowing several simultaneous trades, the model chosen to compute risk is to subtract the risk of the previous open trades to the available capital. That way, you risk a percent of the money not currently at risk.  But when you close a trade and record it, the sheet recalculates all cells. Thus, the sheet needs the “Real Lots” column, so the record does not get modified every time an open trade is closed.

After the trader decides the percent of his account to risk on a trade, the real lot size, and the entry and stop-loss point are set, the sheet also shows the leverage of that trade. That way, all the risk information is displayed. Please, beware that a risk of 3 percent corresponds with a leverage of 10, and that leverages over 10:1 should be avoided, especially when several trades are open on major currency pairs.

JPY pairs

The column JPY? was added for the right calculation of JPY pairs’ values, as these pairs’ pip value is in the second decimal place instead of in the fourth decimal. You should input Y on these pairs to get the right trade size, profit, and leverage. Please, note that pip values on non-USD quote currencies are approximate.

Entry and exit date and time

These are optional entries, but it is advisable to register these values to get observations about the average time on a trade and the average time for a trade to hit stop-loss and take-profit levels.

Trading results

Once the Exit price has been entered, the sheet displays the profit/loss (P/L), Net P/L, %P/L and R multiple of the trade. This will help assess essential parameters, such as the average Trade profit, the usual percent obtained, and the real reward/risk values (R), which is also the profit on a one-dollar risk.

Trade quality

Alexander Elder recommends traders value the quality of the trade based on one objective parameter: The percentage of the available profit you could obtain from the trade.

One possible scale is 0: less than 10%, 1: from 10 to 25%, 2: from 25, to 50%, 3: from 50 to 75% 4: from 75 to 90%  5: over 90%. This will help you see if, over time, you’re improving, maintain, or decrease the quality of your trades. It will reveal the best times of the session to trade.

MAE/MFE

These are to annotate the Maximum adverse excursion and Maximum Favorable excursion. These two parameters are important clues to improve stop-loss and take-profit levels. It will help you also analyze if your entries are too early or too late and take measures to correct them. For more on this subject, please read an MAE/MFE explanation here.

Summarizing

We hope this spreadsheet will help you be a better trader. Please modify and complete it at will for your purposes.  This trading log is not perfect, but it is a starting point.

Categories
Beginners Forex Education Forex Basics

Myfxbook: The Definitive Guide

What is Myfxbook? How do I create an account? What can I find on this platform? What should I do if I want to be a provider of trading signals? In this guide, you will find everything relative to how to handle Myfxbook, a platform that has given a turn to social trading.

More than 100 online Forex brokers offer the services of the Myfxbook platform. It is a tool that has gone beyond social trading to become a provider of services related to the world of world-class short-term financial investments.

But what is the novelty of this platform? Until now, social trading communities had simply been confined to a particular broker. Thanks to Myfxbook, the community is growing. It is a multi-broker platform, with which signal services, Experts Advisors, programmers, PAMM accounts, copy trading, and more.

This feature, together with the number of parallel services it offers and the reliability it provides to copy traders, has made Myfxbook one of the reference trading pages. Through these paragraphs, you will discover how this platform works and what it can do for you.

What is Myfxbook?

This website was born as a trading account analysis system, a community created for traders in which transparency in the operation of those service providers took precedence. In turn, making the learning process easier for other less-experienced traders. Myfxbook is one of the first websites dedicated to social trading.

As we can see, everyone wins: expert traders can make profits by being followed (in the form of commissions) and novice traders can develop their knowledge thanks to the monitoring of other traders. A collaborative project where ideas are shared.

The main difference between Myfxbook and other platforms, also dedicated to social trading, is its ability to work with different intermediaries and the security it brings by showing real and verified results.

Myfxbook puts at your disposal the following benefits:

-Analyze your trading systems automatically and in one place, without the need for manual calculations.

-You can observe (and copy) other traders to discover how they do their trading and, in this way, develop your skills.

-You can share your system and your results to find customers and become a fund manager.

-Likewise, you will also have access to the audited results of other traders in cases where you need to hire some social trading service (copy trader, signal system, PAMM accounts, etc.).

-You will have the possibility to buy and sell trading systems.

-You will be part of a community, Myfxbook is a great social network dedicated to trading.

-You’ll access a wealth of news and market information services to make trading decisions.

How Do I Access Myfxbook?

The first step is to register in Myfxbook (in myfxbook.com), this page is available in Spanish. To be able to use the platform you need to have a trading account with one of the more than 100 brokers that are compatible with its use and allow you to participate in its program. The trading platforms supported are:

The process is very easy, what you should do is fill out the form that you will find on the left side of the home screen, after accessing the page (myfxbook.com). You must define:

  • Your username
  • A password
  • Provide an email address

They’ll send you an email from which you must confirm the newly created account and you can now access Myfxbook by logging in (i.e., entering your username and password).

After this first step, the next step is to connect your trading account with Myfxbook. This option is available in the “Portfolio” menu, by pressing the “Add Account” button. You can also do this task in “Settings” in the user menu (where your username appears).

With MetaTrader, you can link your account through Publisher or by downloading an Expert Advisor (EA) specially designed for this purpose. After that, you will have to install the app, after it is downloaded. It will ask you to select a specific account from the chosen platform (it is advisable to select an account that already has a history).

The following steps are done from the trading platform itself, we can anticipate that, in MetaTrader 4, these tasks are performed from the “Options” command, within the “Tools” menu.

In the “Activity” menu of Myfxbook (top of the screen), you will be notified that your trading account has been linked to your Myfxbook account.

Once your trading account is linked to the platform, in the “Portfolio” menu you can get a view of your trading statistics and associated account information. This will be of great use to carry out a thorough analysis of your profitability, your percentage of winning trades, drawdown, and other variables that you will have to take care of as a trader. Especially if you have multiple accounts, so you can monitor your entire operation.

Prepare Your Profile

On the right side of the screen, at the top, at the aforementioned user menu, you have everything to leave your profile ready in this new social network of which you are already part.

Your profile is your cover letter to other traders and will be essential if you intend to initiate or participate in any conversation, debate, ask questions, or market any social trading service.

To fill your profile you must select the “Edit Profile” submenu or enter “Settings” and select the “Profile” tab (both options are located within your user menu at the top right of the screen, where your name appears).

What Can You Find in Myfxbook?

It is necessary to say that some of these services are available without the need to create an account in Myfxbook, that is, without the need for previous registration on the page. However, once created, you will have full access to all the utilities that this platform has. As we have seen, the process of creating an account is simple and fast: it is worth taking this step. Among the menus of Myfxbook, you will find all this amount of tools that we show you below, menu to menu.

This first menu is related to the latest market news, very useful to keep you up to date. The menu is composed of:

News: access to the latest news related to the Forex market.

Economic Calendar: economic publications that move currencies.

Recent Posts: Last threads in the Myfxbook forum.

Forex Calculators: In this command, you have available a series of calculators designed to make your trading easier (for example, pips calculator, margin calculator, Fibonacci, etc.).

Portfolio: From this menu, you can link your accounts and access their statistics. In short, you can analyze your trading to improve it.

Then we’ll see how we can perform this data public so that other traders can assess if it is advisable to contract some product or service that is intended to offer.

Autotrade: The Autotrade menu is the corresponding menu for replicating operations. When a trader is a signal provider and carries out a trade, Myfxbook sends a signal to all those trading accounts that follow it (that is, the accounts of its customers). In this way, the same position as the aforementioned supplier is opened or closed.

The menu consists of a submenu with the frequently asked questions of this service (FAQs), the help submenu, and a simulator that we can test the strategy of any provider before making the decision to follow it.

Soon we will see the requirements to be able to be a signal provider in Myfxbook.

Charts: Charts are one of the tools that Myfxbook provides to members of its community. Any user can create an analysis and post it so that other traders can view and comment on it. It is possible to see the most followed, the most recent, or the most commented charts (among others). Everything depends on the specific option you choose in the submenu.

You also have the opportunity to create your own analyses and share them in this social network, in this way analysis is shared and learned through shared opinions. It will also help you boost your personal brand as a trader.

Markets: In this section, we will find several sub-menus with information about the Forex market useful for making trading decisions:

Technical Analysis Patterns: shows the different Japanese candle patterns that follow each other in major currency pairs. The temporality in which they appear and the implications they have (bullish or bearish) can be defined. You can also comment (and see the corresponding comments).

Volatility: you can visualize the volatility, in pips, of the main currency pairs (in several seasons).

Heat Map: Do you want to know which are the hottest currencies? Here you are indicated the strongest and weakest in different time periods.

Correlation: The relationship between currency pairs is important to avoid overexposure to the risk of a particular currency pair. There are also trading strategies based on correlation. In this command, you can have it under control.

COT (Traders’ Commitments) Data: data obtained from Commodity Futures Trading and in which you can read the positions of the participants of the forex futures market, to get an idea of what they think.

Liquidity: You can look at the estimates of trading activity in the market in this subsection.

Systems: This menu is only visible to all users who have created an account in Myfxbook. In it, you will have the opportunity to visualize the different trading systems and strategies of those users who have made this information public, in order to be followed. Through the statistics provided by the platform (and that we have already seen in a previous image).

Also, you have the option to follow any of them that you find interesting, by clicking on the button “Autotrade”. You can have direct access to the most popular ones by selecting the corresponding submenu. You can also compare different trading systems.

Remember that one of the advantages that Myfxbook provides is the transparency and reliability in the statistics of the different historical data, the accounts are audited at the time they are linked to this platform.

Community: This is a communication space, where you will be able to ask, share, debate, and learn about any topic of trading in the Forex market.

Beyond the general forum, this section is composed of several sub-menus, in which you can see conversations regarding:

  • New traders
  • Experienced traders
  • Investment systems
  • Strategies
  • Programmers
  • Suggestion box
  • Contests
  • Technical patterns
  • A feeling of community

Any user can open a new discussion thread. Being proactive in this aspect improves our visibility within the platform and, therefore, we will be more transparent and reliable traders. In addition, it is a good meeting point to share ideas and market products and/or services related to currency trading.

Comments: In this section, you can access, in addition to participating directly, various comments, reviews, ratings, etc. about:

  • Brokers
  • Automatic systems
  • Signal providers
  • VPS services
  • Programming services of EAs
  • PAMM services
  • Reimbursement programs
  • Trading platforms

As we can see, once again, Myfxbook stands out for the transparency it offers. On this occasion, the users of the platform are the judges of any service offered. There is nothing like seeing the ratings and reviews to check the reliability of any product or service.

Competitive examinations: As its name suggests, this menu will help us to be aware of the different trading contests organized by different sponsors. We will be able to see, also, the contests that at that time may be active.

If we access the menu, we will have the relevant data to decide whether or not we are interested in participating in a trading contest. Data such as:

  • Sponsor
  • Number of competitors
  • Whether it’s a demo or real
  • Awards
  • Winners (if the contest is over)
  • Start and end dates of the competition
  • Statistical analysis of the operations carried out

Without a doubt, it is another advantage of Myfxbook: to have under control the trading contests and all the information about them.

Brokers: This section is a comparative table of the different online financial intermediaries trading in the currency market. From it, we can see, compare, analyze, and decide which broker is the most interesting for our operation, depending on our trading style and our preferences. We will be able to undertake a follow-up of the spreads they offer, swap commissions, as well as other costs and promotions they can offer us.

Hiring a broker adapted to your needs is essential to develop a good trade. Through this menu you can see all the information of interest in this sense: one more reason to have Myfxbook among your favorite trading pages.

How Can I Become a Trading Service Provider in Myfxbook?

As mentioned above, Myfxbook gives you the opportunity to promote yourself as a trader, offer a range of services, and develop all your skills in the currency market. However, to market any social trading service you need to make public the statistics of at least one of the accounts you have linked to this platform.

Myfxbook stands out for offering a real, verified, and transparent information of the different traders, so, to have the opportunity to be a top trader, you must make a good operation and this contributes to the professionalization and regulation of this professional activity.

To make your trading account data public, simply click on the “Invitations” tab (in the “Settings” or “Portfolio” menu) and mark all options as public.

Trading providers earn a 0.5 pip commission on each account subscribed for each winning trade. If you are content to be a successful trader, you must first learn and take experience in the markets. In this respect, Myfxbook will also be of great help to you thanks to the information and possibility of communication it offers.

To access the Autotrade service and to be a signal provider, the following requirements must be met:

-Only real accounts with MetaTrader 4, verified and connected to Myfxbook, are accepted.

-The account must credit a minimum balance of USD 1,000.

-You must have a history of at least three months and at least 100 operations.

-The historical drawdown must be less than 50%.

-The historical return should be greater than 10% and greater than the historical drawdown.

-You must have earned an average of 3 pips per operation.

-As for the duration of operations, the average will be more than 5 minutes.

-The system should not use any martingale technique.

In other words, it is necessary to demonstrate some value in trading in order to be a provider of social trading services. It is another feature that defines Myfxbook as a secure and reliable platform.

The Reality of Myfxbook

The reality of this platform is that you will find many martingale systems and hidden scams. Most of them may look very promising but then they have a big fall and they get out of the way. In the end, most are hidden under a username.

So, all that being said, in my case I take advantage of this tool to get statistics from my accounts and little else. You can access profitable systems and they can give you an idea of how they work if you’re smart looking at some of their statistics, but remember that it’s a mine of martingale and grid systems, which we already know ends up blowing up accounts. So far all this guidance on this well-known tool within currency trading and trading systems, forex brokers.

Categories
Forex Basics

The Most Interesting Myths and Truths About Forex Trading

There are many myths about Forex that need to be left behind well in the past and here we will tell you exactly what these are because in reality there are many more myths than truths. In this article, we tell you everything! So let’s dive into the good, the bad, and the ugly. 

The myths about Forex that circulate in the network do damage to this type of investment. Currency speculation has always been, especially in recent years, the victim of false news and rumors. In order to succeed in speculating or investing with this trade, investors need to leave behind these myths that affect the image of Forex and its expectations.

Forex gives monthly returns or interest.

Another false myth. As in the equity market, the return generated by the person investing in this product depends on the movements of the currencies the investor buys. In other words, profitability only depends on the fluctuation of prices, something that also happens with other investments (raw materials or stock markets, for example).

Forex is a pyramid.

Forex is an electronically controlled market where all foreign exchange transactions are carried out worldwide. Its usefulness is incalculable for international trade since it is in this place where the currency needed to pay or collect money from import or export products is bought or sold.

Forex makes you rich in a few hours.

Another falsehood. While it is true that anyone can access this market and accumulate strong profits in a short period of time, to invest in Forex and accumulate profits it is recommended to form in markets. That is, it is advisable to take a course to invest in a stock. With this course, we will be able to strengthen the knowledge we have and, on the other hand, learn more about Forex techniques.

Giving up our job to invest in Forex.

Investing in Forex does not mean giving up our job. We can test trading as a part-time job, at least entry, but never leave other sources of income and always learning from investment or currency speculation and receiving continuous training.

The intermediaries only want to con you.

From a few illegal experiences, many people think that the brokers who allow us to speculate on Forex are scammers. We must be clear that there are corrupt companies, but they are a clear minority. Forex is the largest market in the world, which has existed for many years.

There are two fundamental points that show why intermediaries don’t want to rip you off:

-Current licensing and regulation make it impossible for intermediaries to commit fraudulent activities. If you have opened an account with an authorized broker, the current regulations will protect your capital.

-Brokers earn money with the buy or sell spread. That is, they do not need to steal the investor’s capital to make a profit.

On Forex, you bet.

Forex trading is speculative, but to a certain extent: it is not a casino. The strategies and tools in this market are like those in the stock market. Forex traders have different trades, but they don’t work randomly. If an operation is carried out as if in a casino, this is the responsibility of each investor only.

I can make profits whenever I want if the Forex market is open 24 hours a day.

Again, you will not be sitting in front of your computer throughout the day to be able to operate for 24-hours. I would need automated trading software to take advantage of the 24-hour trading market.

I need to accurately predict the outcome of the market to succeed in Forex.

Unfortunately, there is no scientific method for us to have the knowledge of what is going to happen in advance on the market with 100% certainty. There would be no foreign exchange market if the exact exchange rates could be known in advance. Trading will never be an activity of certainties, but of probabilities. New traders tend to think in terms of odds, and this is one of the first things they learn and risk-reward relationships.

Many times you tend to think that you need to use an extremely complex strategy in order to succeed in Forex trading. It’s a popular myth that many online marketers want to create. The main requirement for success in Forex is self-discipline and money management. There are many traders who make profits consistently with simpler and older strategies.

A large amount of initial capital is required for Forex earnings.

A large capital investment will not help you with Forex. You don’t need much money to diversify into currencies and you can’t move exchange rates with your orders (you would need billions of dollars to do that). You can actually trade in forex with very little capital because forex trades are almost always leveraged with the money of the broker.

It’s a risky market.

One could say that it is a market with a lot of risks. The ability to leverage, or buy up to 100 times as much money as you have for investment and high volatility, or the sheer speed with which prices change every minute, can mean big losses to the investor.

The advice for those who decide to enter this market is to know the market before entering it, look for a broker’s platform, if someone will advise you to look well at the experience and set and respect the limits of loss per operation, by day, by week and by month.

Is completely legal.

Although it is not regulated, anyone can legally access Forex through a simple mechanism, looking for a broker. The recommendation, in this case, is to invest in a recognized broker, with trajectory, and use the formal channels to deposit the money to the account in which you will trade.

There Is No need to fear the Forex market.

Once we have established that it is possible to predict the market, why are there so many traders who, understanding and agreeing with this point, have trouble exploiting the market profitably? It is here that psychology is most useful. The trader should not be scared or afraid of not being able to win the market, as the market is changing, nor should he fall into despair because the trade he is waiting for right now seems unworkable, etc. The list of psychological problems that can be identified is quite long, and almost everyone identifies with fear or fear.

“Don’t be afraid of financial markets, just respect.”

The experience and knowledge of how they work will gradually turn us into traders with better mental control and more prepared to face any eventuality in our operation with total normality.

You can earn a lot, YES, but can you lose a lot? YES.

For example, if you open a new account with $10,000 in a broker that allows you to buy currency for 30 times more than you have in your account. Now buy 200.000 euros at a price of US$1.20 per euro, which is investing in total is US$240,000.

In this situation two possible scenarios may occur:

  1. The price of the euro grows to US$1.30. In that scenario, it would earn US$10,000, because it obtained a profit of US$0.1 for each euro it bought.
  2. The price of the euro drops to US$1.15. This is the side of history that no investor likes, but that usually happens to starters. In this scenario, I’d lose $5,000. And if you do this several times in the day, trying to make up for what you lost, chances are your account will be zero at the end.

The scenario that is illustrated, is something that usually happens on a daily basis in the Forex market. Then we already know the importance of learning and knowing how to choose an appropriate strategy to limit losses once a trade has taken place.

Categories
Forex Basics

Let’s Discuss the Ethics of the Modern Investor

I recently read in a forum an interesting debate about whether there are more speculators or citizens in the economic forums, that just by the way of putting it as if the speculators were not also citizens already makes clear certain prejudices that many people have… and this gives rise to a small article to clarify many prejudices, and also apparent contradictions and other very interesting topics.

Ethical Investments

This is a tremendously difficult concept to start with, as we each have our ethics, and I could consider as unethical investments companies like McDonald’s (unhealthy food), Mediaset (TV-trash) or Bankia (preferential and others), whereas for you it may be Inditex (for its factories in Asia) or Shell (pollution), and for another, it may be Uber (management more than doubtful) or Indra (armament)… and in the same way, several companies also have programs such as the university scholarships of Santander or programs to help children with autism of Inditex that are “the other side of the coin”, and that we can not forget when valuing ethically a company.

But even if we agree that a certain “X” company is morally reprehensible, should we avoid investing in unethical companies? As a general rule, NO.

Our money goes to the company itself only when it sells us the shares: when it goes public, or when it makes a capital increase. In these cases, it IS justified not to invest in unethical companies, so as not to finance things that are bad for society. But when you buy shares on the stock exchange, your money does not go to the company, but to another investor who sells them to you, and refusing to buy them will not put any pressure on the company to act properly.

And in fact, in general, I’m in favor of investing in unpleasant companies… let’s say you’re going to set up a business, what do you prefer, a bar, a funeral home or a children’s ballpark? Very few people prefer the funeral home, so it is to be expected that there is less competition and is, therefore, a more profitable business… don’t you think that more bars and ballparks close than funeral homes? Well… and for the same reason, as a disgruntled investor, I know it’s probably going to be more profitable to invest in oil than in renewables.

Does This Mean I Have No Ethics?

No, what it means is that I believe that wanting to make “ethical investments” is of no use, and it is also unprofitable. And since it will not serve to improve society to choose one stock or another, it would be foolish not to look for the most profitable!

However, we do have it in our hands to put pressure on companies to be socially responsible, but not as investors, but as consumers and customers of such companies. If I don’t like the brainwashing they do on certain TV networks, I don’t go through them zapping and I stay half an hour watching it and then in the bar I comment with colleagues everything they said there “although I don’t normally see it”, but I limit zapping to the ones I like or I put on movies or series… which will not prevent me from buying shares in that chain: the flies eat shit, and in Europe, the flies are not in danger of extinction! If I invest in it and others are giving them an audience, who is the culprit here that they emit garbage? It’s certainly not me…

What Comes First? Ethics or Investment?

We can focus the debate a little more with a very good question:

“Those of you who run banks, for example, would you approve the introduction of a bank fee for every empty floor they have on Balance?”

This starts from the premise that a tax on banks for empty flats is good for society and bad for the bank… and this is a very interesting issue because again people assume certain things that are worth thinking about before stating them simply:

It is good for society that banks rent or sell their empty flats: They would certainly lower the prices of both flats and rents; and I think this is good, in general, although those who have been saving to have a flat with whose rent to supplement retirement might not agree…

Harming the banks will not harm society: If, for example, there were talk of asking for compensation from the banks that issued preferential loans, I would agree that this would not harm society, but quite the contrary: the message is sent that the payer, And it keeps them from being tempted to rip off their clients again. But what we are talking about here is a measure that will make it more difficult to recover delinquent credit, just like “stop evictions” and so on… and if the bank has difficulty recovering delinquent credit, what will it do? For the same thing that anyone would do: 1.- give less credits, and 2.- give them more expensive, with what the average citizen will have much more difficult to have in property a decent housing. And frankly, I think that’s bad for society.

Applying penalties retroactively will not harm society: If something characterizes a banana republic is that where I said one thing now I say the other; in Argentina or Venezuela, this is our daily bread. In truly democratic and serious countries, when a standard has been set, it is, and so it must be, here too; creating instability by changing the rules of the game on the fly causes far greater harm than applying a bad rule. If we think it is good to penalize empty foreclosed flats, let us apply a tax, but let it apply to new mortgages that are given and not to old ones, and let us respect the law… or we will have a better law but it will be wet paper.

And after this huge detour, I go back to the essence of the question: I think that banning advertising for unhealthy foods would be good for society, and I would be glad that such a measure would apply even if I had shares in McDonald’s and Mediaset, who would be harmed by it. So I guess I count as a citizen…

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Beginners Forex Education Forex Basics

Why We Love Forex Trading (And Think You Should, Too!)

Forex and trading are becoming an ever-popular activity. For many, it is just about making a little extra money on the side, while for others, it is about the enjoyment that they get out of it. There are a lot of ups and downs when it comes to trading, but overall, those that trade it for a hobby seem to love it. There are plenty of reasons to love it too, from the ups, the profits, the thrills, and more, so we are going to be going through some of the reasons why we love trading and the reasons why you probably will too.

The Incredible Highs

For many people, anything to do with money can give you some serious highs when you win. This is exactly the same when it comes to Forex. When you are winning, or on a winning streak, you feel like you’re on top of the world, you feel like you are on cloud nine and pretty much everything is great. If You have been trading forex for a long time, you will have experienced this a number of times, there isn’t a feeling like it and that is one of the reasons why we love it so much, that feeling is created by something that you have done, which makes it all the better.

The Adrenaline

There are many things in life that can fill us with adrenaline. When we are in charge of our money, and that money is actually doing something, that is one of those situations. When you see the markets moving up and down and your balance moving with it, you will gain a huge boost of adrenaline. This is true for when the markets are going both up and down, you want to win, you don’t want to lose. Whichever way it is moving, it will be playing with your emotions and filling you with adrenaline. It is basically what keeps bringing us back. There are, of course, some traders that are more methodical. They don’t get the emotions that the majority of us do. Instead, they are there simply for the money, but the majority, when things are going really well or really badly, will be filled with this emotion and the feeling of adrenaline going through their veins.

The Money

Let’s be completely honest, we are only trading because we can make some extra money, and the majority of other people are in the same boat. In fact, we have not yet met a single trader that is not taking part in trading for anything other than the money that can be made. Each month we withdraw a little bit of money that we can use to help us live a better life, to pay off debts, or to simply be a little better off. If the money was not there and you did not get any benefit, we certainly would not be trading. So we love trading for the simple fact that it allows us to make a bit of extra money each month.

You Don’t Need A Lot to Start

When I first started out with my trading, we started with about $100, which was great. It meant that we didn’t need to break the bank in order to start our trading journey, this made it very accessible for us. These days you can start with even less, some going as low as $10 or even $1. Of course, you will find it hard to be profitable with such a small amount, but it just shows that anyone can get started as you do not need thousands in order to join in. That is such a great thing for forex when you compare it to other things like stocks where you need a lot more in order to make any sort of decent money.

It’s Highly Accessible

Trading forex can be done from pretty much anywhere. We use our desktop computers, our laptops, and even our mobile phones to do it. The fact that you can use pretty much any platform that you want to access your accounts and the markets means that no matter where we are, we will be able to trade and potentially make money. It also means that far more people can get involved, many do not have a computer or a laptop, but they do have a mobile phone that is compatible with the trading platforms, meaning that they can now trade. A few years back when these platforms were not as easily accessible and so many people just couldn’t trade, that is simply not the fact now and those that missed out can quite easily get involved.

You Can Do It From Home

Normally, when we want to make a little bit of extra money, it will mean that you need to go out and get a second job, and you need to leave the house to do it. This is thankfully not the case with trading forex, you can do that from home, from in your underwear with no need to leave the house at all. This means that there is no commuting, no traffic, no other people annoying you on the way to work.

There Is No Boss

When we trade, we trade for ourselves, we are in charge of what we are doing and there is no one to tell us what to do. We have no boss, something that so many people strive for and something that a lot of people get into trading for. It will take a while to get to this stage, you need to be consistently profitable before you even think about leaving your job, but once you do, you will have all the freedom to trade when you want rather than when you are told to, freedom to choose.

Helps Us Manage Our Risks

When it comes to money, a lot of people are worried about losing it, this is why we use so much risk management when we trade and for good reasons too. The good thing is, that the cautious approach that we put into our trading we can take out into the real world too. Looking at more information before investing any money, before making decisions that will affect our lives. It helps us to better analyse the decisions that we are going to be taking.

It’s Always Changing

The forex markets are always changing, and due to that, we are very rarely bored. There are, of course, slow times when the markets are not really doing anything and our strategy is not relevant, those are times to take breaks. The rest of the time it is always evolving, due to this there are always things for us to do and for that reason, we simply do not get bored with it. We can always develop our own knowledge, we can always try and trade something else, either way, we are simply not bored by the forex and trading markets.

Those are some of the reasons why we simply love trading and the forex markets. It gives us so much freedom, teaches us a lot, and allows us to take part in it pretty much anywhere in the world. There is nothing quite like it, we love it and we are sure that you most likely will too.

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Beginners Forex Education Forex Basics

The Most Pervasive Problems in Forex (#2 Might Surprise You)

From the outside, trading and forex look like a pretty green field, full of people getting rich, and everything going really well. When we delve deeper into it though and actually start trading ourselves, we find that there are a number of different problems, problems that a lot of traders experience on a daily basis, problems that pretty much every trader goes through. These problems are easy to get into and easy to fall into their pitfalls, but there are ways to avoid them or to at least reduce the effects that they have on your trading and your accounts. Today we are going to be looking at some of the most common problems that many traders go through.

1) A Lack of Training

Anyone that trades without knowledge and experience can easily blow an account, or even multiple accounts if they do not learn from their experiences. Trading without the required knowledge and without any idea of what it is that you are doing is a recipe for disaster, yet it is something that a lot of people do and will continue to do so. When we trade without proper learning we are pretty much just guessing at what the markets may do. In fact, it could even be compared to simple gambling.

If you are planning on trading, then you need to put in the time and effort that it takes to learn the basics. Learn about different strategies, learn about risk management, and learn about how the markets move and are affected by things like the news. If you do these basic things, you will have a much better understanding of what it is that you are doing which will help you to develop a  better trading ability and also to keep your accounts and capital safe from silly mistakes of simply not knowing what you are doing.

2) Using Emotions

We all have emotions. They are powerful things, they can make us happy, sad, or even do stupid things, and when we trade without our motions we are often doing just that, stupid things. Two of the most powerful yet damaging emotions that we can have when trading are greed and overconfidence. They often come from different events, greed when we lose and overconfidence when we profit. They both, however, have the same effect on us, as they cause us to throw out our trading strategies and our risk management and then they cause us to place trades that we know we shouldn’t. Either too large for our account or without doing the proper analysis, this can lead to larger losses or even a completely blown account.

If we get to a point where we can feel our emotions coming up or even getting the better of us, it is important that we do something about it. It can be as simple as walking away, taking a step back from your trading terminal, and going out, having something to eat, just doing something that has nothing to do with trading at all. This is the best way to clear your mind. You could even try talking to someone about it, often we can get more rational by talking to someone else rather than just thinking about it ourselves. Once you have cleared your mind you will come back refreshed, with a clear view of what is going on, allowing you to better follow your plans and to place much better trades again.

3) News Events

News events happen. There are calendars out there that will tell you what news events are coming up as well as the potential impact that they could have on the markets and which currencies it may affect. What they do not tell you though, is about the sneaky news events that are not on there. They come out of the blue, maybe something has just been developed or announced or there is a natural disaster somewhere in the world. These sorts of events cannot be predicted, they cannot be on any calendar and when they do happen, they often cause the markets to jump about in very unpredictable ways. They can be a real pain, as you could have just done a lot of analysis, put on the perfect trade, and then BANG, an unknown news event comes out and the markets fly in the wrong direction. We have all experienced it and most traders will in the future too, there is nothing we can do about it but to manage the trades that are affected.

4) Unpredictable Results

We mentioned the news events just above, but there is another side to them, even the news events on the economic calendars can play with us. If there is a positive result then the expected movement in the markets would be up. However, there are times when the markets just do not see to follow what the results would expect. Even things like the Non-Farms Payroll news events, which is historically one of the ones that can influence the markets the most can go a bit funny. There have been times where it is very positive, yet the markets moved down. For those following the news, a buy would have been placed but then the markets went down which would cause a loss as well as a lot of confusion, so the markets simply cannot be predicted even when all the indicators are there.

5) Dodgy Brokers

Unfortunately, when it comes to money, any form of money, there will be people out there that will do what they can to get as much money out of you as they can. From the outside they look like any other broker, offering some great features and trading conditions, but once you have deposited your money, it is very unlikely that you will be able to take any of it out. They will take it and even try and convince you to put more in, either way, your money will be gone. You can try and avoid this happening to you by checking reviews, going for the bigger named brokers, or by using brokers that you know people who already use them and have successfully withdrawn money from them. Choosing the right broker is important, so make sure you take your time to choose the right one for you.

Those are just some of the issues that many traders experience. In fact, many of them every single trader will experience at one point or another in their trading career. We can do what we can to try and reduce the effects that they are going to have on us and our accounts, but for many of them they are out of cour control and we will experience them at one point or another. There are of course a lot of other problems out there, but with every single problem, there will be solutions, or at least a way of reducing the impact that they are having on our trades and accounts.

Categories
Forex Basics

Tips For Keeping A Truly Helpful Forex Trading Journal

This is being written with the assumption you have looked into forex trading before, and in doing so have come across the term ‘trading journal’ previously. There is no way that you wouldn’t have because any website that you go to that is related to FX trading would have told you to get one, and to get one right from the start. That is just how important these diaries of sorts actually are. 

They may have told you to ensure that you have one, but they may not have actually explained to you what a trading journal actually is or what the best practices are when keeping one. So that is what we are going to do now. We are going to look at the purpose of the journal, reasons why you should keep one, and then a few tips to help you keep one properly to ensure that you have included all the important bits of information that could help you improve and analyse yourself as a trader.

What Is a Trading Journal? 

What exactly is a trading journal? A trading journal is basically what it sounds like, it is something where you are writing down everything that you are doing. It is full of your trading activities. You can then use it to learn quite a bit about how you are trading, the things that you are doing right, the things that you are doing wrong, what you need to work on and how you can make your strategies better.

Many people feel that there is actually no need for a trading journal, yet 99% of all successful traders will certainly have one in one form or another. The main point behind having a journal is the idea that you are never perfect, there is always room for improvement within all aspects of your trading. If you do not feel that you can still improve, then a journal will not help you, but you will also stagnate in your trading results. Keeping a journal can be one of the best and most beneficial decisions you can make as a trader.

The first reason to keep trading journals is that it will help you to find the trading style that suits you the most. When first starting out you are probably not aware of the majority of trading styles, you most likely would have seen one or two, or seen multiple different ones but not recognised them as different trading styles. It is a good idea to try out each one, but simply trying them will not really help you, unless of course, you are keeping a journal.

There are a few different things to think about. Try to jot down the reason you entered the market, the time you entered it, the price at which you entered it, how long you held the position open, the reason you exited the market, and how much you made or lost. With just those bits of information, you will be able to work out which style of trading you are naturally accustomed to. If you hold trades for days or weeks, then maybe swing trading is right for you. If you hold them for an hour and take small profits, then scalping may be the style for you. Include as much information that is right for you, at this stage we are trying to work out the right style for you.

The trading journal can be used to find your trading style, it can also be used to help improve the style that you are currently using. You need to remember that trading and learning to trade is a never ending process, you will never know everything, even the most successful traders are still learning new things, they are still keeping their journal as it is that journal that lets them know what it is that they need to learn next or that they are slacking behind in. One of the things that a trading journal is best at is letting you know exactly how consistent you are. It will tell you whether you are following your rules, whether you are entering and exiting the markets at the right times in line with the style that you are using. 

Having said that, even if you are keeping a trading journal, it will be completely useless if you are not analysing it properly. Set yourself a bit of time out from trading where you can properly go over the journal. Do this at least once a month, as this timeframe seems to work for a lot of traders. Many traders find it beneficial to put their trades into a spreadsheet, this way you can easily see the similarities between those trades that have been successful and those that have not been.

The trading journal is there to let you know whether your strategy is working, which parts are and which parts are not. By looking through your results, you are able to see which variables within our trading are causing you issues, they may even be habits. These are the things that you can then work on getting rid of and you can also see the variables that are working well, allowing you to enhance them further. If you are not tracking your trades with a trading journal, you will have no idea what it is that you are doing well or not well. You won’t even be able to work out your overall pips and profit and losses. It will also help you to hone your risk management.

So we now know how to use the journal and what it is that we are looking for when using it, but simply having one is not always enough, so we are going to be looking at some tips that you can use when creating your journal, different things that you should be doing to ensure that your journal will actually help you and that you are putting in the right sort of information.

Be Honest

It’s human nature to try and make yourself look as good as possible, but you need to remember that the only person that is going to be seeing your trading journal is you. So you need to be honest when putting your data in, this is the only way that it is going to be at all beneficial to you. What this means is that you need to ensure that you are recording your data completely accurately, down to the pip, do not fool yourself by making it look like you did better than you did. Having said that, you should also not underestimate what you are doing or what you have achieved, you may actually be doing slightly better than you think. By being honest, it is the only way that you can actually be sure of what you are doing well and what you need to work on. Don’t forget that it is not only about the numbers, you also need to be looking at the reasons behind your trades, both entering and exiting them. Each trader is different which is why you need to be honest with yourself, as you will certainly need to improve on aspects that others do not and vise versa.

Don’t Worry If You Miss and Entry

You won’t always remember to use your journal. There will be times when you are so excited to trade or simply do not have time, so there will be times that you forget to use it entirely. Don’t punish yourself simply because you forgot it, it happens to everyone at one point or another. Just try to move on and try to remind yourself to use it next time. If you do forget, there is still some information that you can jot down, things like the entry and exit prices. Of course, the info won’t be as accurate as doing it at the time, but it will still be better than simply having a blank trade. Whatever you do, do not consider leaving the journal entirely simply because you forgot to put in a trade or two, you still need the journal if you want to carry on improving.

Track Your Emotions

Emotions are a huge thing when it comes to trading and they can actually make and break a strategy in certain situations. Many people though do not feel the need to record them, but they actually have quite a large role in how successful you will become. Knowing whether you are successful or not during different motions could help you to decide in the future when to trade or not. If when you are feeling a bit down you constantly lose trades, then try not to trade in the future when feeling that same way. The same goes for when you are successful. Try and trade more during times when you feel the same way.

Remember to Analyse the Markets

Most people when filling in their journal will only put down what it is that they have done and the decisions that they have made. The markets sometimes behave in quite strange ways, you may have done everything exactly right but then the markets decide to go a little crazy. This isn’t your fault, but your journal will make it look like you did something wrong, so be sure to jot down when it is the markets behaving badly rather than yourself. This would also mean including any important or major events that could have caused the markets to move, things like political speeches or natural disasters should be included within your journal.

So those are some of the hints that should help you complete your journal. It seems like a lot of work, and when you are just starting out it will be, but you will get used to doing it, it will end up taking seconds to fill out instead of minutes. Get used to making one, get used to analysis and referring back to it and it will make your trading journey a much smoother and a much more successful one.

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Beginners Forex Education Forex Basics

Forex Pros Do These Things (And You Should Too!)

We forex traders like to look up to those that have come before us and been successful. We do this for a number of reasons. These individuals have been successful, so they clearly know what they are doing. This means that they are great people to learn from. They also have the experience to know what is a good thing to do and what is a not so good thing to do. They are the people that we wish to copy, to learn from, and to be just like. So we are going to be looking at some of the things that professional traders do in order to be successful, and why you should be doing the same things.

Sticking to the Plan

One of the things that any professional or even successful trader will tell you is that you need to stick to the plan. There is no point in having a trading plan in place if you are not going to be following it. Even breaking the plan in a tiny way is basically meaning that you are placing bad trades. They will tell you that you need to stick to it and you need to stay disciplined. That is one of the most important steps to becoming a successful trader.

Don’t Be Afraid to Take Risks

Contrary to the above, a lot of traders will tell you that if you want to be successful then you will need to take risks. This does not, however, mean that you should be placing more trades or placing larger trades. Those are bad risks and will put your account in danger each time you do it. Instead, the sort of risks that they are referring to are things like taking trades on an asset that you do not usually trade. So if you are an avid EURUSD trader but a great trade opportunity comes up on the GBPUSD pair, then there is no harm in trading that pair, as long as the entry requirements and all other aspects of your trading plan are still being met. Do not limit yourself to that one pair.

Remove Your Limits

We mentioned this briefly in the above point, but you need to be able to remove or at least expand your limits. Sticking to a single currency pair or asset will greatly limit your opportunities to trade and to be profitable. It is, of course, not a good idea to expand too much. Going from one pair to 100 will put your account in danger as you cannot monitor or fully understand all 100 currencies. Instead, expand slowly, moving from one to two, then two to three, and so forth. You are still expanding your limits, giving yourself more opportunities, but you are doing it in a controlled manner which is exactly what you need to be doing.

Get Into the Right Mindset

Being in the right mindset is vital. In fact, it can make or break a trader. If you believe that you can trade, if you are able to control your emotions, if you know when to take breaks then you can keep your mind in the right place and remain free from the distractions that are around you. If you have the right attitude towards your trading then things like sticking to your trading plan and staying disciplined will be a lot more straightforward and easier to maintain. Those that are not in it with the right attitude will soon find themselves making bad trades or making losses, so it is important that you get the right mindset and then try to remain there.

Know When to Take Breaks

A good trader will not spend all day everyday in front of the monitor. If they did, they would simply burn out and start to make losses. A good trader will know when they need to take breaks. This can be a break when your emotions are starting to build up, or you are simply getting a little tired. There is no wrong time to take a break. Getting out and clearing your mind is paramount to being a successful trader. If you don’t take breaks you will burnout and make losses. So learn when to take them, and even set designated times for breaks if you need to.

Risk Control

Risk control is the foundation of any forex trading strategy. If you do not have a risk management plan in place then you’re setting yourself up for failure. You need to create a risk management plan that has a number of different elements to it. These will include your risk to reward ratio, your stop loss size, take profit sizes, trade sizes and more. These are the foundation of your trading plan, you need to have them in place before you make a trade. Any professional trader will simply laugh at you if you are trading without a plan in place.

Not Always Trading

You do not always need to trade. You do not need to trade every minute or even every day. In fact, some professional traders will go a whole week without putting on a trade. This is often due to the fact that the markets are not in the right condition for the strategy that they wish to trade. They will only trade when the conditions are right and this is something that you should be doing. Do not trade just for the sake of trading. Trade when the setup is actually there. If you trade outside of your strategy it is considered a bad trade, so having patience is key to sticking to this rule. Have patience and wait for the right trade to come and certainly don’t try to force it.

Not Focusing on Wins and Losses

Advertised all over the internet are those strategies that are promising you a 99% win rate. These are just not realistic and are playing on the strings of those that are there to simply make money, yet do not fully understand how forex or the markets actually work. Professional traders do not care about how many they win or how many they lose. They are simply interested in the returns. With a proper risk to reward ratio in place, you can be profitable with a 25% win rate. This is what the professionals focus on, being profitable no matter whether they win or lose. Due to this, they do not focus on whether their last time won or lost, and neither should you. Trust your strategy, trust your risk management and you will have a far less stressful time.

Professional forex traders are people that we look up to, yet they do not do anything different to what we should be doing. If we want to be successful traders then we need to mimic some of the things that the professionals are doing. It is easy to do, as they aren’t doing anything magical. There really isn’t an excuse that we can use that will make it acceptable to avoid following them. Stick to some of the actions that we have mentioned above and you will be on your own path to becoming a professional trader at some point in your career.

Categories
Beginners Forex Education Forex Basics

Even More Frequently Asked Forex Trading Questions Answered!

Our previous question and answer article was so popular that we decided to add another round! What follows are some of the most popular questions (and answers, of course) as asked by novice Forex traders. Education is the key to success, so read on!

Question #1: Why is Forex a Bad Idea?

There are some statistics out there that suggest that 70% or more of first-time traders fail. Those that come across these statistics are often scared away from trading because it seems like it just isn’t worth it. In reality, many of these traders walk away over simple problems that could have been avoided, like opening a trading account with zero knowledge of the market, not using risk-management precautions, and so on. As long as you start well-prepared, you’ll be among the traders that succeed. 

Question #2: Is Forex a Good Career?

There are certainly several benefits to becoming a trader, including flexible work hours, the ability to work from home, and being your own boss, just to name a few. Of course, you would need to invest a good chunk of money to make enough profit to be able to trade full-time. Those that still need another source of income often trade part-time. 

Question #3: Is Forex Trading Difficult to Learn?

While there is a lot of information you’ll need to know before you get started trading, we wouldn’t consider it to be difficult. You will need to invest some time into learning, but the good news is that all of this can be found on the internet for free. You can also avoid strategies or indicators that seem overly complicated and stick with things you understand. 

Question #4: How Do I Start Trading Forex with $100?

If you have at least $100 to invest, you’ll find a lot of brokers that are willing to let you open an account. Some brokers even waive a deposit requirement altogether or ask for as little as $10. You’ll simply need to shop around to find an option that offers an account with a $100 (or less) deposit minimum. 

Question #5: Can a Beginner Make Money Trading Forex?

Yes, but your chances of success depend on a few factors, most importantly that you start prepared and choose a trustworthy broker. Beginners are more prone to avoidable mistakes because they simply haven’t had the chance to learn from them. One of the best things you can do to avoid this is to spend time reading articles that provide tips and tricks specifically for beginners. You can also read about common beginner mistakes to ensure that you don’t follow the same path.

Question #6: Can you Start Trading Forex with No Money? 

Sort of. You could start out with a demo account, which is like a practice account that allows you to trade without using real money. If you’re a beginner, you should start with a demo anyways while you work on saving up an initial investment. If you want to open a live account with no money, it is possible if you can find a broker offering a bonus to new traders. However, it may be difficult to find such a bonus that doesn’t require you to deposit anything at all, and these offers often come and go periodically.

Question #7: What is the Best Currency to Invest in?

This depends on the times, but currently, many traders would recommend the British pound. In particular, the GBP/USD and EUR/GBP. Of course, you’ll want to ensure that this is still a smart investment in case the recommendation goes out of date. 

 

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Beginners Forex Education Forex Basics

What Sports Can Teach Us About Success In Forex

The forex world can seem very isolated as if it is something that you can do with skills that are only used with trading. However, there are a lot of other things that we do within our lives that can help us to be better traders and can even teach us a little about it. Some of these things are sports. These sports can help to give us an edge when it comes to trading, either through the development of much needed skills or to give us a better understanding of what we need to do as traders. Today we are going to be looking at some of the sports that could benefit us as traders and can give us a better understanding or skill set when it comes to being a forex trader.

Patience Is Key

When it comes to sports, it may not seem like patience plays an important role, but it certainly does. You cannot simply force a play if you are on the football field, a boxing ring, a hockey pitch, or even a tennis court. You cannot simply force a play, your opponent simply won’t allow it, otherwise it would be a pretty boring and one-sided affair. So instead you need to show patience, you need to be able to sit back, to observe what is going on in the game and to then strike only when the time is right, only when the opposition presents you with an opening. The same thing happens with trading and forex, you cannot force a trade. If you try to do this, the markets will simply punish you, it will take your trade and throw a large loss out at you. You need to wait for the right moment in sport, just as you need to wait for the right trading opportunity and conditions when it comes to putting on a trade. Simply don’t try to force a trade, just like you wouldn’t force a play in sport.

Accept Losses

Losses are a major part of trading, just like they are in sports. You won’t go through your career as a sportsman without a loss (apart from the very few in things like MMA) just like you won’t go through your trading career without a loss, so it is important that you learn to accept them. A loss is not the end of the world. The majority of sports teams that win their leagues or seasons, will suffer losses along the way, but those losses did not hold them back, and those losses did not stop them from being successful. We need to look at trading the same way. When we have a loss, as long as it is controlled and we only lose what we expected to lose, it will not prevent us from being successful. In fact, all the successful trades that you see out there regularly take losses. They are a small step back yes, but they are certainly not anything that you should be incredibly worried about or that will prevent you from being profitable and successful.

You Won’t Win All the Time

This is kind of in line with our previous points. A sports team needs to go into the next game with the idea that they can be beaten, as they cannot win every single game. If they go in with this mentality then they will be going in with their guard down and this is more often than not when they experience their losses. The same has to go for us with trading too. We need to know that the next trade is not a guaranteed win, and due to this we need to make sure that our risk management plans are in palace and that we are prepared for the possible loss. This will allow us to limit the damage that it will do. Sports teams cannot win every single game, it would be boring if they could, the same way that we cannot win every single trade. If we could, we wouldn’t need to trade as we would already have everything that we could ever want.

Look At Your Own Performance

More often than not you get sports people and teams looking at the wrong thing. They focus so much on the opposition that they completely forget to look at their own performances and neglect to work on what they need for themselves. The same thing can go for forex traders. They focus too much on what is happening in the markets or what other forex traders are doing rather than looking at their own trading performance. To look at what they have done and to analyse what they have done right and wrong, that is how you improve. However, if you are solely looking at the markets or other traders, you will not be able to work out what you need to work on or what you need to improve in order to be a better trader. So while looking at the opposition is important, you need to be able to look at your own performances from the start in order to become a better trader overall.

Work Smarter, Not Harder

When you watch your favourite sports team, what is one of the things that you notice when they do well and win? They may be working hard, but there is something else. They are most likely outsmarting the opposition. You can work as hard as you want, but if you are doing it in such a manner that also uses your brain, you will be able to pick the pockets and to make a difference. Both teams can work hard, but the one working smarter will have the advantage. This works the same for trading too. You can put as much time and effort in a you want, but if you do not put it in the right places or do not also think rather than just work, you will not make good trades and won’t be as profitable as you should be. Analyse what you are doing, work on your strengths, and take time to look at your performances to make sure that you can adapt things to get better results. Work hard, but also work smart, just like the most successful sports teams and players do.

Those are some of the things that are very similar between your favourite sports team or athletes and trading forex. You can learn a lot as they often do a lot of the same things or have the same things. Whether you want to be a successful trader or a successful sportsman, you will need to put in the effort. To have the right mindset, you analyse yourself and the opposition and play the game the way it is want to be played. Next time you watch your favourite sport, look at what the team is doing, you will most likely be able to take something away from it that you can then implement into your trading on the forex markets.

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Beginners Forex Education Forex Basics

The Truth About Why You’re Failing at Forex

There are a lot of traders out there. A lot of them are experienced and a lot of them are completely new. The one thing that the majority of them have with forex is that they are simply losing. Yes, they are losing money. You have probably seen the warning signs from pretty much any forex related site, stating that the majority of people that trade forex or any sort of CFD will lose money. So why do we still trade? It is because of the potential, but in order to achieve that potential, we are going to need to work out why it is that so many traders are failing when it comes to forex trading.

Some reasons are based on the individual, some through inexperienced and some through simply making mistakes, common mistakes that a lot of people make. We are going to be looking at some of the main reasons why people fail at forex trading.

Lack of Risk Management

Something that should have been cemented into your mind when you read any sort of trading course or help site is that you need to have a risk management plan in place. Yet it is something that a lot of traders still fail to do, and when you fail to do this, you are failing to trade properly. The risk management plan outlines a number of different things including trade sizes, stop loss distances, your risk to reward ratio, and more. It is paramount that this is in place, its sole purpose is to protect your account and to help you prevent yourself from making large losses. So we really don’t understand why people trade without one, either through lack of understanding or simply being too lazy to follow one. Get a risk management plan and stick to it, you simply cannot be successful without one and will fail if you don’t use it.

Not Using Stop Losses

Part of the risk management plan that we mentioned above is your stop losses. These are basically automatic stops that you can place on your trades. When the price of the markets move up or down and hit these levels then your account will automatically close. They are there to help protect you from bigger losses than you planned for, yet so many people refuse to use them. Again, this may be through simply not understanding their use, but for many. It is simply the fact that they do not want to and for this reason, they often lose their accounts. You need to have them set, every single trade needs to have one, no matter what your strategy is. If you are the sort of person that doesn’t set them and instead wants to manually watch your trades then we would suggest you rethink, these are hard stops, they protect you, use them. Otherwise, a single trade could be enough to blow an account, and it has happened many times in the past.

Trade Sizes Too Large

The size of the trade that you place relies on a number of things. It is decided based on your strategy as well as your current account size. If you place trades that are too large, then you are placing your account under an increased amount of risk, not something that you want to be doing. If you have an account size of $1,000 and place a trade size of 0.01 lots then you have a lot of room for movement. However, if you use your leverage to place a 1 lot trade, then it won’t take much movement in the markets to simply blow your account. You need to place your trade sizes responsibly, yes the larger the trade size the larger the potential profits, but the losses are also potentially larger. Stick to appropriate trade sizes and do not try to push them too far.

Overleveraging Your Account

Leverage is a wonderful thing. The brokers are basically lending you money to place trades larger than your account would otherwise be able to place. It is something that you should take advantage of, but unfortunately, a lot of people do not understand the darker side of leverage, the side that can cause you to simply blow your account. When you leverage your account, you will be placing larger trade sizes, and these give more profit potential but also more loss potential. We see $100 accounts with a leverage of 2000:1 placing 1 lot trade sizes. The markets only need to move a few points before the account will blow. You need to use your leverage appropriately, even with a leverage of 2000:1, you do not need to use it all with every single trade. Remember to follow your strategy and do not place trades too large just because you have the leverage to do it.

Quitting Too Early

People don’t like to lose, and that is understandable, but people also should not quit at the first hurdle. Many people from many walks of life have tried things, but do you think that any of the successful ones have quit after their first lesson or two? When you leave after your loss, you are basically accepting that you have lost that money and have walked away. It should be that you were never serious about trading and never serious about wanting to make the money that you are upset that you lost. You cannot quit too early, losses are a part of trading, just because you experienced one does not mean you are a failure or that you should give up. You need to keep going, even the best forex traders fail, but they are the best because they did not quit, and neither should you.

Being Distracted

Let’s be honest, it is easy to be distracted, and far easier in these modern days than it was before with all the different devices that we have to entertain us. Yet when we trade, we need to try and get rid of everything that we do not consider essential. Get rid of the TV in your trading room, get rid of your phone, get rid of anything that can distract you. We have made losses through distractions in the past, we are sure that the majority of traders have, but it is something that we can very easily deal with. Distractions will take your mind off your trading, placing wrong stop losses or take profits, trades too large, and so forth. You need to be focused when you trade, if not, mistakes will happen and you could ultimately fail if you experience too many of those mistakes.

Those are some of the reasons why people fail. If you make a loss to begin with, do not panic, that is pretty much expected of all new traders. In fact, if you are profitable in your first few months, either you are amazing or simply lucky. However each time you make a loss, take a look at the trade, try and work out why you lose, some you will be able to make adjustments, others may have just been unlucky, but use it as a learning experience. Doing this with each trade will enable you to be better, and the better you are, the less likely you are to fail.

Categories
Forex Basics

10 Incredibly Surprising Stats About Forex Trading

Both aspiring and expert forex traders can benefit from learning informative statistics about the forex market; however, you’ll often find a long list of boring facts and numbers when you look up the subject. We wanted our readers to have the chance to learn something new without feeling bored, so we scoured the internet to find the most surprising stats about the forex market out there. 

Statistic #1: Only 10% of forex traders succeed

Our first statistic is both depressing and surprising, but the good news is that it isn’t difficult to avoid becoming one of the failed traders we’re speaking of. The majority of this percentage is made up of aspiring traders that either opened a trading account without proper education or with unrealistic expectations. The misconception that forex trading is just a quick way to get rich draws in traders, then they give up quickly when they realize that they may have unrealistic expectations. 

Statistic #2: 51.6% of traders prefer Android smartphones over iPhones

People across the world have been arguing over whether Android or iPhone is better for more than a decade. We’ve heard a lot of arguments supporting the iPhone for all of its unique features; however, iPhone users might be surprised to hear that Android not only sells more phones than Apple, but the smartphone brand is also preferred by forex traders by approximately 14.3%. 

Statistic #3: A Whopping 90% of successful forex traders claim to use expert advisors

An expert advisor is a trading robot that executes trades on behalf of the trader. There are a lot of different types of EAs out there that enter and exit trades based on different principles. Although there are highly profitable trading robot options out there, many traders can be apprehensive about using them because they may fail and also because many EAs cost at least a few hundred dollars, meaning that you’ll be out of a decent chunk of money if you invest in an unprofitable robot. This is why it’s surprising to hear that so many successful traders actually depend on these services. 

Statistic #4: 27% of forex traders are aged between 18 to 32 years old

When you picture a forex trader, your mind might think of someone in their forties or fifties, or maybe even older. However, forex traders are getting started at much younger ages these days. Another 28% of forex traders are between 35 to 44 years old, meaning that younger traders make up more than half of the total forex traders in the world.  

Statistic #5: More than $5 trillion is traded in the forex market each day

It’s surprising enough to hear that an almost unheard of amount of money passes through the forex market every single day, but did you know that forex trading has more money flow through it than the stock market? It can be harder to find exact figures, but price points seem to fall more in the range of billions when you’re looking at the stock market, which gives forex a substantial lead. 

Statistic #6: 41% of all forex transactions occur in the United Kingdom

The most popular currency pair is the United States Dollar, so you might be shocked to learn that almost half of all forex transactions actually occur in the United Kingdom. If you’re wondering how many transactions take place in the United States, the answer is only about 19%. 

Statistic #7: Only 7% of traders have 10 or more years of experience

If you’re feeling like you’re at a disadvantage because you have little experience trading forex, you might be surprised to hear that traders with 1-3 years of experience make up 39% of forex traders, while another 31% have less than one year’s worth of experience. 

Statistic #8: 40% of forex traders choose to trade because they want to be their own boss

The number one reason why people decide to trade comes down to being their own boss, with almost half of all traders claiming this to be their top motivation, even more so than simply making money. Of course, forex does offer a lot of perks that you can’t find with a regular job.

Statistic #9: More than 45% of traders don’t spend money on learning resources

When you become a trader, you can find a lot of resources online for free, but some may believe that the resources you pay for would offer better educational opportunities. This isn’t necessarily the case, as nearly half of all forex traders opted not to pay a cent for any learning resources in the past year. 

Statistic #10: Approximately 89.1% of forex traders are men

You might have assumed that the number of male traders outweighs the number of female traders, but it’s surprising to hear just how much larger that percentage is. Of course, this is a great incentive for aspiring female traders to get out there and even out those stereotypes. 

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Forex Basics

You Need to Know These True Pros and Cons of Trading Forex

If you’ve ever considered becoming a forex trader, you have undoubtedly wondered if it would be a lucrative investment. Forex trading has helped many traders to amass a great deal of wealth, while it has caused others to wipe out their investments altogether. There are good and bad aspects to trading and considering those factors is important before deciding if trading is something that you should try.

Below, we will start positive with the plus sides of opening a trading account, before moving on to the cons.  

Pros

Flexibility

 Forex traders never have to worry about a stressful boss standing over their shoulder. They get to be their own boss, set their own hours, and work from anywhere with an internet connection. There’s no need to commute to work or even to change out of your pajamas if you don’t want to. You could work from anywhere in the world because traveling is no issue. This is one of the main reasons that many people dream about ditching their desk job to become a forex trader.

You can get a free education

Learning everything you need to be a successful forex trader is right at your fingertips, online for free. The internet is filled with articles, videos, and other resources that can be accessed free of charge. It’s true that this will take some effort on your part, but anyone can accomplish this with a little hard work and determination. Remember that investing time into your forex education is one of the most important things you can do before you get started trading. 

Leverage

Forex traders use leverage to increase the size of their trades. This gives traders with a smaller amount of capital the opportunity to make bigger profits. This is another one of forex trading’s main draws. 

It doesn’t take much to get started

You don’t need much to become a forex trader. Simply sign up with a broker from any device with a working internet connection, make a deposit, and you’re ready! Of course, you’ll want to be well-educated before you start, but even acquiring an education is free. Anyone that puts their mind to it can do this – it doesn’t require having a lot of money already or other difficult steps. 

Cons

You need a starting investment

Just to be clear – you can get started with as little as $5, but this isn’t going to leave much room for trading. Those who can afford to deposit a few thousand (or more) dollars are going to make more significant profits. If you’re just looking to make a little extra cash here and there that shouldn’t be a problem, but those that want to support themselves purely by forex trading need to have a larger investment to start with. Sadly, most of us don’t have $20,000 or in disposable income just so sitting in our bank accounts. This means that it will take a while to work up to making larger profits. 

Trading is risky

Trading involves investing your hard-earned money with no promises that you’re going to see any profits. Or even worse, you could lose it all. In a way, it involves the emotions one would feel with gambling, that trading decisions are less based on chance. Traders consider a variety of factors, like technical or fundamental analysis, which makes their decisions more founded. Still, at the end of the day, nobody can 100% predict the way the market is going to go. 

Leverage

We know that we listed leverage under the pros, but it can also be a con. Many beginners make the mistake of trading with too high of a leverage, which can quickly end your career. Leverage is often referred to as a double-edged sword because it can go both ways. If you’re a beginner, you don’t need to use the highest leverage your broker has available just because you can. Start small and work your way up, or leverage could be your downfall. 

Scammers

Scammers can be avoided if one knows what to look for, but many beginners do fall victim to shady brokerages. Whenever you’re looking at companies, check for regulation, and do further research before you give out any personal information or open an account. Some brokers have impossible withdrawal conditions, have customer support teams that you can rarely get ahold of, and so on. New brokers pop up every single day and only some of those options are legitimate. Choosing a forex broker is not a quick decision, choosing the right one takes thought and comparison.

The Bottom Line

Anyone that is interested can become a forex trader with some know-how and a small investment, but one really needs to consider the pros and cons first. You might make a lot of money, or you could lose everything you invest. The good news is that some of the downsides can be avoided. If you secure a good forex education, research your brokerage before opening an account, use a leverage that suits your skill level, and take risk-management steps, then you’ll be more likely to succeed.

The ultimate downside to Forex trading is the risk involved. Even if you’ve been practicing on a demo account, switching to a live account can feel overwhelming and you might not realize the way that your emotions, slippage, or other live conditions could affect you. If you are willing to put in the work to learn, then we fully recommend opening a trading account, just be sure that you’re investing from your disposable income, not from the money you need to live on or support your family. It can also help to adjust your expectations if you’re starting with a small investment.

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Forex Basics

Why It’s Easier to Succeed with Forex Than You Might Think

Those that decide to pursue forex trading fall into two categories: those that go on to make a profit and continue trading, and those that lose money and quit. While everyone hopes to become one of the traders that finds themselves on the path to success, many people simply don’t realize the simple factors that can make you or break you when it comes to trading in the forex market. First, you need to start by understanding the basics of forex trading. 

An Introduction to Forex Trading

The term forex refers to the foreign exchange market, which is an online global exchange market where people buy and sell different currencies. This includes regular people and professional traders, along with bigger entities like banks, hedge funds, brokers, specific companies, and other high-stakes investors. The value of the currency that people are buying and selling changes based on several different factors, including but not limited to:

  • Interest rates and inflation rates
  • The country’s current debt
  • Unemployment data
  • The housing market
  • Politics
  • Supply & demand
  • Economic factors 

As you can see, the value of each country’s currency is primarily affected by factors that are associated with money, government, and economic data. In order to make informed trading decisions, traders keep up with news events and look at economic calendars for updates that tell them a currency’s value may change. Other methods that are used to decide what currencies to trade include technical and fundamental analysis. 

What Is a Currency Pair?

A currency pair includes two different currencies that are paired against one another. For example, EUR/USD. This means that the (base currency) Euro is being traded against the (counter currency) United States Dollar. This is the most used pair in the world, but there are also several other major, minor, and exotic pairs that can be traded. 

  • Major currency pairs include EUR/USD, USD/JPY, GBP/USD, USD/CHF, AUD/USD, USD/CAD, GBP/EUR, EUR/CHF, EUR/JPY, and the NZD/USD. 
  • Minor currency pairs don’t include the United States Dollar. The most common examples are the British Pound (GBP), the Euro (EUR), and the Yen (JPY). 
  • Exotic currency pairs are made up of one major currency, traded against a currency from a developing country. The Turkish Lira (TRY) is one example of an exotic currency

Traders choose which currency pairs to buy or sell based on the change in price with the goal of making a profit. It’s generally considered the safest to trade major currency pairs, while exotic currency pairs can be more volatile and riskier to traders, so be sure to choose wisely. 

Must-Follow Tips for Success

Now that we’ve covered the basics of forex trading, it’s time to dish out some of the most helpful tips that can help you reach long-term success. Simply being aware of this information can help to ensure that you get started on the right foot without falling victim to common trading mistakes. 

  • Choose the Right Broker: There are a lot of choices out there, but you’ll need to do some research to make sure you’re working with a reputable broker. It’s also important to compare account types, fees, funding methods, and other important aspects before you open a trading account. Know that choosing a broker with fewer fees means that more of your profits will wind up in your pocket. 
  • Develop a good trading strategy: There are a lot of different strategies out there that appeal to all kinds of different traders. You’ll need to choose one that fits with your schedule and determine the reasons why you will enter trades, how much money you’re willing to risk, etc.
  • Don’t open an account until you’re ready: You shouldn’t rush to open a trading account until you understand the market and you’ve developed a solid trading plan. Some brokers will even charge you for inactivity if you deposit funds but choose to hold off on trading until you feel ready. Instead, open a demo account for practice. 
  • Try to limit distractions in the place where you plan to trade. Background noise, music, television, conversation, and other noises can cause you to lose your focus. Also, try turning off your phone or at least put it on silent if social media keeps pulling you away from your work.
  • Never risk more than you can afford to lose: Don’t get caught up using extremely high leverage options or risking large amounts on your trades in an effort to make a large profit quickly. It’s better to be safe than sorry when it comes to forex, especially if you’re a beginner. 
  • Don’t enter a trade if there isn’t a good reason to do so: Even if you haven’t entered any trades for the entire day, don’t enter one for the sake of doing it just because you’re bored or feeling unproductive. It’s better to choose not to trade at all with no money lost than it is to enter a trade and lose money you could have spared with patience. 
  • Never stop learning: Even once you have a good understanding of the forex market and strategies, there’s always more to know. Be sure to spend time reading about psychology-related trading material, checking out tips and tricks from other traders, watching educational videos, or anything else that helps to expand on your knowledge as a forex trader.  
  • Keep a trading journal: Trust us, you’re going to refer back to your trading journal more than once, so don’t take the lazy way out on this one. Be sure to log specific details about the trades you take and check on your progress from time to time. 
  • Don’t give up: If you start to lose money, don’t panic and start risking more to make up for it. The best way to handle this is to take a step back and look at your trading journal to see if you can figure out what’s going wrong. If you think your strategy is to blame, try making changes and testing on a demo account before you go back to your live account. Staying calm and figuring out the problem is what separates successful traders from the large percentage of those that give up.
Categories
Forex Basics

What You Don’t Know About Forex Regulation Could Hurt You

The forex (FX) market is the largest and most liquid market in the world, with around $5.3 billion traded daily. Day trading is the most common among Forex traders, but many of the investors depend on the creation of trading accounts and the execution of their transactions through Forex brokers.

There are hundreds of new Forex brokers and brokers constantly opening their doors to the public. This makes it difficult to choose the best broker and leaves traders at the mercy of the broker when we talk about transparency and honesty. The Forex market is huge, but regulation in this market is scarce and there is not a single global body to monitor it 24/7.

There are no specific statistics, but the amount of foreign exchange brokers and binary options working under a regulatory authority is minimal (estimated at 5 percent) and that gives many companies the opportunity to take advantage of their customers and engage in abusive practices without consequences.

The Risk of Non-regulation

For retail forex traders, the biggest disadvantage of most brokers’ lack of regulation of the forex market is illegal activity or outright fraud, as well as losses in a market increasingly dominated by speculative activity and large institutions. After a series of scams related to the forex market during the period 2001-2008, the CFTC to create a specific task force to address the problem, and stringent forex regulations were introduced several years later to protect retail currency traders.

Under the Commodity Trading Act (CEA), the CFTC assumed jurisdiction over leveraged Forex transactions offered to retail clients in the United States. This Act only allows regulated entities to act as counterparties for forex transactions with US retail clients and requires all online US forex brokers to be registered and comply with the strict financial rules applied by the National Futures Association (NFA).

At the institutional level, banks, which are responsible for 95 percent of daily foreign exchange trade, are heavily regulated. The United States Federal Reserve and the United States Department of the Treasury are very attentive to the regulation of the Forex industry and carefully monitor brokers for evidence of manipulation.

Forex Regulation: Why not?

Why is Forex regulation so important? The aim of regulation is to ensure fair and ethical business behaviour. Under the current regulatory contracts, all forex brokers, investment banks, and signal providers are obliged to trade in fair compliance with the regulations and regulations established by the forex regulators or their activities may be considered illegal. These bodies must be registered and authorised in the country where they operate, ensuring that quality control standards are met. Brokerage houses are subject to audits, reviews, and periodic evaluations that force them to maintain industry standards.

In addition, regulated Forex brokers must hold a sufficient amount of funds to be able to execute and complete foreign exchange contracts performed by their clients and also to return clients’ funds in the event of bankruptcy.

If a regulator finds a broker infringing its guidelines, it can use a wide range of powers – criminal, regulatory, and civil  – for the protection of consumers and take action against businesses or individuals that do not meet acceptable standards. It may publish notices that are important to ensure the transparency of the decision taken by the authority and to inform the public, thereby maximizing the deterrent effect of enforcement action.

Some regulators issue alerts about financial services companies and individuals, both abroad and in their local areas. Of course, there can be no guarantee that any action taken by a regulatory agency, such as the FCA in the United Kingdom, translates into a payment or return of funds or securities, even when formal disciplinary action is taken and sanctions are imposed.

Many of the measures taken by regulatory agencies against brokers covered by their authorities may also apply to unregulated brokers in similar situations by police and other enforcement agencies, but its mandate is limited and less likely to be imposed, leaving investors with few resources in the event of fraudulent practices.

Forex regulators work within their own jurisdictions but often work together to search for suspicious activities. In fact, in the European Union, a single Member State licence covers the whole continent.

Over the years, regulators around the world have sought to organize some kind of universal body of regulation. The Mifid (Markets in Financial Instruments) Directive was introduced in the United Kingdom in 2007 and has been the cornerstone of Europe’s financial regulation regime ever since.

The Mifid Regulation is being revised to improve the functioning of financial markets following the financial crisis and to strengthen investor protection. The changes entered into force on 3 January 2017, although discussions are under between the European Commission,  the Council of the European Union, and the European Parliament. The new legislation is called Mifid II and includes a renewed Mifid and a new Financial Instrument Markets Regulation (Mifir).

There are, however, powerful voices working to pressure the wholesale forex market to have a broad regulatory base. The Association of European Financial Markets (AFME), a body in the sector, has spoken out against the strict rules of MIFID II and has recently published a document highlighting “unforeseen consequences” that could lead to excessive regulation of the Forex sector that would not allow brokers to serve their traders comfortably.

Local Approaches

At present, there is still no uniform approach to the global level when it comes to this market. The regulatory industry continues to operate locally with each broker requesting regulation at a chosen location and some organizations being more active than others. In Japan, one of the most active retail foreign exchange markets in the world, the Financial Services Authority (FSA) oversees all markets, including retail trade. The FSA is proactive in regulating retail foreign exchange trading and has reduced several times the maximum leverage that can be used by retail currency traders in recent years. In the UK, where the FCA (formerly the FSA) is the main regulatory body, and in much of continental Europe there are very few limits to the level of leverage offered.

Cysec, the financial regulator of Cyprus, is part of the European Mifid regulation, but it has attracted a number of foreign companies who wish to take advantage of what is seen as light regulation and an easy way to obtain a licence without having to comply with the strict requirements imposed by other European financial regulators.

In Latin America, there is no regulatory agency, and traders are protected by the regulatory authority that regulates the broker, depending on the country from which the broker originates, for this reason, it is very important that if you are going to carry out trading in Latin America, do so only with a broker who is regulated by a globally recognised authority.

Currently, the lack of regulation of the institutional foreign exchange market continues to pose continuing risks for the retail investor, including increased currency volatility and discrepancies in available public information.

Despite the difficulty and cost of brokers to be under an authorized regulatory body, there are many worthwhile brokers who choose to do so and these have to be considered ahead of all others. Traders have a large selection of regulated brokers in their jurisdictions or in other countries and will also find the same features -and more- with regulated brokers as with unregulated brokers.