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Beginners Forex Education Forex Basics

How Can I Ensure Long-Term Success in Trading?

As a Forex trader, you will need to pay attention to important points in charts, adjust specific settings, manage your risk, and maximize your returns as a result. The intention here is to show how you can practice long-term sustainable and profitable trading regardless of your market of choice. We truly want you to have the best opportunity no matter how and when you started to trade for the first time, which is why we are delighted to close this topic with special tips that you can apply today. You will probably want to prepare your notebook and take notes so as not to forget any suggestions or ideas you may have.

What is the worst attitude for long-term success?

I need that money now, many people say. Unfortunately, with this degree of dependency on the result of your trading (i.e. the need to succeed now), you are limiting your vision quite a bit. With this point of view, you do not give yourself the chance to learn steadily and the learning curve is unrealistically steep. Since there is a need to debunk this myth of instant wealth, what you can do instead is set the grounds for trading in the way you will be thankful for in the future.

What is the right mindset for sustainable growth? 

You should find a way to always preserve a portion of your return and reinvest it so that this system starts running on its own. We call this buy and hold strategy that helps traders take steps that will always put the money back into their accounts. This is the one way you can feel secure about your finances down the line.

What if I don’t feel like allocating part of my earnings?

Changing perceptions and creating a new routine is a tough thing to do. Most people are afraid of changes, but the control you may think you have over your life and your finances now is false. If you just trade, you do not have a plan B. Even if you have a regular job and do trading on the side, don’t you feel like you can do more? We want you to do more and to succeed in an easy way, but this will require you to change your views about how money should be managed.

How do I reduce anxiety about making changes in how I perceive trading?

First of all, start playing offense and defense at the same time by not spending all the money you earn. What you never want to do is work hard for a few months and spend it in a matter of a few days or weeks. Reinvesting your money will help you relieve yourself and alleviate that sense of anxiety. If your worries come from the place of wanting to secure your finances in the long term, this is the way to go. The thing is, with this approach, you will never need to worry about individual trades because, even if something falls through, you will always have security. Whenever you enter the market, it is absolutely never too late if you have a buy and hold mentality.

What if I need the money now?

Well, first ask yourself the question of what is the sum that would make you happy. When you will take this money off your account is yours to decide, but you do need to have a clear idea of how much you need to make. If you generally just want to be rich, you are much better off applying the buy and hold strategy.

What are the essential trading rules?

Perfect your system first and then do everything to stop yourself from sabotaging it. This may sound easy, but it is actually one of the greatest hurdles in trading.

How do I start buying and holding?

You first need to have a plan that you will write down. Whatever situation you find yourself in, do not make any changes to it regardless of what is going on in the market. This means that you will not tweak the settings or change the take-profit point as you please even if it gets tough. The best part about this approach is that you will always have more opportunities to earn money trading and any losses will be opportunities for you to improve your system.

What is the best strategy for buying and holding?

In one of the previous articles, we talked about scaling out if you use a swing trading strategy. This is your best money management solution and a secure way to amass a fortune over time. As long as you don’t react impulsively, get suddenly triggered by some external factor, or make decisions based on your emotions, the money you take off the table and reinvest using the scaling out strategies will provide you with the things you need.

How do I differ from the rest?

You will be different if you design a thorough plan first. Then you will choose if you will be in the buyer’s or seller’s market and whether you will go long or short. Shorting may be more difficult in the stock market than with trading ETFs, gold, or commodities for example. You will strive to pick things that can have a limited downside and can hardly go down to zero, such as gold and oil or healthcare and energy stocks and ETFs. Forex traders should test their algorithms to perfection (backtesting, forward testing, and real money application as well) because this will help you outperform most investors and financial advisors. Opt for the monthly or the weekly chart for a more aggressive approach, rather than the daily one. While these are easy to apply, understand that just by scaling out and buying and holding, you are already way ahead of the majority

What are the two biggest pieces of advice you can give me?

Firstly, never let yourself be susceptible to the fear of missing out (FOMO) because there is an abundance of opportunities in every market, be it stocks or gold. You can push yourself sporadically in the investment scene, but must never let your emotions guide you while trading. Secondly, always and with whatever amount of money you have, start trading and investing as soon as possible. Make your plan and you will have that bright future of which you keep dreaming.

What is the best order of actions I could use to succeed as a trader?

Since this is the last article on the best position you have, we would like to share a form of a checklist you can return to any time you like.

Thank you for sharing this journey with us. Ensuring the best trading position is a really broad topic, but we strived to be as clear and to the point as possible. Consider reading additional articles on the topics that may be of interest to you because the more you know, the sooner you can apply and test. Finally, please also remember that the sooner you start buying and holding long-term, the better. And, once the shorter-term machine starts running, the world is yours

Good luck!

 

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Beginners Forex Education Forex Basics

How Many Times Per Day Do Professional Traders Trade?

The forex trading industry is known for 24-hour market access, flexible hours, and many other benefits, but many people avoid trading because they assume that they do not have enough time to dedicate to everything trading entails. Before you decide that your lifestyle simply won’t support a career as a forex trader, you should take a look at the three different types of professional traders we’ve outlined and the number of times each trade per day below. The answers just might surprise you!

Swing Traders

Swing traders typically place one or more trades each day and leave them open for a varying amount of time, from several hours to several days. This trading style is considered a short-term to medium-term investment and traders generally use technical analysis to find trading opportunities, sometimes in conjunction with fundamental analysis in order to analyze trends and other data about prices.  

While the exact amount of weekly trades that are put in depends on market conditions, this trading style is considered to be a lower maintenance option as traders can enter positions and then do nothing for longer periods of time. Of course, you’ll still have to keep an eye on important data in order to make smart trading decisions, so you’ll want to invest some time each day or week to take technical and possibly fundamental factors into consideration. 

High-Frequency Trading

As the name suggests, high-frequency traders enter quite a lot of trades per day, sometimes in the hundreds or thousands. It would be impossible for a human to do all of this manually, therefore, algorithms and computer systems are used, with quicker connections being required than those that are typically available to the average trader. This shouldn’t be confused with expert advisors, as these systems work differently. High-frequency trading is most commonly used by larger institutions, like hedge funds and banks. 

Home-based traders that want to practice high-frequency trading without having access to extra technical connections typically place around 20 trades per day manually. This style focuses on making small profits off each trade, which adds up over time. This trading style is best suited for traders that have more time on their hands, as it requires a lot more effort than swing trading. 

Investors

The pattern that investors follow involves holding onto the currency they are trading when it is in an uptrend for weeks or months at a time. In some cases, traders might even hang onto a currency for years! This is because currency pairs typically go through a cycle that lasts 2 to 3 years per trend and investors are looking to capitalize on those moves. 

This trading style requires more patience from the trader, as it can take a long time to reach maximum profitability before you should sell. On the bright side, this is another strategy that doesn’t require constant effort, which means that traders can do it in their spare time or even while working a full-time job. Of course, you’ll want to keep an eye on your trades and pay attention to data that could affect the prices of currency pairs that you are currently holding. 

The Bottom Line

No matter what trading strategy you choose, you’ll need to invest some time into looking at data, reading charts, staying up-to-date on the news, and pouring over other fundamental or technical data in order to make informed trading decisions. If you’re pressed for time, you can always follow a professional strategy like swing trading or investing that does not require a large number of trades to be entered each day. The fact that these traders often hold positions for days, weeks, or years also provides a great deal of flexibility. If you want to go another route, consider high-frequency trading, which involves entering a large number of trades each day in an attempt to make a small profit off each one. This is the most high-maintenance option on our list, but it does offer a good outlook of profitability.

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Forex Basics

Forex Myths that Some People Actually Think are True

As we’ve moved into the 21st century, forex trading has risen in popularity and attracted a growing number of traders from all over the globe. Although we would expect people to have a better understanding of forex thanks to the increased awareness, there’s actually a lot of confusion and several myths surrounding the subject. It can be difficult for new traders to decipher what is and isn’t true, considering that some of these myths are passed around as common knowledge and repeated often. Some of these false beliefs can even cost you to lose money! Below, we will debunk some of the most common myths you’ll hear about trading and shed light on any real facts that inspired them.

Myth #1: Trading is Only for Rich People

We’re more than happy to announce that this statement is actually the opposite of the truth. In fact, many brokers offer trading accounts that can be opened for less than $100. In some cases, brokers will allow you to open an account with $10 or less. So where did the myth that trading was strictly reserved for the rich come from? Those that can afford to make larger deposits can usually open better account types through brokers and there is potential to make more money when you have more money to invest. People also tend to assume that rich people have more resources available to learn to trade, as they can afford to attend college courses or pay for account managers, financial advisors, and training. In reality, you don’t have to have any of these things and everything you need to know can be learned online for free. 

Myth #2: The Risk isn’t Worth it

Just like with any other investment, forex trading does carry a level of risk with no guarantee that you’ll make money. Many people have done so and gave up in the beginning, which likely contributes to the popularity of this rumor. In reality, trading offers a much more structured way to make money because you aren’t blindly rolling the dice and hoping for a win. Your trading decisions are based on real evidence and you can control the amount of money you’re risking on every trade by practicing effective risk management. Keep in mind that your knowledge of the markets and your trading plan also have a big effect on the results you’ll see and that many of the people who say trading isn’t worth it didn’t understand the markets fully or they went in risking way too much money from the start.

Myth #3: Trading More is Better

The concept that entering more trades would give you the opportunity to make more profits seems simple, but this isn’t the way it really works. If you overtrade your account, you run the risk of an overactive account, which is harder to keep up with. You could then become stressed out or anxious and begin making mistakes or forgetting to exit trades. Traders that use too many indicators on their charts often suffer from this problem as well. Keep in mind that some strategies do require trading more, but you should never take on more than you can actively manage. 

Myth #4: Trading is Easy

Brokers have made it extremely easy to sign up for a trading account these days by only asking for a few personal details (like name, email, phone number, address, and country of residence) alongside low deposit requirements. If you want to open a trading account, you can literally do so in minutes. Unfortunately, the simplicity we mentioned leads many beginners to think that trading must be easy since it’s so easy to get started. In reality, you need to invest a lot of time and knowledge into researching various trading topics in order to be truly ready. It’s true that trading is something that most people can do successfully if they invest the proper time and effort into it, but many people believe the misconception that it is a quick and easy way to get rich and aren’t willing to put in the effort needed, so they lose their money and abandon their trading accounts. 

Myth #5: The Forex Market is Rigged Against Traders

Some people believe that you can’t make money trading forex because big banks and governments rig the market, or that brokers change and influence data to make you lose. In reality, the value of a currency is influenced by entities like banks and governments, but this is caused by inflation rates, interest rates, unemployment rates, elections, and other matters that just happen to affect the market. It isn’t actually possible for brokers to rig the market against traders either, as the forex market is too volatile and liquid to be rigged. In some cases, traders lose money at their own fault and want to blame their broker or say that the market is rigged to help their ego, even though this isn’t the case. 

Myth #6: You Need to Constantly Watch the Market

You don’t have to sit around in front of your computer screen 24/7 to be a successful forex trader. In fact, many people manage to work full-time jobs while trading on the side. You do need to spend some time looking at charts and analyzing data, but there are tools out there that can do this for you. For example, you could sign up to receive signals from a trusted signal provider in order to receive messages that tell you when you should enter a trade. Expert Advisors that trade for you are another shortcut that significantly reduces the amount of time you have to spend online looking at data.  

Myth #7: Forex Trading is Just a Big Scam

The idea of trading is scary to some because it involves making an investment through a broker and withdrawing profits later on. They imagine that the broker might keep their funds and refuse to issue their withdrawals for made-up reasons or that they might never respond to them again once funds are requested. It’s true that there are some brokers out there that are scammers, but you can avoid these shady companies altogether by doing research on any company you’re considering and sticking with more popular options that have received online reviews from real traders. It also might help you to rest easy by knowing that many of these brokers are regulated by government agencies that hold them accountable and ensure that traders don’t have to deal with shady tactics.

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Beginners Forex Education Forex Basics

Six Key Mistakes New Traders Make (and How to Avoid Them)

Within the last few decades, trading in the financial markets has seen a sharp increase in popularity, which has led to a boom in the number of newbie traders signing up for trading accounts all over the world. While trading can be a great way to make money from home or even as a full-time job, many of these beginners start out with no real idea of what they should be doing.

After losing a little bit of money (or blowing their account balance), they feel discouraged and give up. In reality, most of these failed trading attempts can be contributed to common trading mistakes that could have easily been avoided if the novice traders were aware of them. If you don’t want to suffer the same fate, we have good news, as you’ll simply need to read this article so you’ll be aware of these mistakes.  

Mistake #1: Trading Without a Strategy

Ask yourself these questions:

  • “What instruments do I plan to trade?” For example, you might answer something like “Major currency pairs, minors, and some CFD options.” 
  • “What evidence will I look for to tell me to enter a trade?” Some traders might answer that they are looking at fundamental data, while others are looking at technical data or a combination of the two. 
  • “How much am I willing to risk on each trade?” This answer varies based on personal preference; however, a smart choice would be around 1% of your total account balance. 

Your answers might look a lot different than our suggestions, but the point is that you should have some type of answer to these types of questions. If you do, then you’ve been doing your homework and likely have an idea of a trading plan and strategy. If you couldn’t come up with an answer, then you’ll need to develop a plan so that you can start well-prepared. One of the beautiful things about the forex market is that while nothing is guaranteed, traders do have the chance to significantly improve their chances of making money by educating themselves and sticking to their trading plan. One of the biggest mistakes beginners make is opening a trading account with no real plan, which is essentially the same as just gambling. A bit of preparation will go a long way if you simply invest time into your plan and follow it. 

All you’ll need to do is develop a solid trading plan and choose a strategy that will work for you. This will take some research and work, but it is one of the most crucial steps to trading success from the very beginning. 

Mistake #2: Not Testing Your Plan

Once your trading plan and strategy is in place, you may be feeling very eager to jump in and get started trading. Unfortunately, there may be some problems that you didn’t oversee. This can be very costly if you’re trading on a live account and it could even drain your account balance altogether. Many traders reach this point, feel discouraged, and decide to give up before their trading career ever even got a chance to take off. Keep in mind that your plan may sound great on paper, but you still need to test it in a real setting to make sure that it lives up to expectations. 

The good news is that you can avoid this problem by signing up for a free demo account through your broker. You may already know about demo accounts, but if you don’t, you simply need to know that these simulation accounts allow you to practice trading in a live environment while using virtual funds. Since there is no financial risk, you can test your plan to your heart’s content until you’re confident that your strategy is profitable beforehand. 

Mistake #3: Lacking Discipline

If you’ve ever read about trading psychology, you probably have some idea of the ways that emotions can affect our trading decisions. Sadly, some traders skip over this category completely when they’re learning about trading, which leaves them unprepared in the event that their emotions do start to cause problems. Every trader needs to know that feelings of greed, resentment, overconfidence, anxiety, and other emotions can cause you to make avoidable mistakes like risking too much money, deviating from your trading plan, overtrading, and more. If you don’t know this, then it can catch you off guard.

You’ll likely feel some type of emotion at some point, but the best way to avoid this problem is to stay disciplined and remember to always stick to your trading plan. Reading about trading psychology so that you can identify and remedy any related problems is another important step. If you’re ever feeling overly emotional and you can’t calm down, the best thing to do is to take a short break from trading until you feel more level-headed in order to avoid making emotion-driven mistakes. 

Mistake #4: Having Unrealistic Expectations

Whenever someone opens their first trading account, they have some kind of picture in their mind about how things will go. Many beginners start with unrealistic expectations about how much money they’ll make. Oftentimes, this is because those traders have heard about the success of others, possibly even people they know, and they assume that they can reach the same level of profitability from the beginning. In reality, you may be working with a much smaller deposit and you won’t have the experience those investors possess at the beginning, which can lead to disappointment. 

From the beginning, you’ll need to set more realistic goals that focus on positive notes like improving yourself as trading, losing less money each month, sticking to your trading plan, and so on. It isn’t a good idea to set exact monetary goals, as it can be difficult to predict how much money you’ll make due to the market’s unpredictability, especially from the beginning. 

Mistake #5: Not Understanding the Market

All traders need to understand the market and what causes prices to change in order to make smart trading decisions. There’s a lot to learn on the subject, as microeconomics and certain events like elections or pandemics can really shake up the market. Many beginners are in a rush to get started and may briefly glance over this topic before moving on, only to realize that they don’t really know what’s going on once they get started. 

Before you open a trading account, you should spend an ample amount of time researching these topics so that you’ll be more aware of the factors that affect the market. If you’ve already opened an account and you’re confused, consider taking some time off to brush up on your knowledge of these subjects. Some of this knowledge will also be gained through experience as you make trades and live through certain events. 

Mistake #6: Overusing Leverage

Leverage can be both good and bad for traders, as it can help you to make large profits, or it can help you to wipe your account clean when used incorrectly. Many beginners don’t entirely understand leverage and might think that it is best to use the maximum leverage cap offered by their broker to make the most profits. You might make a lot of money doing this, but you’ll likely be risking a lot more money than you’re willing to lose in doing so. 

Start by ensuring that you understand what leverage is and how it works, then you can incorporate leverage limits into your trading plan. Don’t assume that you should use the highest leverage available, especially if it is more than 1:100. As you gain practice over time, you can adjust your plan and trade with higher leverage with a better chance of using it correctly.

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Forex Basics

Do You Know the Pros and Cons of Using a Demo Account?

A demo account allows forex traders to become more acquainted with a trading platform and to practice their skills and strategies in a live environment. Since demo accounts use virtual currency instead of real money, traders can use these accounts without taking any financial risk. There are several reasons why beginners and even advanced traders can benefit from these accounts, but there are also some cons that come from trading on them. Below, we will outline both the benefits and disadvantages of demo accounts.

Pros

Demo accounts are great for practice. You can take more risks than you would on a live account and more experienced traders can even use them to practice different strategies. Beginners can track their progress and have a better idea of when they are prepared to make a real investment. You can do all the research you want, but nothing is as practical as trading hands-on with a demo account.

They’re free: Most forex brokers offer demo accounts and it should never cost anything to open one. The reason why brokers provide these free services is that they want their potential clients to come into the market better prepared. Traders are less likely to blow their accounts and give up quickly if they have some practical experience. You’re also more likely to open a real account through the same broker that has provided your demo account, so this is a way for companies to gain future clients. 

You can use them to practice different strategies: The internet is filled with information about different kinds of trading strategies. Some prefer scalping, while others take to swing trading, and there are a whole host of other options out there. You might read an article or watch a video about a strategy you’ve never tested and think that it sounds promising. A demo account is useful in this situation because you can test the new strategy without risking real money.

Opening one is quick and easy: The process of opening a demo account does not involve a headache. Brokers don’t ask for nearly as much information as they would if one were opening a live account. Most require your name, email address, and possibly country. Every now and then you might need to provide a phone number, but not always. One can fill in an account opening form and receive their login details in just a couple of minutes. 

You can use them to test indicators: An indicator signals the best times to enter the market and is helpful when used correctly. Some indicators are available for free, but many providers might ask you to pay for them. The issue is that you never know for sure if the indicator is going to work effectively as many of them can give off false signals or experience other faults. This is why most traders test out promising indicators on demo accounts to see if they are worth investing in.

Demo accounts rarely expire: Most brokers will allow you to trade on your demo account indefinitely. Every once and a while, a brokerage might set a 30-day expiration date or cut off access to that account after so many days of inactivity. If you reach out to support, many brokers will allow you to keep using the same account. If not, you can always open a new demo account in a couple of minutes for free, so you can practice for as long as you want without being forced into opening a live account if you aren’t ready. 

Cons

Demo accounts don’t prepare traders for the emotions related to live trading: When real money is on the line, we can get overly emotional. If you lose big, you might feel a lot of grief or beat yourself up over it. If you’re winning, you’re likely to feel excited, which can lead to other trading problems. Trading psychology is a whole other matter in itself, but it is important to know that demo accounts can’t prepare you for those feelings because real money isn’t on the line. These emotions can come as a shock to traders that aren’t expecting them.

Demo accounts don’t experience delays or slippage: On a live account, traders might see slippage in times of high market volatility or when important finance related news breaks. Slow internet connections can also cause issues with re-quotes. Everything happens faster on a demo account, so traders might not realize that these problems can occur once they switch to a live account.

You might become too used to using a demo account: Some traders never make the switch to a live account for whatever reason, even with good demo trading results. Perhaps they lose interest in trading or don’t want to make a real investment. The issue is that some traders just become too comfortable on the demo account and they continue to trade on it for an extended period of time. If those traders ever do open a live account, they will be more relaxed because of their altered expectations.

Traders handle money differently on a demo account. Sure, you might take your results seriously, but you won’t always make the same moves when real money is involved. What seems like a good move on a demo account might seem too risky if real money is on the line. This can alter one’s perception and change their results on a live account. Another downside is that many demo accounts start you off with an unrealistic amount of money, which also changes the way you trade. 

Final Thoughts

Demo accounts offer several obvious advantages. One can sign up for them easily through most brokers without paying a dime. The accounts can be used to become more familiar with forex trading and to gain practice using different strategies, leverages, account types, indicators, and so on. However, demo accounts do present some dangers that aren’t as well-known. Traders don’t experience the same raw emotions or fear losing money in the same ways when they know that real money isn’t at risk. They also might not realize how re-quotes, slippage, and delayed execution can affect them in a real environment.

When traders aren’t aware of these issues, they might be too relaxed once they start trading on a live account. Those traders are then likely to incur losses because their expectations are off, and this could even cause them to walk away from trading for good. Despite the disadvantages, we highly suggest opening a demo account and taking advantage of their many perks. Traders simply need to be aware of the dangers involved and ensure that they are prepared to deal with the differences once they open a real account.

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Forex Basics

The Top 7 Most Misunderstood Facts About Forex Trading

Despite the fact that there are currently more than 9.6 million forex traders in the world, the topic of forex trading still manages to bring up many myths and misconceptions. Knowing the truth about some of the most common misconceptions out there can really save you money in the long run if you’re a trader. On the other hand, those that have only considered trading may have chosen not to open a trading account over a simple rumor, while others may jump in with unrealistic expectations. If you want to learn the truth about forex trading, keep reading as we break down the 7 most common misunderstandings about forex trading. 

Misunderstanding #1: Forex is a quick way to get rich.

We can thank several movies, brokers, and sketchy “motivational” forex traders for the misunderstanding that forex trading can make you rich overnight. Oftentimes, people see flashy advertisements that show traders living a luxurious lifestyle and they decide they want that for themselves. In reality, these are just advertising gimmicks meant to capture your attention and draw you in so that the trader can sell you something or to convince you to open an account with a broker. On the bright side, you really can make a lot of money trading forex, but the amount depends on experience, the amount you invest, the market environment, and other factors. If you start trading with a few hundred dollars in your account and little knowledge of the market, it will take a while for you to reach the larger monetary goals you’ve set. 

Misunderstanding #2: Trading is a scam.

While some traders believe forex is a way to get rich quick, others think that the system is rigged and don’t believe you can really make money doing it. Shady unregulated brokers contribute a lot to this misunderstanding, but you also might hear from scorned traders that lost money due to their own error. Those traders then turn around and blame their broker, the market, or something else to help ease their bruised ego, when they probably just weren’t prepared to open their first trading account. As long as you choose a trustworthy broker that is regulated with positive client feedback, you shouldn’t have to worry about any issues. It’s also important to know that there are too many factors affecting the forex market and things move too quickly for there to be any way for your broker to rig the market. 

Misunderstanding #3: More complex strategies are better.

Many traders believe that the more complicated a trading strategy is, the better the results will be. It’s actually fine to stick with a simpler strategy, you just need to take certain matters into account, like price movement, a ranging or trending market, reversal points, and so on. If your trading system is making profits but it isn’t as much as you’d like, start by considering these factors before adding more variables and overcomplicating things. Know that even the best traders usually walk away with only a slightly higher win rate than their loss rate, so you shouldn’t throw an entire trading strategy out the window just because you feel you should be making profits more quickly.

Misunderstanding #4: More trades = more profits.

This is a common belief among forex traders because it makes sense that the more trades you enter, the more chances you would have to make money. The truth is that you can actually make the mistake of overtrading if you do this and you put yourself at more risk of losing money. If you open too many positions at once, you also may have trouble keeping up with everything and you could become overwhelmed, causing you to forget to exit positions and to make more careless decisions. Instead, you should only enter a trade if there is good supporting evidence to do so and be sure that you never open more trades than you can manage. Even if you’re left feeling unproductive, it’s better to avoid trading if there just aren’t any good opportunities in a day. 

Misunderstanding #5: It’s possible to have a 100%-win record.

If you ever hear a trader say that they’ve never lost money or made a mistake while trading, don’t believe them. With the forex market being so volatile, it just isn’t possible to make the right moves every single time, even if you’re an expert trader with a high win rate. It’s also impossible for signal providers or Expert Advisors to trade with 100% accuracy as well, so don’t fall for these false claims. When you do lose, you shouldn’t beat yourself up over it, as the solution is to keep calm and assess what went wrong. If there’s a problem with your strategy or you made a mistake, simply try to learn from it, make any needed changes, and move on.  

Misunderstanding #6: Trading with high leverage provides greater rewards.

There’s an old saying about forex trading that claims, “leverage is a double-edged sword”. This is absolutely true – the higher the leverage you use, the greater the potential for returns; however, it also increases your risk significantly. Many beginners rush out and decide to trade with the highest leverage available through their broker, which can be as high as 1:400, 1:500, or even 1:1000 in some cases. Beginners need to know that many professionals actually prefer the leverage ratio of 1:100 because it provides a good opportunity for investment without an insane financial risk. You’re still free to make your own decisions regarding leverage, just keep these facts in mind if you’re tempted to use a high degree of leverage.

Misunderstanding #7: It’s best to choose a broker that offers 100% bonuses.

Some brokers offer perks in the form of bonuses and promotions to traders that choose to sign up for an account with them. While it’s great to see deposit bonuses and other ways for traders to make extra money, it’s important that you don’t choose a broker solely because they offer this type of deal. There are usually strings attached when it comes to this, like minimum trade requirements before you can withdraw profits, the bonus being nullified if you make a withdrawal before fulfilling certain conditions, and so on. The broker might also offer bad trading conditions in general and use the bonus to draw in traders quickly and to keep you from looking into their terms further. This doesn’t mean that promotional opportunities can’t be a good thing, just that you need to do thorough research anytime this is offered. 

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Forex Basics

Is it Possible to Legally Trade Forex in Nigeria?

Forex trading offers attractive perks that draw in traders from all over the world, however, some aspiring traders hit roadblocks when attempting to open a trading account because forex is banned in certain countries. South Korea is a common example of a country that many brokers place on their ban list because it is illegal for residents of the country to open a trading account with foreign brokers.

Traders in the United States often have issues finding brokers that will accept them as well due to strict regulatory requirements. It isn’t possible for traders to lie during the account registration process, due to the fact that brokers require some type of document (like a utility bill) proving that they do live where they claim to. All of these rules and restrictions cause some confusion in the forex community.

If you’re wondering if forex trading is allowed in Nigeria, the quick answer is yes, but there are some things you need to know. Trading is actually becoming quite popular in the country, with more than $1.25 million is being invested in the market daily. 

Nigeria has certain rules in place for its stock market stating that local stocks can’t be raised or lowered by more than 10% of its current value for the day. Unfortunately, forex traders don’t see the same level of protection, as forex trading is not currently regulated in the country. This means that there are no government entities watching over Nigeria-based brokers and holding them to higher standards that can protect clients. Here are a few reasons why this can be an issue:

  • If your unregulated broker goes bankrupt, traders are at risk of losing all the money in their trading account. With regulated brokers, those traders would be entitled to financial compensation.
  • Regulated brokers must comply with rules and regulations, which protect traders from fraud or mistreatment. 

Fortunately, you can simply choose a broker that is regulated and based in another country, even if you are a current resident of Nigeria. If you want to open a trading account, you’ll just need to follow a few quick steps to get started:

  1. Ensure that you have a suitable device with an internet connection, like a computer, a smartphone, tablet, or iPad. If you don’t currently have internet, you’ll want to choose a provider that offers good service. Airtel is known to bring the fastest provider in Nigeria. 
  2. Choose a broker. Now, you’ll need to do some research and invest in a trustworthy broker. Be sure to keep regulation in mind. Your broker doesn’t necessarily have to be regulated, but you’ll be more protected if they are. 
  3. Complete the account verification process. This usually goes fairly quickly, as you’ll be asked some personal details, like name, address, date of birth, etc. You should also be prepared to submit some form of ID and a document that proves you’ve provided the correct address.
  4. Make your first deposit. The amount that you must deposit depends on your broker, as some will take $10 deposits and others set higher requirements of $100 or more. 
  5. Install your trading platform and get ready to trade! The exact platform you’ll be using will also depend on your broker, as some use 3rd party platforms like MT4 and others offer their very own platforms. 

The process of opening a trading account from Nigeria is the same as it is for traders in many other countries all over the world. This is great news for aspiring Nigerian traders that are looking to take advantage of the highly liquid forex market and all of the perks that come with trading. As always, we will remind our readers to get out there and get educated before opening a trading account to avoid losing money at the beginning of your trading career. 

Categories
Forex Basics

Must Follow Facebook Pages for Forex Traders

If we asked you to guess the most popular social media platform in the United States, what would you say? The unsurprising answer is Facebook, which ranks in the number one spot, followed by Instagram and YouTube. In several other countries, the popularity of Facebook can be exceeded by other platforms, but it usually finds itself in one of the top three spots with more than 2.7 billion users to date. The platform manages to attract different kinds of people from across the world, both young and old. In fact, most of us already have an active Facebook account. If you don’t, it only takes a few minutes to sign up for one and you will likely find that many of your family members and colleagues already have an account. 

Just like with many other popular social media platforms, you can find many different kinds of pages, businesses, and influencer pages on Facebook. Professional forex traders and pages are no exception. If you actively trade forex, you should definitely follow these top trading pages to get the best trading information delivered straight to your newsfeed:

NewTraderU.com

NewTraderU.com is an education-based Facebook page that shares helpful trading information related to quotes and charts with the goal of helping new forex traders to achieve profitability. If you’re looking for a highly active page to follow with multiple posts per day, this is a great option. The page has attracted more than 32,000 followers and contains links to a website, along with an email address where traders can reach the page’s creator Steve Burnson. If you haven’t heard of him, you should know that he is also the founder of NewTraderU.com and has an active Twitter account. 

Harvard Business Review

You don’t have to attend Harvard (or even take a college course at all) to benefit from following the Harvard Business Review Facebook page. While the page isn’t completely dedicated to forex traders, it does host a lot of information and ideas related to business and economic factors that can affect forex traders worldwide. Some articles that are shared can also benefit traders, for example, the page recently posted an article that explains how to stay focused when working from home, which is a common issue for many traders. This is one of the most popular pages listed in our article, with more than 5 million followers and multiple posts each day. 

MT5 Forum

MT5, short for MetaTrader 5, is one of the most popular trading platforms in the world and is offered as a primary platform by a large number of brokers. The MT5 Forum Facebook page doesn’t only focus on the trading platform, however, as it serves as more of an educational page that posts news articles, hot topics, economic data, and forex humor posts that can serve every kind of trader. 

Warrior Trading

The Warrior Trading Facebook page is followed by more than 175k people who communicate in comments on various posts made daily by the creator. The page is linked to a website that offers paid courses to forex traders; however, you can view lengthy videos directly from the Facebook page for free! Topics focus on education, with an emphasis on profitable strategies and morning shows. This is another page you can quickly follow if you’re looking to add more forex content to your daily news feed.

TradeCiety 

More than 31,000 current and aspiring traders are currently following the TradeCiety Facebook page, which was created to entertain and engage traders by providing information related to trading forex and futures. When we glanced over the page, we found an average of one interesting post per day with recent topics focusing on reward risk ratio, webinar opportunities, making small steps to become a better trader, and so much more. Even though there aren’t a large number of posts per day, this page still posts informative information and could help traders learn something new whenever they are scrolling through Facebook out of boredom. 

Stocktwits

Stocktwits typically posts two or three times daily on their Facebook page, along with offering their own app by the same name with even more content. The page was created for traders and investors to share ideas with one another and often shares both funny and informational videos about trading, articles, and other resources that can help traders make smart investment decisions. 

Trading Legends

Trading Legends Facebook page currently has about 23k followers and is known for posting inspirational trading quotes from top traders like George Soros and Martin Schwartz, trading rules, event discussions, and educational videos. The page is fairly active and offers traders a friendly place to communicate with zero tolerance for bullying. The controlled environment creates a great space for beginners to ask questions and get advice with no judgment from their more experienced counterparts. 

TradingwithRayner

The TradingwithRayner Facebook page was created to share new price action trading techniques and strategies with traders. The creator’s main goal is to educate others on these matters in order to save them from learning hard lessons that result in a loss of funds. With more than 17k likes and at least a few posts per day, this is a moderately active Facebook page that shares interesting ideas and informational articles that can help to improve profits for every kind of trader.

Categories
Forex Basics

Insider Tips & Tricks of the Forex Market

By making the decision to trade in the Fórex currency market, the future John Rockefeller stumbles upon several concepts and definitions that can put him in trouble, as well as new information that will take a lot of time and effort. To shorten the learning path and help beginners make the right choice, I have created this brief instruction on the main features and definitions. Success will largely depend on what the first step will be, the important thing is to do it in the right direction.

After selecting the trading account, the next required step is to choose the size of the «leverage», which can be from 1 to 500. Leverage will largely depend on the style of the trader’s trade. Therefore, I recommend you not to be in a hurry and think it over.

What is the Leverage?

Brokers offer their clients various types of «leverage» from 1 to 500. But before you select it, let’s clarify exactly what leverage is. I will try to convey everything to you with simple terminology. Leverage is funds that the company lends to the merchant to finance its operations in the Fórex market in automatic mode, without unnecessary paperwork and delays. The trader can choose the size of the «leverage», where the level of 1 (1:1) will mean the lack of borrowed funds in the account and the level of 500 (1:500), multiplication coefficient of the investor’s own capital.

Example. The merchant has an account with $1000 and using 1:1 leverage will be able to trade in the market only with its own funds. However, using a leverage of 1:500 you will be able to open a $500,000 transaction.

But, we must always be cautious because the more money you have, the greater the responsibility. Using maximum leverage means a slight fluctuation of quotes against your transaction that is able to turn your own funds to zero. Experienced traders typically choose leverage between 1:30 and 1:200. The standard leverage is 1:100 and is the most popular because it makes it easier to calculate the sum of own funds needed for benefits when opening positions. Therefore, if you do not have preferences, I recommend applying this coefficient.

You have already chosen the type of account and the size of the «leverage», but with what tools will you carry out foreign exchange buying and selling operations? When data transmission technologies did not yet exist, commercial operations were conducted by telephone and previously by telegraph. But now we have internet and commercial platforms of different types, including mobile devices and apps with access to a personal Area.

Which Terminal to Choose?

About tastes, there is nothing written and much depends on the preferences of each one. However, I would like to highlight certain peculiarities of the use of commercial platforms.

The trading platform in the Customer Area usually has a set of basic functions that allow you to open and close transactions, monitor the trading account, as well as necessary technical analysis tools to determine the future direction of currencies. It is ideal for beginners who just started the road to financial Olympus. However, you should not expect anything extraordinary from this platform. At the same time, your great advantage would be the ability to operate directly from the Personal Area without the need to install special applications.

Mobile platforms based on iOS and Android suit all those who lead an active life and do not have permanent access to a fixed computer. The terminals are equipped with everything necessary for trade and have a standard set of indicators and technical analysis tools. The big disadvantage of these terminals is the limited physical size of mobile devices, which does not allow you to make a complete analysis of the situation in the market. And this often leads to bad decisions.

Commercial Platforms: MT4 and MT5 or its Online Version?

If you’ve finally thought that the decision to conquer the world of trading and make a successful profit, the MT4 terminal is all you need. Some believe that it is the right instrument for analysis and trade. A huge amount of custom and integrated indicators for the analysis of quotes, the possibility to test your own commercial systems, a simple programming language in which you can sort or write the algorithm, make it stand out as a leading terminal in the Fórex market. A user-friendly interface in different languages that is able to satisfy even the most demanding trader. The MT4 terminal has passed the test of time, it is simple and accurate like a Swiss watch. MT4 is what real professionals choose.

The MT5 terminal received the best from its “big brother”, in this platform you can trade not only in the Fórex market but also open operations with other assets, including trading stocks and futures. The terminal has timeframes called “timeframes” with more advanced features and other advantages. However, the biggest disadvantage of the MT5 terminal is the limited functionality of the custom signs created for its “big brother”.

When you have already chosen the platform on which you will operate, it is time to know some concepts and terms of Fórex, at least to feel like a fish in the water and show off your knowledge to others; Merchants communicate in their own language and unknowingly will not feel comfortable in their “gatherings”.

Commercial Platforms and their Definition

The quotes of the currency pair in the Fórex market: the price of one currency is determined in relation to another currency and is written as a decimal fraction. The quotation, where the currency quoted in the pair is the numerator and the base currency is the denominator, is called “direct”, for example, the EUR/USD pair shows what is the amount of US dollars required to buy a euro.

Another way of representing the exchange rate is the reverse quotation, the exchange rate of the USD/RUB pair (the Russian rouble is determined against the US dollar). Another example of the reverse quote is also the exchange rate of the Japanese yen written as USD/JPY.

There are other types of cross-currency exchange, which do not include the US dollar. The most popular among them are the pairs of EUR/JPY and GBP/JPY, but I do not recommend newbies to start trading with cross exchange rates until they become familiar with the market for major currency pairs.

What is a lot? It is the size of an open position. In the Fórex market, the standard size of a commercial lot is the sum of 100,000 (one hundred thousand dollars, euros, pounds). When opening trades at this value and with the leverage of 100:1 the trader will need a loan of 1000 units of the quoted currency. The usual trading conditions allow you to open transactions of size from 0.01 lots, which with a leverage of 100:1 will be equal to 1000 units and will require loans of only 10 units of the quoted currency.

For example, if we open a position with a volume of 0.01 lots in the EUR/USD currency pair, this position is equal to 1000 euros and will require a deposit of just 10 euros. If we open a transaction with a volume of 0.1 lots in the same pair, this transaction is equal to 100 euros, which is obviously not much. I have given some examples for the trading account in Euros. For accounts in other currencies, it is necessary to convert these values.

What is Pip (Dot)?

In Fórex a PIP is the fifth decimal of a quote. In other words, for the currency pair EUR/USD, which is now quoted at 1.23456, the fifth decimal in the quotation (6) is the pip (percentage point).

What is a swap? It is an interest payment for the move of the open position for the next day. The trader can trade for the same day as much as he wants, but when he decides to move the open position for the next day, he is charged a swap created by the difference between the interest rates in the currency pair, which is due to the use of leveraged funds and a currency other than the nominal value of the account.

Attention: very important! What you have to learn from memory is that in most cases swaps are very harmful.

Swaps can be not only negative but also positive, that is, they can yield profits for traders. The bad news is that most swaps have negative values, another bad news is that the payment for the current move of the open position and for the weekend is charged on the night of Wednesday to Thursday being the triple charge.

Traders, especially beginners, often underestimate swaps by opening their positions. If the trade remains open for an extended period of time, swap hedging can lead to a significant loss of funds. The size of the swap is usually expressed in ticks, and its value can be known in the contract specification.

Thus, for example, on April 30, 2020, the size of the swap in the sale of the pair EUR/USD was -0.483, which means that in the open position with a volume of 1 lot the trader will lose $0.483 each day. However, when buying 1 lot of the same currency pair the size of the swap was already -4.7495 ticks, implying a daily loss of $4.7495. Thus, to keep the position open during the month, the trader’s losses would amount to $142,485, paid for the valued position of 100,000 euros. Swaps are charged at 00:00 according to terminal time. The swap is always charged in the currency that is the denominator (the base currency) in the quotation.

What is the Spread?

A spread is the difference between the purchase price and the selling price of the currency pair, that is, between supply and demand, The size of the spread depends on current market conditions and can vary from 0 to a few dozen points. The more people want to buy and sell the currency pair, the smaller the spread size. You can also find fixed spread quotes set before the currency pair specification.

What is Long and Short in trading? “Long” (long) is a buying position, “go long” means to buy. “Short” (short) is a currency or other asset selling position, “short” involves selling. The platforms came to Fórex from the stock market, where stock prices grow slowly and/or fall sharply. In the Spanish language too, the same terms, “long” and “short”, which mean purchase and sale, are often used.

What is Stop-Loss and Take-Profit?

Stop-loss is a pending order placed by the trader to stop losses automatically. They often call it simply “loss”. “Cutting losses” means closing lost positions. Take-profit is a pending order that the trader places to set the profits. The expression “take profit” means to set the profits.

Margin call (margin call) is one of the most feared concepts by traders. The Margin call is a letter or other signal that the trader receives from the runner when it is necessary to deposit his account. This means that the merchant has lost his funds and is proposed to close the open position or deposit additional funds in his account.

I really wish you didn’t have to resort to this legendary phenomenon. Of course, these are not all concepts and terms of the stock market. He’s still not familiar with the rest, but it’s enough to get him started.

Categories
Forex Basics

What Is the True Difference Between Forex and Binary Options?

Today we will focus on trying to respond to a very frequently asked question in the world of trading: What is the difference between binary options and Forex? In the following article, you will find answers to questions such as: What are binary options? How do binary options work? Can you win in binary options? In addition, I will also share my opinion about what is better and more profitable, Forex, or binary options.

Novelty Instant Benefit

About 10 years ago, most broker companies specializing in stock markets, suddenly, with a single voice, began to proclaim in every corner a new super service, “binary option”. At that time, very few investors could understand what it was, but the thirst for instant profit made this tool very attractive. In those days, no one had a similar offer, because it was, in fact, a home casino, but with constant access and a wallet with an initial minimum. Now enough time has passed and the consumer began to understand that the binary option is not such a brilliant instrument and that it most often leads not to instant gains, but to instant loss. To give your own opinion of this instrument, you need to understand what it is.

What is a Binary Option?

So what exactly is a binary option? If we want to answer this particular question, we have to look at its structure. The name is made up of two words: binary and option. The word “binary” is derived from the concept of “binary model”, a model that has only two variants of an event, or is “yes” or “no”. This model is one of the main ones of the instrument, or win or lose, there are no other options. Now the word is “option”. Everything is much deeper here, this concept is taken as a derivative of the real stock option. A “stock option” is a derivative financial instrument, which is based on the rule of future performance of the contract in the event that a pre-established condition is met.

Therefore, by putting these two concepts together, we get an instrument that works according to the rules of the stock exchange contract and has only two options for the event. In other words, by concluding such a contract, you have either won or lost.

Let’s look at the working mechanism of the binary option based on the most popular parameter of the contract, “high/low” This type of contract means that you have chosen the target price level and the direction of the agreement. For example, we think the EUR/USD currency pair will fall in the next 5 minutes. We select the level from which the calculation will be performed and put the option down. Therefore, if the price in 5 minutes is lower than this level, we will get a benefit, and if it is higher, we will get a loss. We chose the bet size, for example, $50 and go!

The position of our option will look like this, as shown in the chart above. All that is red below is our benefit and all that is up is loss. The main feature that distinguishes such a contract will be the fact that we do not care how many points the price will be higher or lower: our gains or losses are always fixed.

Therefore, it passed 2 minutes after the conclusion of the options contract, and during this time the price was below our reference level. Therefore, the time of our choice is over, we obtained a profit equal to 80-85% of our bet.

Three minutes later, our option was executed, as time has expired (expiration occurred). But unfortunately, the price shot up at the last minute and went above our benchmark, which caused us a loss in the size of our $50 bet. It’s as simple as that. Of course, there are still many different variations in the binary option, but we will talk about them directly compared to the Forex market.

What Is the Main Difference Between Binary Options and Forex?

The comparison of these two types of trading will occur in a number of the most important parameters:

Variety of Contract Types

In Forex there is only one type of contract. No, of course, you can trade with currency pairs, CFDs, commodities, or securities, but these are only variants of the same type of contract: CFD price difference contract (Contract For Difference). You bought a currency pair and its price has increased, you will get the difference between the sales price and the subsequent purchase price.

There are several types of contracts in binary options: this is the most common “high/ low” that we have already seen, is the “touch option”, where you should wait for it to reach a certain level, the “range option”, where you should specify a target price range, and the “ladder option” of higher performance.

Value of Potential Benefit

In Forex, your performance is not limited. Of course, you can limit it to placing fixed orders, but if you’re talking about a simple managed deal, you can generate your profits until you close it yourself at the price you’re interested in. It’s not uncommon for you to make a deal, and literally within a few minutes, the price flies to a lot of points, giving you a much higher profit than you expected.

When trading with binary options, your earnings are always limited by the type of contract selected. And, most importantly, your win can never be greater than your bet. If you put $100, you’ll get, at best, $90. In case you lose, you lose all $100. Yes, there are different options for all contract types, however, in any case, the success ratio will always tend to loss. But distributors of these options are always in profit.

An example of how binary options work cleverly:

-We place a bet, for example on the pair AUD/USD of $1000, at the time of clicking the button “buy” or “sell” instantly the balance deducts the $1000 from the bet.

-If I get the bet right, then I’ll see that the “profit was $1710”, actually it was $710 ($1000, as we remember, was deducted at the time of opening the bet and when I got it right, it came back).

-If I do not get the bet right, then I will see that the “profit was $0”, but the $1000 I have already lost, and in case I fail these funds will be lost.

-It looks great, and in fact, the loss of the same option is always more beneficial.

-In Forex, with the same agreement and the equivalent price movement up or down, the profit/loss will also be the same.

Possibility of Margin Trading

In Forex margin trading has reached perhaps the highest level of development. Forex brokers provide leverage in almost any range, from 1 to 2 to 1 to 1000, and even more. We agree, such a large amount of credit money can provide us almost unlimited opportunities for profit, which is sometimes 1000 times more than our invested capital.

In binary options, there is no such concept as margin trading. Everything is limited only to the notion of bets. If you have $100, then only with this $100 can you trade. This is an absolute disadvantage in modern trading realities.

Easy to Make Deals

Forex is considered the simplest and most modernized trading system among all foreign exchange markets. The transaction system refers to a process that goes from the analysis to the moment your order is placed on the market. There are several trading platforms, some with extended functionality, however, to understand them is not difficult.

In binary options, the settlement system is even easier than in Forex. Essentially, the entire trading agreement is reduced to the choice of a financial instrument, such as an option, run time, and clicking the “buy” or “sell” button. Let us not talk about the effectiveness of such an operation, but about the possibilities that are 50/50.

Duration of Stay in the Agreement

In Forex all contracts are indefinite, and therefore do not have a term of treatment (expiration). This means that when we enter the agreement we can wait the time until the price is not where it was waiting. Yes, there are commissions that can do a lot of damage, but it is no longer in this area.

In binary options all contracts are fixed-term. All options have a very limited lifespan, so, “wait for the storm” as in Forex, will not succeed. This type of contract completely excludes the investment component, leaving us only pure speculation.

Minimum Start-Up Capital

On Forex, this limit is almost erased, and you can start trading, even if you only have $10. But you must understand that the less your initial investment, the more leverage you need to take from your broker, and this increases risks many times over. In binary options, the minimum initial capital is even $1. Then your income will be equal to the minimum. Perhaps, for a person who just wants to get acquainted with these contracts, this is enough.

Conclusion

If we listen to all the questions I’ve told you before, we can make a small summary:

Forex: This is a stock market where, as in the stock market, as in other financial markets, there are laws of supply and demand. Agreements are made at different intervals of time, however, statistics show that transactions at long intervals of time are the most effective and most often yield profits. Forex pays a lot of attention to technical and fundamental analysis. There are a large number of different active transaction management systems, allowing you to benefit even from completely desperate transactions. Competent use of margin trading can increase your investment capital many times, allowing you to make a much greater profit. Of course, success on Forex requires market analysis, trading strategy, expertise, and the use of informational materials. This market cannot be conquered by leaps and bounds. If we want a Forex trader to achieve greed in every trade, you need to train and gain experience.

Binary Options: The binary options market is an over-the-counter market (OTC-market), or rather, it is not a market at all, as binary options brokers are liquidity providers, market makers, and in general, everything they want. In most cases, the quote is only a projection and has nothing to do with the actual price of the asset. And when we talk about “turbo options”, brokers simply draw the quote that is profitable for them in front of the group of their players. In fact, a binary options broker is a bookmaker that spreads what you want to your customers.

The high commission for a profitable transaction makes the popular 50/50 stock ratio absolutely unprofitable, as it will never earn as much as it invested. The benefits of the same option will always be less than a loss. In general, a binary option is a pure casino or addictive gambling that has nothing to do with real trading in the financial markets. Options are a game according to the owner’s rules. You can check the demo account of any binary options broker.

In this article, I have expressed my opinion only, which is supported by the practical experience of developing and implementing various stock exchange contracts. I really like the “real binary option” model, which I consider the best of all stock contracts, but it has nothing to do with the “binary option”. With which instrument to work, the choice is yours. I just want to wish you lots of luck and lots of benefits!

Categories
Beginners Forex Education Forex Basics

Top 10 Errors Made By Forex Newbies

In this article, we present 10 errors of the beginner trader that are repeated more frequently. These mistakes are actually made by any trader, from beginners to veterans. It doesn’t matter how long you have on the market; from time to time you will experience lapses of indiscipline, either because of extreme market conditions or because of emotional factors. It is vital to recognize and understand these situations in order to be successful in trading.

1. Cutting Profits, Letting Losses Grow

Usually, the most repetitive error when investing in currencies is to hold lost positions too long and close winning positions early (usually out of fear). Even with a larger record of winning positions, the losers, though less, will represent a larger amount of money.

The best thing we can do to limit losses is to follow a business plan that considers the risks and always use a stop-loss. Normally no one will be right all the time. It is best to accept that having some losses is part of the day-to-day, the more time it will take to refocus and get winning operations.

2. Operating without a Plan

Opening a position without having a concrete action plan is reckless, and the market will surely take our money. If the price moves against us and you don’t have a plan, you won’t know for sure when to cut the losses. If the price moves in our favor, neither will know when to collect the winnings. Making these decisions in the heat of open positions is a good invitation to disaster. Trading with a plan is perhaps the most important step a Forex trader can take, as it tries to largely eliminate the emotional part when it comes to making trading decisions.

3. Operating without a Stop-Loss

Operating without a stop-loss is also a recipe for disaster. That’s how a small, manageable loss can end up blowing up an entire account. Using a stop-loss is a vital part of a well-crafted plan that has specific and realistic expectations, based on prior analysis and research. Stop-loss indicates when a given strategy is invalidated.

4. Move a Stop-Loss

Moving the stop-loss to avoid being taken out of position is almost the same as investing without a stop-loss at all. It indicates a lack of vital discipline, which will unequivocally result in losses in most cases.

The exception to the rule that allows you to move a stop-loss, is when it is done in the winning direction, to consolidate profits that are being recorded in the position. Never move the stop-loss in the losing direction.

5. About-Invest

There are two forms of over-investment.

– Investing too often in the market: Investing too often suggests that something is always happening in the market and that you always know what is happening. If you have open positions constantly, It is also usually exposed to financial market risks. It is much better to focus on looking for good and strong opportunities, where the risk is minimal, and where a well-developed plan and strategy can be implemented.

– Holding many open positions simultaneously: Having too many open positions at once is an indication that you probably don’t have a good business plan and many of them are opening up instinctively without control. Many open positions also affect the margin available, making it more difficult to maneuver in difficult market situations.

6. Over-Leverage

Over-leverage refers to holding very large positions with respect to the margin available. Even a small market movement can be catastrophic in a very large position for the margin available. This common error is made more tempting by the generous levels of leverage offered by online brokers. If a broker offers leverage of 1:100, 1:200 or even 1:500, this does not mean that they should be used. Do not base your positions on the maximum leverage available. Positions must be based on factors specific to the operation, such as proximity to specific technical levels or confidence in any specific signal to open a position.

7. Not Adapting to Changing Market Conditions

Market conditions are always changing, which means that the strategies to be used must be flexible. The current market situation should always be analysed using technical analysis to determine whether it is fluctuating or trending. Likewise, the use of technical indicators must be flexible. No indicator works well all the time. Different indicators and strategies should be used depending on market conditions. Some indicators work well in fluctuating markets, while others work better in markets with more pronounced trends.

8. Do Not Be Aware of Important News and Events

Even for traders who rely exclusively on Technical Analysis for their operations, it is essential to be aware of the main news and events of the market. If at some point certain indicators are indicating the existence of a very good opportunity to open a transaction, but in half an hour a piece of important news that can move the market in a significant way. It would be unwise and very dangerous to open that operation. These types of situations can occur if you are not aware of events and news. Always keep the economic calendar at hand and identify those events of major importance that can affect your open positions.

9. Investing in the Defensive

No trader wins all the time. Some of the best traders even lose more times than they earn. But when they lose, they lose little. After a series of losses, it is better to wait a while for the market situation to stabilize and refocus on new opportunities. One should avoid falling into the mistake of investing in the defensive and try to recover or avenge the losses.

10. Having Unrealistic Expectations

No one is going to retire with the result of a single operation. The key is to make profits as experience is gained. You have to be flexible and manage to adapt to market conditions. It is a bad idea to have in the beginning goals about how much money you will earn. With expectations about specific quantities, and being in a position where those expectations have not been met, it is very common to fall into the temptation of opening larger operations to achieve the goal. Finally, the result is usually a greater loss.

Categories
Beginners Forex Education Forex Basics

How Long Can You Leave a Forex Trade Open?

Who is asking, a trader, or an investor? Do you think setting a time limit for each trade is a good idea? Do you think investors who bought physical gold 10 years ago held it for too long? How about people who bought bitcoin in 2016? Trading is essentially a calculated process that is managed by a trader’s system, on any timeframe and any asset. A system is a combination of a trading algorithm, various strategies, and one’s approach to trading. The duration of any single trade will need to be a well-calculated decision that will include all of the strategy components, excluding vague and intangible factors such as luck or emotions. Today, we are digging deep into how long a trade should last with an overview of different rules and methods any trader can apply in trading.

System

As we said above, a developed system is an essential part of trading. A trade that is filtered through different indicators will be the right trade to enter, leaving bad options behind. Also, if you manage your settings properly, you will know that your trade will run accordingly – neither shorter nor longer than what you would want it to. That is why choosing the right exit indicator is one of the key steps in assessing how long a trade should last. Reversal indicators, for example, are believed to give reliable exit signals, but the overall duration of a trade depends on other factors as well. 

Risk

Risk management may sound like a complicated word, but it actually serves to protect your finances and prevent losses. Therefore, knowing when to exit a trade will, on one hand, help you with your winning trades and, on the other, assist with managing your assets and your account. There are several fundamental terms that we need to define here to be able to assess how long a trade should last.

Stop-loss & Take-profit Points

A stop loss is a point in the chart where your trade will automatically close down and +. It constitutes an important exit strategy that will handle your trades so that you do not need to sit and oversee what is happening with the market or worry if the price starts moving in the opposite direction. With the use of the stop loss, you will always know exactly after how many pips a trade will close in a loss. When it will happen should not concern you.  When you are in a single trade, your take-profit point will also be the moment where your position will be closed. 

Strategy

Sometimes, depending on your strategy and the platform you are using, your take-profit points are going to differ. If you are using the scaling out strategy, you will take 50% of your trade off the table, for example, and then move your stop loss to the break-even point (the point where you entered the trade). The remaining 50% of the trade will keep going for as long as it needs to, naturally running its course. There is no limit to how much you can gain. Why limit this part anyway, it can last for weeks. 

Traders eager to apply the buy and hold strategy usually decide to hold a stock or commodity for a long period of time, so their take-profit will depend solely on their strategy and plan. However, it is increasingly important for traders never to change their initial plans after entering the trade.

Time frames

Time frames also affect how long a trade is going to last. The daily time frame may be a great opportunity to enter longer trades, but this decision often varies from one trader to the other. Some traders may be driven to use smaller time frames to achieve faster (but smaller) wins. The choice of a time frame is going to depend on the market conditions and one’s strategy as well. Sometimes, when the market is dead and the volume is really low, traders choose smaller time frames for a more aggressive strategy. The decision of which time frame you are going to use needs to be in alignment with other aspects of your trading approach, as it will inevitably impact the duration of the trade.

Market

It is also important to mention how market conditions affect the duration of trades. While a well-tested system is the main way you can protect your account, it may happen that the market is so out of control that your system never recognizes the need to exit. While these situations do happen even to the best and most experienced traders, you can always take additional precautions by not entering trades that could turn out to be a problem. These trades involve all currencies that are heavily affected by the news (e.g. the USD) and all major events such as elections. The USD gets easily triggered by even the smallest pieces of news, such as the President’s tweets. In the midst of the Brexit talks, the GBP was also not the best currency to trade, not just for the problematic exits but the overall market condition as well. Volatility does affect any system if the market gets so out of control and we should, thus, do everything to avoid situations that may keep you in the game too long, thus endangering your finances.

Psychology

Many traders are afraid of making a mistake and losing their money. As a result of these fears, their trading is controlled by their emotions, which can have quite a negative impact on the results too. Sometimes, traders decide to tweak the setting in the middle of the trade and exit the trade prematurely. Other times, they are afraid of risking too much, so they end up underleveraging and making their trade last much shorter than necessary. Anxiety is another reason why many opt for smaller time frames, hoping to be able to exert control better. Traders may even ignore the signals their systems are giving them because they hope that a particular trade is going to trend even better in the upcoming period. Overall, these examples reflect poor trade management and should be handled with care. Each trader has a responsibility towards himself/herself to discover the situations that trigger such reactions and prevent them from happening.

Best Exit Points

The best moments to leave the trade are those that your system gives you. We cannot base our trading on intuition and sentiment because our wins, and losses as well, will then be in the hands of luck. Exit points must be calculated with precision and understanding of why this action is taken at that moment in time and chart. Learning about different strategies and time frames can make this process much easier, along with thorough testing and practice.

Conclusion

With a demo account, everyone can see if every exit indicator used works properly. Backtesting and forward testing will further show if the combination of indicators is giving the best possible results. The only requirement that each trader needs to satisfy is to carry our proper journaling, listing all trades with every entry and exit point. What is more, using a demo account will also help traders learn about themselves because we are often unaware of our reactions when money and security are involved. Since exiting trades is not a matter of how you feel at the time you are trading, you will surely benefit from applying the risk management advice we provided, as it will save you and your account from unnecessary losses, whether they come from staying in a trade for too long or too short.

Whatever you do, do not keep your trades running just because you hope a windfall of money is around the corner. Instead of obsessing about the length of your traders, rather focus on the risk and money management principles that will provide you with the security you may be looking for elsewhere.

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Beginners Forex Education Forex Basics

What Does a FX Trader Really Need to Focus On to Trade Successfully?

What factors do you assume to be the most impactful in the world of forex trading? Should traders focus on the technical tools more intensely than on their traits? Does one’s personality have a determining role in the development of a trading account? How do we measure our growth and what attitude is necessary to facilitate progress in the forex market? Along with these questions, today we will be discussing all areas traders need to focus on to be able to trade successfully.

The Right Approach

The right approach to trading does not necessarily imply a fixed set of actions that each trader must take but a direction in which one needs to move so as to grow and reap the rewards from trading in any market. Whether you are a beginner or a more advanced trader, you probably already know how maintaining a proper attitude is a necessary continent of successful trading. If you truly want to be good in this field, you must learn how to maintain a degree of curiosity in each developmental stage and in every possible sense.

At the very beginning, curiosity is required in looking for credible sources where you can learn about the key terminology and tools to use later on. Education, however, also entails the aspiration towards understanding different currencies, their respective countries, and central banks along with related events that may affect the market at some point. You will need to polish up your research skills and practice discernment to know exactly which item of knowledge is best suited for your vision. In order to create a purposeful course of movement, naturally, you will need to minimize any reliance on luck and set short-term and long-term objectives through thorough planning.

Ask yourself some vital questions and look for answers in selected sources and in your own attempt to apply theory in practice. Strive to understand what your reasons for entering this market are and how your expectation might affect your trading. Set realistic goals and use analytical and critical thinking so as not to stain facts with your personal projections (e.g. I will get a 20% return in the first go). Finally, prepare yourself to continually show commitment and dedication without expecting to see immediate results. Learning about forex and growing as a trader is a process, which requires both patience and persistence.

Key concepts: curiosity, commitment, dedication, dedication, persistence

Example questions: How do I build an algorithm? Why is this currency pair considered to be risky?

Functional System

The basis of every trader’s experience with forex is the system that is comprised of various tools, strategies, and techniques specifically selected to produce the best possible result and protect one’s trading account. To be able to set up an algorithm that will function to your advantage, you will not only need to set a good foundation in terms of knowledge but also invest a considerable amount of time in testing. Opening a demo account and applying the theoretical knowledge acquired up to this point will allow you to assess how prepared you are from both the technical and psychological perspective. You will keep looking for areas where your approach lags and track your progress through journaling. Reflecting on one’s wins, losses, and important numerical data allows traders to measure trading in terms of quality and quantity in every respect and have an active role in its further development. Having an efficient algorithm also obliges traders to consider the risk-reward ratio and consciously understand when and why they wish to enter or exit trades.

Remain open to making changes in your system by using different strategies for example and allow to be molded by your experience. If you happen to come up with two viable options, always turn to your records and compare how the two systems compare to one another, picking your top-performing algorithm as a consequence. Lastly, at this stage, you should aim to nurture independence and sense what it feels like to be dependent only on your system and your logical thinking. Your system will only need to reflect your personality and goals regardless of how similar it may seem to what you have read about before, which is why you need to play an active part in every step of its creation.  

Key concepts: demo account, testing, journal, improvement

Example questions: What leverage is acceptable to me? Where do I put my stop-losses?

Personal Growth

Forex trading is known to be able to test each individual’s boundaries, awakening people’s greatest fears, and bringing to light their deepest desires and urges. To facilitate your learning and development as a trader, you will have to invest in personal growth. Investing wisely necessitates that every forex market participant understands their triggers and compulsive behaviors or those situations and conditions that provoke emotional responses and reactions we may not be able to keep under control. Experts always advise traders to take a personality test where they can learn about their personality type and how it can potentially impact their trading.

People generally try to erase traces of whatever they deem negative, but if you learn how to trust your system and you make a habit of communicating with parts of your personality that seem to need more attention, you will soon be on top of your weaknesses. Personal development also includes the skills of balancing trading and other life responsibilities, whether you are learning how to allocate time to obtaining education or how to let go of the stress you face on a daily basis. Working with your personality additionally entails deliberate action to improve whatever you discover you may be lacking, be it diligence, discipline, or any other skill or ability. The best part about the effort that you will be investing in this area, no matter how scary it may seem, is the fact that your overall living conditions will change for the better and you will see benefits in different areas of life.

Last but not least, personal growth also involves thinking about future progress, which is why you are advised to think about how you can use the skills and knowledge you have acquired so far down the line. Will you expand to other markets we trade or possibly decide to present your trading achievements to a prop firm and sign a contract for bigger yearly returns? Wherever your path takes you, remember that your personality traits will always have a varying impact on your trading but that the effort to improve your personality will impact your entire life positively.

Key concepts: personality test, triggers, emotions, control, discipline, balance, benefit

Example questions: How does my personality affect trading negatively? How can I improve myself?

We can now say that your position sizing is equally important as your reactions to failure. Your skills in managing high risk may be exceptional, but if you fear to invest more when you can, your account will not grow as much as it can. The examples of these correlations and contrasts are many, but at the same time, traders must focus on the process rather than on their desired profit. Goals are amazing because they make us create plans, but if we are unwilling to adapt and adjust to changing circumstances, our objectives will only be farther and farther away. Generated layer by layer, excellence is a product of hard work and continual faith in oneself. Trading is a multi-faceted skill and, as such, it encompasses several key areas where your focus is mandatory. Like a singer who needs to overcome stage fright, practice singing techniques, and considers different styles of singing, a trader also needs to adopt and test specific knowledge and skills while ensuring the right mindset to secure success.

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Forex Basics

Push Past These Common Forex Problems to Find Success

Forex trading is a field where your success depends largely on your own actions – with little practice and unrealistic goals, you are likely to fail, while hard work and determination can put you on the fast track to success. Still, reported numbers of those that give up on trading fall somewhere in the 70% – 90% percentile. This might make trading sound difficult, but the truth is that many of the reasons why others quit can be avoided quite easily. 

Reason #1: It’s Too Hard

Some people make trading sound easy. For those that have been doing it for a long time, it feels more natural and it’s easier to make the right split-second decisions. Beginners need to realize that starting out can be difficult, however, no matter how easy your colleagues or advertisements online make it seem. This doesn’t mean that you have to be very intelligent to trade, only that it takes a large investment of time to learn everything you need to know. From there, you also need to keep up with the news and continue to do research from time to time.

Some people give up once they realize how much they need to learn because they are looking for an easy way to make money. Don’t make the mistake of thinking that you can sign up for a trading account and make money quickly if you don’t feel like putting in the effort. Trading is a real way that you can make money from home, but it is not a way to get rich quickly without effort. 

Reason #2: Unrealistic Expectations

Maybe someone quit their job under the notion that trading would become their new source of income. Or you might need to make a certain amount of money within a given timeframe. Whatever the reason, some people start out with high expectations or make the mistake of setting the exact monetary goals they want to reach by a certain date. This can set you up for failure because it’s difficult to predict exactly how much you could make while trading thanks to all of the different factors that affect the market.

Your money goals also need to keep your initial deposit in mind – if you’re hoping to make a living trading, you’ll need to deposit at least a few thousand dollars. You can’t come in expecting to make a living off of a $100 deposit. When people set these goals and can’t meet them, they tend to become discouraged and move on to the next thing. Remember that setting goals is important, but you should focus on the short-term as well and think about improving yourself as a trader in the beginning. These healthy goals will make a better impact on your profits and your brain will thank you for the dopamine reward when you manage to reach your realistic goals. 

Reason #3: Their Balance Hits Zero

We all enter the field of trading to make money, but things don’t always go as planned. Beginners are more likely to make avoidable mistakes, like risking too much on each trade, setting their leverage too high, forgetting to exit a trade, or being oblivious to trading psychology. If these things lead to a blown account, it can be difficult to bring themselves to invest more money because their new mindset tells them that they just aren’t good at trading or that it isn’t profitable. If this happens to you, don’t give up. It’s just a sign that you need to spend more time researching and practicing before you try again. Try opening a demo account if you haven’t already or taking trading quizzes to really test your knowledge if you’re apprehensive about making a second deposit. 

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Beginners Forex Education Forex Basics

Guide to Identifying and Avoiding Dangerous Forex Scams

The Forex market is filled with competitors, and more brokerages pop up every single day. With so many options out there, comparing choices can be difficult or even overwhelming. Novice traders may not be apt at spotting scams, since many of these brokerages have nice websites and seem legitimate to the untrained eye. Unfortunately, there are a lot of scammers out there, and opening a trading account with one of them is one of the worst financial mistakes you could make.

Don’t let us scare you – good brokers are out there; you simply need to be able to identify the difference. Below, we will provide some tips that can help our readers know what to avoid when searching for a broker. 

-Transparency: A good broker offers a transparent website. Details about their account types, funding methods and fees, leverage options, and minimum deposit requirements should be clearly explained. If you’re left with more questions than answers, look for a broker that provides this information upfront. After all, this is need-to-know information!

-Check to see if the broker is regulated. This should be clearly indicated towards the bottom of the website, but you could also check the broker’s “About Us” page. Regulation is a good sign that the company is legit, although US-based residents may need to lower their standards because many regulated brokerages cannot offer service to these clients. 

-Remember that it is impossible for any brokerage to promise they will make you rich. There is no way for them to know that you will make profits, so any such claims are a bad sign. 

-Searching for background information about the company is a great way to see if things are legitimate. User reviews can also give insight into any hidden issues. Reviews might detail issues where brokerages won’t release funds to multiple clients, or other problems you wouldn’t otherwise know of.  

-Be sure to check the funding page for withdrawal rules. Some brokerages impose ridiculous rules and minimums that make it difficult for traders to withdraw their profits. 

-Check out the customer service options offered by the broker. Now, bigger brokerages can generally afford to employ LiveChat agents where smaller companies can’t, but listed contact methods and an address are all good signs.

-Use common sense: if something seems too good to be true, it probably is. Forex trading is risky no matter what, and brokerages need to make a profit. 

-Always check to see what type of spreads are being offered by the broker. On the benchmark pair EURUSD, spreads should be around 1.5 pips or less. We wrote about the importance of transparency earlier – never open an account with a broker that isn’t upfront about their spreads.

Forex Robot Scams

Although Forex robots are different than brokerage-based scams, they can still cause a lot of damage. Before purchasing a robot, do some research about the company or individual that is selling the product. Avoid any claims that the product is guaranteed to make you rich. Instead, look for good backtest results and tips from the author. Many providers will allow users to rent such a product before paying full price, or to at least test it on a demo account.

If you’re ever unsure, then reading user reviews and testing are the best methods of finding out the truth. Know that many of these products aren’t profitable and companies may present one backtest out of hundreds to trick traders into thinking their robot is more profitable than it really is. 

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Beginners Forex Education Forex Basics

Reasons Why Forex Traders Quit Trading (And How You Can Avoid the Same Fate!)

If you’ve ever looked at statistics about forex trading, you’ve likely noticed that the results seem bleak. If you haven’t, check out a couple of the current statistics we’ve listed below:

  • 80% of all day traders quit within the first 2 years.
  • 90% of traders lose money.

These statistics might shatter the delusion that forex trading is the answer, but this doesn’t mean you shouldn’t trade! You might be wondering what the point is if only 10% of traders never lose money. Well, most traders do lose at some point – maybe only a few dollars, or more, but this is expected. What matters is that you have more winning trades than losing ones. Still, you might be wondering why so many traders quit if forex trading is so great. Below, we will try to explain some of the main reasons why traders give up so that you can avoid falling victim to these common problems.

Reason #1: They Start with Unrealistic Expectations

Some people start trading for the wrong reasons. These traders hear about another person’s success and decide that they want a piece of the pie. Others think of trading as an avenue to get rich quick. Trading is profitable, but it takes a lot of hard work and determination. Plus, it takes time. How much time depends on the size of your initial investment, your strategy, and a whole host of other factors but the lesson here is still the same. You should only start trading if you’re willing to put the time into learning with an understanding that it could take a while to see a lot of profits, especially with a small investment.

Reason #2: They Use too Much Leverage

Leverage is attractive because it allows traders to increase their buying power. Unfortunately, overleveraging your trades can backfire. Many beginners turn to leverage without being fully aware of the risks. This often includes those that don’t have a large starting investment. Once these traders wipe out their accounts, they are usually scarred from the loss and never fund their accounts again, thus ending their trading career. The best thing to do is stick with a lower leverage option until you are more familiar with trading and well-aware of the risks. Even then, many professionals recommend using a leverage of 1:100 or lower.

Reason #3: They Risk too Much

Risk-management is essential for success if you decide to trade forex. No matter how skilled one is at trading, failing to use risk-management precautions is one of the biggest mistakes you can make. Setting a stop loss and reasonable lot sizes are some good examples of ways that you can limit your losses. Many professionals recommend only risking 1% of your account balance on any single trade. If you risk too much or you don’t have loss limiting precautions in place, then you’ll likely blow your account as many others have done.

Reason #4: They Let Emotion Guide Them

Emotion plays a bigger role in trading decisions than many realize. Anxiety can cause analysis paralysis, which results in the lack of ability to make any decision altogether or making delayed decisions when one needed to act quickly. Emotions like greed or excitement can cause the opposite, where one fails to stop trading when they should, and they risk too much. Traders that don’t recognize these emotions and their effects often fall victim to their downfalls. If you want to avoid these, research trading psychology to be more aware of the problem and work on self-discipline.

Reason #5: They Don’t Have a Trading Plan

It’s impossible to predict what the market is going to do, but a trading plan can help one to make more informed moves. Your trading plan or strategy needs to consider the best times to enter and exit trades, risk management, and other factors. An example of one common strategy called scalping revolves around making many trades quickly and profiting from small price changes. Day traders open several trades throughout the day and close them out before the end of the trading day. Swing traders do the opposite by allowing their trades to stay open for days or even weeks. Traders that don’t have a game-plan rarely fare well in live conditions. This is another way that traders wipe out their account balance early on and give up.

Reason #6: They Give Up Too Soon

Some traders get off to an unlucky start. Maybe they failed to get a proper education before opening a trading account, they didn’t have a good plan to follow, they used too high of a leverage, or some other reason. This doesn’t mean that person is a bad trader, only that they need to figure out where the problem is stemming from. Keeping a trading journal is one way to log this, but many traders don’t get that far because they become discouraged and convince themselves that they just aren’t any good at trading. If this happens to you, take a step back and look at the bigger picture. It may be discouraging to lose your initial investment but think of it as a lesson rather than a sign to give up trading for good.

In Summary

Statistics about the number of forex traders that quit might seem unpromising, but there are several reasons why traders quit that can be avoided. Here’s a quick summary of the most common reasons why forex traders quit:

-They don’t have realistic expectations and aren’t satisfied with making a small profit, so they quit trading entirely as it seems like too much work.

-They use too high of a leverage, which can quickly backfire and blow one’s account, especially if that person doesn’t have much experience. After losing their initial investment, they feel defeated and walk away.

-They risk too much on their trades, which is another quick way to blow through a trading account’s balance.

-They fail to see the ways that emotions might be interfering with their decisions. Some may be too anxious to make quick decisions and fold under pressure.

-Others may become too excited and risk too much.

-They don’t have a good trading plan to follow. This results in trading decisions that aren’t properly planned and lead to financial misfortune.

-They get off to a bad start and give up before they have a chance to improve.

If you follow our tips, then your trading career should get off to a smooth start. It’s discouraging to see disclaimers about the percentage of traders that actually make money or how many quit, but potential traders need to realize how many of those people weren’t prepared. If you give it a half-hearted go, then of course you are likely to fail. Those that put the effort into securing an education, choosing a good broker, and devising a good trading plan should go on to have a productive trading career.

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Beginners Forex Education Forex Basics

The Top 3 Richest Traders in the World and What We Can Learn from Them

Whether it be forex trading or virtually any other topic, we often turn to the experts when learning how to do something with success. Those who have come before us and become masters of their craft have a lot to share with the world. We need only know who to mimic when working to become masters ourselves. The following three individuals are, at present, the richest traders in the world. Let’s see what we can learn from them.

#1: Ray Dalio

Ray Dalio wasn’t always the richest trader in the world, but he has recently surpassed billionaire traders Carl Icahn and George Soros with a net worth of $18 billion as of 2020. Dalio is the founder of investment firm Bridgewater Associates, was ranked #4 on the 2017 hedge fund managers list in Institutional Investor Magazine, and was ranked as the 67th richest person in the world in Forbes a few years ago. Dalio became interested in trading at the age of 12 as the people that he worked for often spoke about stock trading. He credited meditation and an early success buying $300 worth of stock in an airline for helping to get him off to a good start.

Dalio took an interest in trading commodities in the 1970s before it was considered to be a lucrative investment. He then created his own investment firm Bridgewater Associates after being fired as a director at another firm. By 2011, his firm was the largest hedge fund in the world. Dalio also became famous after he predicted the global financial crisis in 2007.

Ray Dalio is obviously a genius investor that really understands how the stock market works. Young traders should take note of how young he got started and consider looking into a career at an investment firm or similar business. The investor has actually released a 15-minute YouTube video that explains “How the Economic Machine Works” and published a book titled Principles, which tells his life story and covers his money-management principles. If you want to learn more about how he did it, you should consider reading his book.

#2: Carl Icahn

With a net worth of $14.3 billion, Carl Icahn has currently traded his position as the richest trader in the world for second place. Before becoming a broker, he acquired a philosophy degree at Princeton and went through three years of medical school. The wealthy investor then decided to become a broker and options manager for two separate companies.

Carl Icahn amassed his fortune as a corporate raider by purchasing large stakes and either manipulating his targeted company’s decisions to increase their shareholder value or forcing them to buy back their stock at premium prices. This tactic was very popular in the 1980s and it helped many traders to become rich. He also used the green mailing tactic, where he would threaten to overtake certain companies so that they would buy their shares at premium prices to remove that threat.

Corporate raiders have to acquire a massive portion of their targeted company shares, which would obviously require a large amount of capital to invest. While this puts the strategy out of many trader’s reach, one could consider looking for investors to help get things off the ground. You would then look at taking over companies that are run poorly and that don’t share enough of their profits with their investors. When the time is right, you can then sell those shares at a huge profit if you follow the strategy. Of course, the need for a large investment might serve as a roadblock for many traders.

#3: George Soros

In his 40+ years of trading, George Soros has amassed a net worth of $8.3 billion, is the hedge manager of the flagship Quantum Fund, was named the “world’s greatest money manager” by Institutional Investor Magazine back in 1981, and has been nicknamed “the man who broke the bank of England.”

Soros is known for making massive, highly leveraged bets on the way the market will move. He takes macroeconomic analysis into account when making trading decisions. Macroeconomics studies the economy as a whole while focusing on national output, unemployment, and inflation rates. Soros does not believe in traditional ideas about an equilibrium-based marketplace and instead believes that traders cause booms and busts which are directly influenced by their irrational behavior. This presents opportunities to invest, according to Soros’ belief.

So, what can traders learn from this trading legend? In order to mimic his strategy, you’d need to have millions in your trading account to copy his massive bets and you’d also need a lot of knowledge about leverage, otherwise, you’d probably lose everything when making highly-leveraged trades due to how risky it can be. Those that don’t have the means to do this can still take a lesson from the way that Soros believes the market is influenced and should really look into macroeconomics and take that into account when making decisions.

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Forex Basics

Can Artificial Intelligence (AI) Successfully Trade Forex?

Artificial intelligence can do a lot of things. It has machine learning, meaning it is able to learn from mistakes and to adapt. It is able to kind of think for itself, to make complex decisions based on pre-programmed data as well as the learning that it has done from the past. It can calculate things far quicker and far more accurately than a human, but it certainly has its limitations. It can’t exactly think like a human and it can’t really work things out based on a hunch or by looking at external factors such as news and sentiment. So the big question is whether or not you can use artificial intelligence to trade forex.

Let’s kick things off by saying that computers and AI can be incredibly helpful when it comes to trading. It is able to do things that no human can. It can look at huge amounts of data in a very short time, something that would be next to impossible for a human to do, yet it only takes seconds for an AI system to do. With all of that information it is able to make predictions or to find any anomalies that may be in the data, something that can help us to avoid certain things. It is also able to use that data to look for trends, trends that could be repeating themselves, and ones that could be profitable. 

AI systems are fantastic at sticking to the plan, something that we as humans often fail to do. When a plan is created, the points and data are put into the system and the AI will then trade along with those guidelines. Us as humans get emotional. We think outside of those rules and so can put on trades outside of them, which usually leads to bad trades being made. This is not something that an AI system needs to think about. It will stick to the plan and any risk management plans that you have put in place, making it a little safer and potentially more consistent than a human trader, certainly an emotional one.

Speaking of emotions, the AI does not have any, at least we hope they don’t! The AI will work to a system, it won’t get stressed by a loss, it won’t get overconfident and greedy when it is doing well or not, it will simply stick to its plan, something that we often fail to do when our emotions and stresses get too much for us to handle.

Another great feature of an AI system is that it is automated. It doesn’t need to eat, it doesn’t need to sleep, it doesn’t need to work, and it doesn’t need any breaks. As human traders, we need to do other things with our life. It is not all trading and nothing else. Some of us have jobs, some family, and others just like doing other things. These all take us away from trading. When it comes to an AI system, there are no other distractions, it is there to trade and only trade, so it can be there 24 hours a day, taking all the trades that it needs to and never missing a single one.

Now, there are of course some problems when it comes to AI systems. Have you ever been trading and looked at the markets and something in the back of your mind has told you to trade something? You do not know why but it just feels right. You put the trade on and it wins. Or the opposite, something is telling you not to, a little feeling telling you that it is a bad trade, so you decide not to. The markets then react in the way your hunch told you that it would, you have either just made or saved yourself quite a lot of money. This is a human emotion, a feeling that we get and something that an AI will not. It will simply follow the set algorithms that have been built into it, not feeling this and eventually putting on trades that are good trades, but not correct trades.

There is a huge downside to trading with an AI, but this again comes down to human error. You would have created the algorithm for it to follow, but what if you put something in slightly wrong? A one when it should be a zero? Just a little mistake could potentially cause disastrous consequences. We aren’t talking about the robots revolting against the humans, but it could mean that the AI thinks it should buy instead of sell when a certain condition is met. This will lead to a loss and a loss every time that this scene takes place. So while it is not the AIs fault, it will continuously make the error when a human would not.

The AI is also dependant on the hardware and software that it is built on. We have all had computers fail in the past. If this happens to the AI, not only will it potentially lead to open trades being stuck open, but it will also give you quite a long downtime, time where no trades are being made and so profits are being lost. If parts aren’t available then it can take days, weeks, or even months to fix which is a long time when it comes to trading. There is also a cost to AI trading. You need to buy the equipment, the software, and any other components when things break. This added cost is on top of your trading balance and for some it may simply be too much.

The final disadvantage that we are going to look at is the fact that an AI system will take in all the information that it finds. Sometimes this can be a little too much information, some relevant and some not so relevant. The problem is that the AI will not be able to work out what information is good and what is bad so it will most likely use it all. This can make its predictions go a little off track. Using too much information can change a buy to a sell or to no trade at all. With a human mind, we are able to discard info that we don’t want to use. An AI system cannot do that, at least not very well.

So those are the advantages and disadvantages of using an AI system with trading. It certainly has its uses, but using it solely for trading could lead to some negatives. However, using it along with your own analysis and trading, as a tool to help you analyse and to gather more data is certainly a good thing to try. It can give you more information than you would otherwise have and can do calculations far quicker and more accurately than you can.

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Beginners Forex Education Forex Basics

The Top 6 Things We All HATE About Forex

Most people love forex trading. We would not be doing it if we didn’t. However, no matter how much you love something, there will be things that you do not love about it. When it comes to trading, although we may love it, there are certain things about it that we are not fans of. We have listed some of these things, along with tips for how to avoid them, whenever possible.

Missed Stop Losses

We all use stop losses on our trades. If you do not, then you should. The stop loss is there to protect your account. It is there to ensure that the trades do not go too far into the red when the markets go against you. Many traders seem to think that these stop losses are set in stone. The sad truth is that the markets can in fact move below these levels without it closing and so the stop loss will close at a larger loss. This normally occurs during times of low liquidity and high volatility. The markets will simply jump below the stool loss level and close out at a lower level. This can cause havoc on our overall profits and risk to reward ratio, but it is something that we are going to have to live with, even if we do hate it.

The Markets Move The Wrong Way

As a forex trader, we watch the news, we look out for economic announcements, and generally keep on top of world events. We know that these events can have an effect on the markets and generally the markets react in a  way that can be at least slightly predicted. Bad economic data should make something move down and good economic data should make the markets move up. There are however occasions where the markets just seem to do the complete opposite, for no apparent reason at all. Why this happens, many traders are not sure, the sentiment may just be too high. But when some really bad economic data comes out, something that would normally cause the markets to quite severely drop down, and the markets instead move upwards. This can cause frustrations, especially if trades were put on based on the economic data. This movement against expectations is certainly a cause of major frustration when it happens.

Unforeseen News Events

The economic calendars are fantastic. They give us an idea of what news events are coming up, and what currencies the news will affect the potential impact that they can have on the markets. This enables us to prepare and to stop trading if the conditions won’t be suitable for our strategies. The problems arise when a major piece of economic news comes out of the blue and there is no warning. These news events can cause the markets to jump or even trend, and when it is not predicted or there is no warning. This can catch you out, especially if you are not at your trading terminal and not able to make any adjustments. These news events can cause havoc can lead to losses, which is why we as traders hate them so much.

Long Withdrawals

This is only relevant to some brokers but isn’t it funny how deposits are instant, but it can take up to a week to get your money out. This can lead to a lot of frustrations, especially if you need that money for something. Many brokers are now moving towards same-day or at least next day withdrawals which is great, but there are a lot of them still stuck in the past with long delays to withdrawals. It is frustrating to wait, even if you do not need the money, the wait is something that we hate. Of course, you should not be trading with money that you actually need, so the withdrawal length should not affect your life. Still, it can be a source of frustration, as it is our of money after all.

Scams and Frauds

There are a lot of scams out there and unfortunately, they are giving the idea of trading and forex a bad name. With so many of them from brokers, fake money managers, fake social trading platforms, and more, it is certainly a minefield. Unfortunately, a lot of newer traders seem to fall for them, looking for quick and easy profits. They fall for a scam and then publicise the fact that they were scammed, giving people outside the trading world the idea that it is full of scams and that anyone that trades is potentially a scammer. Legitimate forex traders seem to hate those fake traders simply because of the reputation that they are getting and the reputation that is spreading to the legitimate traders too.

The Risks

If we want to make money there will be risks. Risks are a part of trading, but it is still something that we see a lot of traders say that they hate. We all have different risk tolerance levels. We can all handle different amounts of it, but it will be there with every trade. So while some traders may hate it, it is there, you can reduce the risks but there is no way of removing it completely apart from not trading at all. We all hate certain risks, but when it comes to trading, it is, unfortunately, a necessary evil that we will need to live with.

Those are some of the things that we go through as traders that we absolutely hate. Hopefully, you won’t experience some of them, but we are sure that you will experience at least one of them at some point in your career. If you do go through them, remember that much is out of your control. Do what you can to get past it and to rectify anything that may have happened. It is not the end of the world, even though we do hate it.

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Forex Basics

Avoid These Mistakes that Will Completely Blow Your First Broker Deposit

Let’s be honest. The majority of us have probably blown our first trading account. The majority of us have probably blown our second account, too. The majority of traders will lose their first deposit or at least a part of it. But why is this? What are they doing that causes them to lose pretty much their entire balance? There are plenty of reasons why this happens, each one will be different depending on the trades in question, but we are going to be looking at some of the common reasons as to why traders end up blowing their initial deposits with their broker.

Trading Without a Plan

Your trading plan should be the first thing that you create, yet so many people do not do it before they start trading. Either they have come into trading with the idea that it is easy, and all they have to do is predict the movement and they will be rich, so they don’t need this plan. These sorts of people come from the thousands of adverts that you see out the promising high returns which simply are not real. Then there are those that know what they need to do but are simply too lazy to do it. These people don’t bother with the plan either and instead go the lazy route of guessing where the markets will go, or simply copying what others are doing. Either way, both of these people will end up losing their accounts, simply because they do not understand what it is that they are doing properly, a recipe for disaster whatever you are doing.

Lack of Education

A lack of education is another killer of accounts. There is a lot to learn when it comes to forex and trading, too much for any one person to learn. However, there are certain things that you need to learn before you start trading. If you do not then you will be bound for losses. You need to learn some of the basic terminology, different order types, and also things like risk management which will allow you to protect your account and your capital within that account. If you do not learn even the basics then you will be guessing and you will be making mistakes. Mistakes that will cost you money. You do not need to learn the world, you do not need to know what an expert does, but you need to know what you’re doing, why you are doing it, and how you can protect yourself from losses.

Gambling

Gambling, something best left for the bookies, yet it is something that a lot of people come into trading and do. People gamble for a number of reasons, for the thrill of it, due to not fully understanding what they are trading, being lazy, or simply wanting more easy money. Whatever the reason behind why they are gambling is, it doesn’t change the fact that what they’re doing is dangerous and will lead to a loss of your balance or even your account as a whole. It may seem simple, the markets will either move up or down, so it’s a 50/50 chance that we will be right. Unfortunately, the markets don’t work like this and it is a little more complicated. In fact, there are hundreds of things that affect the markets, and simply guessing will make you wrong the majority of the time. If you want to gamble, do it away from forex, there are far better things to gamble on, but we can assure you, if you decide to do it here, you will just end up with a zero account.

Trades Are Too Large

A lot of people come into trading with the expectation that they can make a lot of money. While this is true, there are things that you need to do to protect yourself first. One of those things is not trading too large. The idea of making a lot of money can be an enticing one, it can cause people to place trades that are far too big for their account which in turn would cause them to lose a lot of money on their trades. If you place a trade that is too large for your account, a single trade can cause it to blow. Many people do this due to the lack of knowledge on how big their trades should actually be, going in blind, and then guessing is never a good strategy. So ensure that you understand how big each trade should be for your account when trading. This should be outlined in your trading plan when you create one.

Overtrading

Similar to the point about overtrading is when a trade simply places too many trades. The more trades that you put on the more risk that your account is under. There is also something known as margin, which is basically a figure that tells you how much you are able to trade. The more trades that you put on the lower the margin becomes, and when it reaches a certain level, your broker will actually close out all of your trades at a loss. If you don’t understand this, you will continue to put on trades until your margin is used up, then even the smallest movement in the wrong direction can cause your account to close and basically lose everything that is in it. Your strategy should have a max number of open trades allowed, try not to exceed it and try not to place trades simply for the sake of placing trades.

Using Emotions

Emotions are strong. Emotions have the ability to take over and emotions have the ability to blow your accounts. Do not let this happen. Instead, you need to be in control. If you feel things like greed, overconfidence, doubt or any other emotion start to creep in, this is your time to step away. When you trade with greed or overconfidence, which many traders (especially new ones) do, you will be putting your account at risk. You will be placing more and larger trades, trades that you probably shouldn’t be making, putting your account at risk and when you do that, there is a good chance that your account will be drained. If you are feeling emotional, try not to trade. Go out for a bit, take time to relax, and then come back with a calmer and clearer mind.

Not Using A Demo Account

It is always recommended that you use a demo account to begin with. If you are coming straight into trading then you most likely do not have any experience. You also probably don’t have a whole host of knowledge, if this is the case, then do not jump straight into trading on a live account. Instead, you should be using a demo account, this is where you can practice your strategies, practice putting on trades and basically ensure that you have some sort of idea of what you are doing before you start risking any of your own money. The last thing that you want to do is to jump into a live account with your real money only to realise that you do not know what you are doing. It is best to learn that on a demo account where your money is safe.

These are some of the things that people do that end up blowing their first account balance. We have all been there, so if you have experienced it, do not feel disheartened. Even some of the best traders in the world have blown accounts. It is simply a part of trading. Learn from it, develop yourself further and you can help to ensure that it doesn’t happen to your second or third account.

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Beginners Forex Education Forex Basics

Ask Yourself These 5 Questions Before Trading Forex

If you are thinking about making the jump and investing in a trading account, there are a lot of choices and a lot of decisions that you need to make. Your family, your friends, and people randomly over the internet will want to give you advice. They will want to point you in the direction of what they like and what they think is right. This can be helpful but it can also be detrimental. With so many different voices and opinions being thrown at you, it can make it hard to keep sight of what it is and the reasons as to why you want to trade in the first place. 

With this in mind, we have come up with some questions that you should be asking yourself. They will help you to really understand why it is that you are looking to trade and why you should or should not be doing it. You may not be able to answer them all or you may not be sure of the answer and that is fine. Use this as an opportunity to work them out, as this will then enable you to know whether trading forex is the right thing for you.

What is your end goal with trading?

When people look at trading, they often see the big numbers and the fortunes that could be made. If this is your end goal then you could be in for a little bit of a surprise. Things aren’t that simple and people very rarely see those larger numbers in their accounts. It is important that you have a more realistic end goal, something like being able to quit your job. This is achievable. A lot of people do it and it is certainly something worthy to aim for. Ensure that your goal is manageable and that you do not forget it, keep your eye on it to help you remain focused. People Will say that it is wrong or bad, but it is your goal, and if you believe in it, you should be able to achieve it. Just ensure that you actually have one as you are not simply trading blind, there will be times where it will be hard to motivate yourself.

How does the idea of trading make you feel?

Before thinking about this, have you actually traded before Either real or demo accounts? If you have then think about it when you were actually trading, if not, just think about how you would feel about trading with your own money. Many people like the idea of trading or the idea that they will be able to make money, but when it actually comes to trading or to actually risk some of your own money. If you feel nervous about putting your money on the line or taking a risk with it then trading may not quite be the right thing for you, or you will need to ensure that whichever strategy or trading style that you are going for suits your risk tolerance. You need to be able to accept a certain level of risk if you want to trade. Also, consider your thoughts and feelings towards learning, many people do not like to sit down and read a lot of information. If you can manage this then it’s a big plus. If you cannot then it could be a long journey ahead of you.

Do you have enough time to trade?

Trading takes time, a lot of time, if you were to think about your average week, excluding the weekends, how much time do you actually have free? You need to consider your other hobbies, your family, your social life, and of course work. 99% of people start trading as a side hobby, something to do after work or on their day off. It’s great that you are doing it alongside your work, but this will end up taking away pretty much all of your free time. There will also be some limits to what you can do, some strategies and trading styles require you to be in front of the computer for extended periods of time while others only a few minutes. So before you decide how you want to trade you will need to work out which style would better suit you.

Do you have enough capital to trade?

Trading takes money. While it has become increasingly accessible, with accounts being able to be opened from as little as $10, it does not mean that you will be able to be successful with that amount, let alone make enough to achieve the goals and targets you would have set for yourself. If you want to be successful and to use proper risk management techniques then you will need to ensure that you have enough money to support it. Your capital needs to be in line with your goals, so if you want to earn $10 a month, then a $100 account may be enough, but if you want to earn $1,000 per month then you will need at least a $10,000 account in order to do it safely. Trading can be an expensive game, and remember that any money that you put in is being put at risk, you are able to lose it all regardless of how good your money management is.

Do I have the determination and dedication for it?

Trading takes a lot of dedication and commitment to be successful. It is true that anyone can trade, anyone can enter into a trade, but it takes time and a lot of effort to fully understand why you are putting on trades and also which trades you should be taking. If you are someone that gets bored easily and likes to move onto the next thing, then trading may not be right for you. You need to go into trading with the idea and understanding that this is a long term thing, we are talking years or even a lifetime. You won’t be successful straight away, in fact, the majority of people who trade quit within the first year either due to losses or simply getting bored of it. Know that you will be here for the long haul, and if you are the sort of person with the personality that can deal with that, then it is a good start.

The start of your trading journey comes far before the first trade has been made. It comes far before you have even signed up with a broker and it has even begun before you have read your first educational article. You need to think about whether the prospect of being a trader is right for you right at the very start. If you are not sure or don’t think it is for you, there is nothing wrong with that, but you do not want to then still get involved, spend hours of your life learning and trying just to confirm that it is not right for you. Simply look for something that is instead. If you feel that it is right, then start learning, you are now embarking on a long and hard journey, but one that can reward you with pretty much everything you need to stick with it and continue to learn.

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Forex Basics

How to Safely Trade Forex In Kenya

Around the globe, Forex trading is becoming more and more popular, pretty much every country in the world has a community of traders within it and Kenya is no different. The forex markets offer its traders high levels of liquidity, low costs, a large selection of trading platforms, and many different assets and currency pairs to trade. Over recent years, the popularity of trading in Kenya has been on the rise with there being many more retail traders each and every year. There is now a predicted 70,000 plus traders in Kenya according to recent estimates, and this is a number that will only go up.

Living in Kenya does not limit you from trading in the global markets. There are brokers and markets available to you just like anywhere else in the world, there are Kenya based brokers as well as a large number of brokers based outside of Kenya that are available for Kenyans to trade with. Trading through these brokers is incredibly easy and incredibly simple. All you need these days is a computer or smartphone and an internet connection. You can then simply sign up and begin trading. Forex trading is all about trading the movements of currency value.

In terms of regulation in Kenya, the regulatory body in Kenya is known as the Capital Markets Authority or CMA for sport. Every broker that is based in Kenya will need to be authorised by the CMA in order to legally serve residents from Kenya. There are, of course, other brokers as mentioned that are not located within Kenya that also serve people from Kenya. The CMA advises against using these brokers, but depending on the trader, this may be the best course of action to take. The decision will be up to you.

When you are choosing the broker that you want to use as a Kenyan, there are a few different things to consider. Firstly, there are a large number of regulatory bodies the most known ones include the FCA in the Uk, NFA in the US, CySEC in Cyprus, and ASIC in Australia. Then there is the CMA that we mentioned above in Kenya. Many will say that a good broker needs to be regulated but this is not necessarily the case. Many regulated brokers will protect your funds, but the actual way that they run is very similar to the non regulated ones, well at least the better-unregulated ones. Many see regulation as a symbol of trust, and some brokers are also regulated by multiple regulatory bodies from different countries.

So let’s assume that you have decided to trade in Kenya, there are a few things that you would need to do in order to ensure that you trade safely there. The first is to get a good understanding of what trading and forex actually is. To put things simply, trading is about the exchange of currencies, but when using a forex broker you are trading on CFDs which are contracts for Difference. This basically means that you are not physically buying the assets or currencies, instead, you are simply stating whether the price will go up or down.

You then need to get yourself a broker, there are a lot of them out there, we mentioned about regulations above, whether you go for a regulated broker or not is up to you, but there are a few things that you need to consider. Think about the spreads that are being offered, the minimum deposit that they require for the different currencies and other instruments that are available to trade with them as well as many other factors such as commissions. You should also select an account type that suits both you and your needs. There are many different types from a standard account, ECN accounts, STP accounts, and even micro accounts that require far smaller deposits.

So you have your account ready, but are you aware of the risk involved with trading? It is important to understand them so you can try to avoid as many of them as possible. When reading you will be using leverage, this is where you can borrow money from the broker in order to place larger trades, this leverage can increase your profits but it can also increase the potential losses, if you are not a confident trader then we would suggest using a lower leverage in order to help protect your account from large movements. You should also be aware of the volatility that can come with the markets, any sort of news event can cause the markets to jump.

Different currency pairs also have different volatility, the higher the rate volatility the more the markets will jump about, making them quite dangerous trading environments. You should also keep an eye out for anything strange that may be happening with your broker, some have been known to manipulate their markets and charts. For this reason, ensure that you are using an ECN or STP broker, this eliminates the ability for the broker to manipulate the markets and to trade against you. Instead they will be trying to help you win, as that is how they make their money.

Now you need to do free things that will help to mitigate any risks, you will never be able to get rid of all risk. The only way to do that is to not trade at all, but we can certainly reduce some of them. Get yourself an education, learn as much as you can, start with the basics and then start to work your way through all that there is, learn a strategy, risk management, and more. You will never learn everything, but understanding that you will always be learning is a good place to start. You should also ensure that you are using a save leverage, do not go crazy, some brokers are offering up to 2000:1 which is high, very high. You should not be going higher than 200:1or 500:1 if you can, as this leverage offers you good margins and profit potentials without going too high and increasing risk too much.

We mentioned getting yourself a good broker. Take your time to work out which one you want to use. This can be a big decision but it is not a final one, you do get the opportunity to change and many people do throughout their trading careers. Lastly, you need to ensure that you have your risk management plan in place, this will include your risk to reward ratio, how much you will risk. Some people go for low numbers, others for things like 10:1, it needs to be in line with your strategy and within your own levels of risk tolerance. Your risk management plan can be one of the most important aspects of your trading career.

The final and important tip is to simply trade with what you can afford. If you need the money for food or rent, or it will cause you issues if you lose it, then do not trade it, only trade what you can afford to lose, this cannot be said too many times. So those are some of the things that you can do in order to trade safely within Kenya. Ultimately it is up to you which broker you go for, which currencies you trade, and the sort of account that you use. Take your time to learn and educate yourself, spend only what you can and you should be in a good place for some safe trading in Kenya.

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Forex Basics

Read This Before Turning to Facebook for Your Forex Education

Facebook is huge, it has been around for many years now and is the most popular social network in the world right now. Due to its size, it is not a surprise that a trading community has been created around it. In fact, if you simply search for forex, there are hundreds and thousands of groups that come up, from all sorts of things, country specific forex groups, currency specific groups, educational groups, affiliate groups, and pretty much anything else that you can think of. With all of these groups and pages available, is Facebook actually useful when it comes to your trading education? That is what we are going to be looking at today.

The simple answer to this question is yes and no. Facebook has a whole wealth of information that is posted from its various members, but there is also a lot of false information being posted too. We are sure that you have heard of fake news, a phrase made famous by Donald Trump, the saying, unfortunately, has a lot of merits when it comes to Facebook too. While there is a lot of information there, we need to be careful as to what we decide to believe and what we don’t.

With so many different groups it can be hard to find the right ones, a lot of the groups are made up of people simply spamming their own services, with very little discussion about actual trading, or when someone does ask for help their post is simply drowned in the flood of otherwise useless posts from automated profiles and bots.

If however, you do manage to find a group that is good at weeding out the spam, and has an active user base, then you may have stumbled into a goldmine for things like feedback and trading ideas. When you have a group of people who have a similar mindset to yourself, then it is a fantastic opportunity to get some feedback on your own trading ideas, it also allows you to throw ideas about to get some pretty quick feedback from people who are in the same boat. These sorts of groups can help you to get confirmations of your ideas and also counter ideas, which could potentially help you avoid making some bad trades.

A problem with Facebook is that it has become the breeding ground for scams. Pretty much every group that you look at you see people advertising their mentorships, their trading signals, their huge returns on investments, and other various things. You need to remember that if something seems too good to be true, it most likely is, if someone is advertising that they can get you 0 a day for an investment of $10 then there’s probably something just a little fishy about that. The same goes for signals, if they are advertising 100% accurate signals, but you need to join their group or telegram channel in order to get them, then there are two things wrong, firstly no one has 100% accurate signals, and if someone is asking you to join their personal things especially off of Facebook then this should be a warning flag too.

If you do join a group, and you see people advertising their trading software, then this is actually not allowed anymore. Facebook classes all forex software as a “get rich quick” scheme which is now against their rules to advertise. So while there may be some legitimate software out there, it is best not to take the word of anyone on Facebook and certainly not to purchase something that was advertised within one of the groups.

Along with the groups, there are also Facebook pages, which are often from companies, some legitimate and some not but they also include a number of different trading education sites and companies. While they may not actually be offering their services on Facebook, it is a good opportunity for you to work out what different offerings out there are. But again, you need to be wary of the ones that are simply there to try and take your money rather than offering a true service.

So ultimately, Facebook does have a lot of useful information. The problem is that it is very hard to find the groups that are actually useful, with so many bots and scammers about it is a minefield for those that are not up to date on what they need to look out for. If You can find the right groups then it can certainly be helpful at getting feedback and replies from other real traders, but if you cannot, then it is probably best to look for your trading advice and education outside of Facebook on a more dedicated forum or website.

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Forex Basics

The Lazy Way to Trade Forex

Let’s be honest, if we could, the majority of us would do everything the lazy way. Why put in the effort and time if you can do it much quicker and with half the effort? This isn’t any different when it comes to forex, with the accessibility that it has now, there are a lot more new traders coming into the trading world, and many of them are not here to put the effort in. Instead, they are here to simply try and take some profits. There is nothing wrong with simply wanting profit or to trade for only the money, many people do this, but when you come into something as huge as forex, you will most likely expect to put in a bit of work, but there are things that you can do that take away a lot of the effort and time that it takes to trade. So that is what we are going to be looking at today, how you can trade, the lazy way.

Gambling

The first and most obvious way to trade the lazy way is to do something that is not recommended at all, and that is to simply place trades without doing any analysis. Doing it this way allows you to trade with very little effort, all you need to do is actually place the trade and it also saves you time from having to do all of the analysis, something that can potentially take a long time to do. Trading this way is a sure-fire way to a loss of your account and let’s be honest, it is simply gambling. So no matter how lazy you are, we would recommend simply not trading this way, instead, go and do some sports betting, you will have more success gambling that way.

Social Trading

Something that has really started to take off in the last few years is social trading, this is where you go onto one of the many platforms that are available, look at the traders that are currently trading and then find the one you like. Once you have found them, you simply subscribe to their profile and your account will start copying their trades. The reason why this is known as a social platform is that you are able to message and communicate with them in order to get some feedback and give your ideas, you can chop and change who you follow at any time from the available traders. This saves you time and effort because all that you are doing is signing up, selecting a trader to follow, and then pressing a single button, all the trades and everything else will then be simply copied from the trader, no effort on your side. The downside to this is that you are fully trusting the other trader, you have no control over the trades so you are effectively giving your account to the other person to trade.

Signals

Another thing that a lot of people seem to be doing lately is to follow signals, this takes little more front than simply copying someone, but signals are where a trader has basically done all the research for you, they then publish the trade that they recommend that you take, it is then up to you to actually put on the trade. So while there is a bit of effort, you are saving a lot of time in avoiding the analysis side of things. Of course, you are trusting that the analysis done by the trader is correct as you are simply blindly following the signal. You can of course do your own research to help confirm it, but then it isn’t quite as lazy is it?

Expert Advisors

There are also expert advisors, these are bits of software that people also refer to as bots. They are often based around an indicator or a number of different indicators and will then take action and open and close trades based on those indicators. So unlike indicators themselves, the EA will actively place and close trades rather than just show you information. This takes away all of the work and time that it takes to trade as the machine will do it for you, it will also trade when you sleep which makes them very desirable. Of course, you are putting your trust in the robot, they cannot think or adapt very well so when the markets change you will need to be there to make changes or to turn it off to avoid larger losses. There is also a startup cost to this method as you will need to purchase torrent the EA, but once that is done, you do not need to put much effort or time in at all.

Using Single Indicators

When it comes to trading, many traders will recommend that you use a lot of different indicators, this brings you a lot of different bits of information that can help you to work out what to trade. The problem is that with each new indicator, it is adding to the amount of time that you will be spending looking at the info and working out how it relates to your trade. So what you can do instead is to take a single indicator and trade with that. It will mean that your trades won’t be quite as reliable or accurate as with more but you will be saving time as you only need to look at that one indicator instead of many. This can be a little risky, and could even be considered as a gamble, but at least you are having one indicator rather than going completely blind, so it is one step further than gambling itself.

Those are some of the lazy ways to trade, if you are planning on doing this then ensure that you look into who you are copying and what EA you are buying, you also need to be comfortable with the fact that you will have very little control over your own trading account as you are trusting someone or something else. It will however give you a lot of time to do things for yourself rather than trading, these methods work well for those that are not really interested in trading themselves or the experience of it, but for those that are simply looking for the profits that come with trading.

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Forex Basics

Warning: These Mistakes Will Completely Destroy Your Forex Profits!

Let’s imagine that we have been trading for a while for a few months or a year, we are profitable, we are on a high and then all of a sudden, things go wrong, we lose some of if not all of our profits, but why? Why have we made these losses? There are a number of very common mistakes that people make which can lead to them losing their profits, or even their accounts. These mistakes can be easily avoidable, some through your own actions and others by changing something that you use. We are going to be looking at some of the mistakes that people make which can eat into their profits and also what you can do to try and avoid making those mistakes yourself.

Forex Broker Charges

From the very start of your trading career you will be using a forex broker, these brokers, unfortunately, have charges. Each broker will have completely different charges and they come in the form of three different things. There is the spread which is the gap between the buy and sell price, some brokers will artificially increase this gap as their way of taking payments for each trade, others trade straight up commissions. Every trade that you place will have a charge attached to it that you must pay. There are then swap charges, these are charges that you pay to your broker for holding trades overnight, they vary with the interest rates of the markets. All three of these charges have the opportunity to eat into your profits, when deciding which broker you wish to use you will need to take this into consideration, if you are using a scalping strategy then having a broker with high charges will basically use up all of your profits making it pointless. So ensure that you chose the right broker that won’t eat into your profits from the very start.

Swap Charges

We briefly mentioned swap charges above, but they can have a larger effect than you may think. We have seen trades being held over a period of a week or two which have had swaps so large that even though the trade was in the blue, it was in fact trading at a loss, and the longer it was held the larger that loss became. You need to keep track of your swap charges, especially if you have a lot of trades open at the same time, if you fail to do this, they can very quickly mount up and overwhelm your profits, even causing you to take a loss when the trade is in fact winning. Know your swaps and understand what swaps are going to be applied to your trade, it may be worth taking a small loss in order to protect yourself from larger swap charges.

Forgetting Stop Losses

One of the major parts of your risk management plans will be your stop losses, they are designed to protect your account and should be there with every single trade that you make. However, it can sometimes be easily missed, especially if you are very quickly trying to put on a trade at the current price due to volatility, some strategies will have you placing the trades and then coming back to them to combat the losses, but again, this can mean that it is easily forgotten. We need to ensure that we are placing the top losses with eerie trade and that we are putting them on as we open the trade. If you feel what you do not have time to put them on, then put them on as soon as it is open, if not then avoid trading in what manner completely, you need to take your time to ensure that they are on so that you do not take larger losses which could take away quite a lot of the profit that you have previously made.

Not Diversifying

Think about how many currency pairs or assets you currently trade? If it is just one or two then there may be an issue. It is true that when you start out that you should only concentrate on one pair until you understand it, but once you do it is important that you start to branch out. Having trades on more than one pair, more than two, or even more than three will help to protect your account, it ensures that you are not putting all of your money on a trading pair. This means that even if one goes negative, the others will be there to help maintain your current profit levels and to help protect your profits and account. It is important to branch out, but remember not to do it too quickly and overwhelm yourself.

Changing Your Strategy

If your strategy is bringing you profits, why would you change it? The thing is, that many people do for some reason. We cannot explain it, but if you are doing something and it is working, do not change it, the old saying, “If it ain’t broke, don’t fix it” is very relevant here. Yet we see people do it all the time, changing things because they think that it will make them that little bit extra. That extra would be nice, but why risk losing something that you already have in order to get it? Stick to the working strategy. It has brought you profits up to this point, so there is no reason why it will not bring you more afterward too.

Letting Emotions Take Over

Emotions are wonderful things, they make us feel and they allow us to do things that we otherwise would never dream of doing. Unfortunately, when it comes to forex, those emotions are not exactly the most helpful thing. Things like greed, overconfidence, doubt, and pretty much anything else can have negative effects on our trading. Things like greed and overconfidence can cause us to trade outside of our plan, to place additional trades, and to also place larger trades than we are used to which is dangerous and is a sure-fire way to make some losses. Things like doubt can make it so we simply do not want to place any trades, to avoid putting them on makes trading completely pointless. If we aren’t going to trade, why are we sitting here with our money in an account? It can be hard to control the emotions, but if you feel them taking over, take a break, take a step back and relax away from trading, this way you can come back with a clear mind and then continue to trade to the plan.

So those are some of the things that people do that ends up eating into their profits. There are of course a number of other things that people do, some are obvious, some are not so obvious, but what is certain for all is that we need to stick to our plans and not change things. Understand what and why we are trading and then simply let the profits grow without any added interference that could potentially cause us to lose some of those hard-earned bucks.

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Forex Basics

What Are the Advantages of 1:1 Leverage in Forex Trading?

When it comes to leverage, you often see larger numbers being advertised, brokers trying to entice in new traders and new webers with the promise of sky-high leverage. In fact, the new standard of leverage being given by brokers these days is around the 500:1 level which would have been unheard of a few years ago. Some people, however, still swear by simply not using leverage, to use an account with a 1:1 leverage which basically means that you will be using your own money and only our own money, not borrowing from the broker at all. This does of course come with some advantages, advantages that we will be looking at in this article, so let’s jump in and see what the advantages of trading with a leverage of 1:1 are.

What Is Leverage? 

Before we do that though, a very brief overview of what leverage actually is. Leverage is basically a way of using more money to trade with than you have in your account. If you have a leverage of 100:1, it would basically mean that for every $1 in your account, your broker will let you trade with $100, they would simply lend you the other $99 in order for you to trade. So an account balance of $1,000 would have the trading power of a $100,000 account. This enables you to place larger trades giving you larger profit potential, but it will also increase the risk that you are putting on your balance with the larger trade sizes.

So there are certainly advantages to trading with a higher leverage, especially the profits that we are all after. There are however advantages to keeping your leverage low, so let’s take a look at what they are.

Advantages of Leverage

One of the main advantages to keeping your leverage low is the fact that it enables you to better manage the risk on your account and can allow you to survive for a longer period of time during a period of lots of losses. If we have a trading power of $100,000, this would mean that for an account with a leverage of 100:1 they will only need $1,000, however for an account with a leverage of 1:1, they would need the full $100,000, sounds like a disadvantage needing that much, which is true, but hear us out.

When we put on a trade with an account with the leverage, and the value of the trade drops $1,000, you technically still have $99,000 right? Wrong, due to the leverages, you were able to place those trades, but the $1,000 drop will have completely blown your account. With the leverage at 1:1 however, your account would be set at $99,000, with just the $1,000 lost. So it basically allows you to survive larger movements and consecutive losses that would have otherwise blown a leveraged account.

Transparency

There is also a lot more transparency when it comes to a leverage of 1:1, what you see in your account is what you have and what you have available to trade with. It can be quite confusing when trading with leverage, working out what your margin levels are, working out what your trading power is, and so forth. With the 1:1 leverage, you know exactly what there is and you know exactly what size trades you are able to make. This level of control and transparency can make it far easier to analyse your own account and to work out your risk management plans as well as your risk to reward ratio.

Balancing Losses

Trading with a low leverage keeps losses in line with your account balance, we mentioned before the heavy losses that can come from leveraged accounts, we just wanted to confirm this again. When we trade with low leverage, your losses will be in line with your account, you will be in a much better position to manage those losses and to be able to take a number of them at a time, not putting huge dents into your account. You also do not have any liability when not using leverage, many brokers will charge you a form of interest for using their leverage, so holding trades or simply placing them can mean that you have to incur a charge from your broker. Having a 1:1 leverage will mean that you are not borrowing any money and so do not have to pay the interest for doing so, another advantage and a day to save a little bit of your capital.

Impact on Margin Calls

Trading with a 1:1 leverage also helps you to avoid those pesky margin calls, these are levels set by your broker that are to do with your margin levels. When your margin level falls below the set amount then the broker will basically close all of your trades, this is done to protect you and to prevent you from going into negative balance, something that used to happen quite a lot in the past with leveraged trading. Not having to worry as much about margin calls can take a level of stress out of your trading. It will be very hard to get a margin call when trading on a 1:1 account simply because you are not borrowing any money to trade, what you see is what you have, and so the margin requirements are not as relevant.

Impact on Mental Health

Trading at a low leverage can also be beneficial to your mental health. Trading can be stressful, and when trading with leverage you are adding to that risk and the stress that you will be put under. You are risking more per trade and so each trade will give you additional stresses as you are risking your own money. With a 1:1 account, you are risking a limited amount and so the risks are lower, and so is the stress that you are putting yourself under. If you are a risk-averse person, then low leverage will be perfect for you.

So those are some of the advantages of trading with a 1:1 leverage, we are sure that there are some others out there there are of course some disadvantages too, as there is with any form of trading or leverage amount. You do need a lot of capital to begin with and it will take longer to make decent profits, but you need to weigh up the pros and cons, there are certainly a lot of advantages to trading low leverage, especially if you are not a fan of risk.

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Forex Basics

Follow Top Trader Advice When Getting Started in Forex

Starting the forex journey has a reason, so you first need to know what you want out of trading once you are familiar with the basics. It is not always about the money, some people like the thrill of trading, however, if you want to have some income out of forex forget about getting emotional. The great thing about forex trading is that it is very flexible for you. You can shape trading how you like it, trade only 10 minutes a day, explore an incredible array of methods possible, and use your knowledge how you see fit.

Now we have mentioned a broad spectrum, when you have so many possibilities people start wondering if they have made the right choice. Eventually, your trading will become a result of what you like but also evolve as you develop the skill and discipline. The right path to consistent results is very hard, that is why most fail. But it is not hard to learn to trade, it is hard to fight with the emotions and urges trading will put on you many times. Therefore, we have made a few steps that will put you on the right track, getting started is a crucial moment that will direct you for some time. Sometimes it may take a while to understand that a particular trading method is not for you, but this is ok, successful traders fail and keep trying. 

Treat Trading Like Your Business

If you want to treat forex trading like your little business project, you are on the right track to becoming a professional trader. If you are in for the thrill, make fast money, consult our other articles about this to have at least a bit better luck (probabilities), you are going to need it. Now, making things serious will result in serious outcomes. Forex, after all, will just reflect what you have been doing and how on several aspects: your mindset or psychological aspect, how you manage your capital when trading or risk management, and finally your trading methods. You have to master these three pillars of forex trading. All of these aspects need to align with your personality and lifestyle. 

Now that we have outlined the most important things you need to focus on, let’s first get acquainted with forex and trading. Your first stop can be babypips.com. The internet is full of guides about forex, however, this portal has easygoing content beginners like. You can also consider our article about free resources you can gradually explore as your skill and knowledge grow. Some things need to be understood before trading, consider babypips as your encyclopedia about forex, however, we do not recommend applying right off trading methods in the later lectures about advanced trading. This part has to be molded as you want and at the end of the day, where you have the best results. Actually, the biggest part of making yourself a pro is finding where you perform the best, all aspects combined. 

Trade Demo First!

After you have a picture of what forex is, you might try demo trading. Demo trading can be done in several ways, and again the internet is providing you the best tools for this. Just two decades before, traders had a lot harder way to test their trades. You can try to handle the tradingview.com portal and try out some trading. Use their charting to explore practically what you have learned from babypips lessons, spend some time getting familiar with the charts. The replay button on the top is very handy if you want to test out your trading ideas. 

After you get familiar with charts, time to get to some demo trading. Metatrader platform is great for this and is supported by the majority of the brokers. Find one regulated broker you like, consult our resources to find one, and get familiar with the client, there are many guides online. Demo accounts are where you will spend most of your time, forward testing or trading in real-time, and backtesting your strategies. Only by doing this part, you can know if you have something worth working on further. Of course, there is a proper way of doing this too as we have explored in the previous articles. Know you are most likely into an emotional rollercoaster, what you have made may not work for a long time. If you find yourself in a position you become wondering again, you may need more guidance. 

Take Advantage of All Resources

At this point, you may try to find other resources where you can have a glimpse of how professional traders trade. By professional, we mean proprietary firms and fund traders that have real experience trading large portfolios and manage other investors’ money. To find these people is not easy, however, social media is a good source where to seek them. Learning from the greats is completely normal, even required if you want to get to the top of the forex game. Find like-minded people and their channels on youtube, tweeter or forums. It is important to align your trading ways with similar traders or their strategies.

The result from this is that it could point what is missing from your current strategy which is not performing well. But also, inspired to try new things too. Experienced traders have discovered what works and what is junk already, most of the methods and tools are not very good, so do not be surprised if everything you have made so far is way below what is considered good and consistent. 

Once you make your strategy sound and rigid, traders at this point often fail on the psychological aspects. Messing up with the rules that could work is a common mistake. It is just a matter of if you can keep consistent with your strategy to get consistent results. Of course, the strategy that works is backed up by rigorous proving grounds you had to endure but everything can fail if you do not follow it to the letter. There are so many reasons to get off track on the psychological aspect many professional traders agree this is the most important pillar. Right after it comes how you manage your risk in trading. Therefore, all things considered, you might want also to include some books while you are exploring other strategies and traders. 

Forex Reading Materials

Forex books come in many flavors, however, when you are getting started it is recommended to read those that concern with trading psychology. Some of the most interesting books in this category do not even talk about forex trading, but everyday discipline. Once you have understood some strategies on a more advanced level, and also explored other tools not mentioned on babypips or other media, it is time to make sure you are not making any emotional decisions in forex.

Some of the books we recommend to get started are from Ray Dalio, one of the best economists who can transfer an incredible amount of useful information that is easy to digest. Advanced forex psychology books, but good ones may come from less known traders, such as “No Nonsense Forex Trading Psychology” by Patrick Victor. Books such as these not only point where your drawbacks and mistakes are, but also motivate traders to keep pushing to the top. As mentioned before, not quitting is the only way to succeed.

With this article, you have some starting points but also you know what to do as you progress. Exploring forex trading is a very engaging journey, for those that like the idea they can discover their own strategy or system of indicators that make money over many years will certainly dive into this world and be persistent in their quest. If you need more resources consider our free resources article.

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Forex Basics

If You Don’t Know THIS About Forex, You’re In Big Trouble!

The forex market is known for providing traders with favorable conditions, including 24 hours of market access and high levels of liquidity that provide a great number of trading opportunities. If you want to make the most of the opportunities that the forex market provides, you’ll need to approach the market with the right level of skill and confidence, while making smart financial decisions that limit your overall risk along the way. If you want to start out off on the right foot with a competitive edge in the market, it’s important to know these three key ideas.

The Forex Market is the Best Place to Practice Your Trading Skills

Practice is one of the most important factors that will take you from a novice trader to a professional level investor. Fortunately, the forex market is filled with practice opportunities that beginners can take advantage of thanks to the high liquidity and 24-hour market access we mentioned earlier. Sure, you can get in some practice on a demo account beforehand, but it’s different when you’re practicing on a live account because real money is on the line. This introduces emotions and a sense of danger that just isn’t present when you’re trading on a demo, even if you take your results seriously.

Another plus is the chance to test your strategy using micro-sized trades, as long as this option is available through your broker. This will allow you to test more entries in a shorter amount of time, especially if you were to use a shorter 5-minute chart. You’ll also risk less money trading with micro lots versus standard lots, meaning that there is still a financial risk present, but less pressure because you won’t lose much money if your strategy doesn’t work as well as you had hoped. 

With Forex, You Can Start Small and Work Your Way Up Over Time

Contrary to what some believe, you can actually open a trading account with a small investment through most brokers. Some companies will even allow you to open an account with just $1-10. You’ll also find many different account options available through different brokers, including micro/mini, standard, VIP, and other account options. Micro accounts are one of the best options for beginners because they support low entry-level deposit barriers and allow you to trade with smaller lot sizes, thus allowing you to test your system with a scaled-down level of risk. 

Many brokers offer tier-based accounts or will allow you to upgrade your account to a standard level or better once you’re ready. This means there’s no reason why you can’t start small with an entry-level mini or micro account, gain confidence, and test your strategy with minimized risk, and then move on to better account types when you’re ready. If you take advantage of this opportunity, you’ll lose less money along the way while increasing your confidence in your trading plan. You can also keep a trading journal in order to identify and make any changes to your plan that are needed before you start to risk more of your hard-earned money. 

You Can Decide How Much to Risk on Each Trade

It’s true that forex trading carries some level of risk, however, traders have a lot of control over the amount of money that they could actually lose. If you don’t want to risk a lot of money, you don’t have to. In fact, it’s better to test new strategies with a low level of risk at first until you have the chance to see that there aren’t any flaws in your system. 

There are a few different ways that you can control your risk level, like using a smaller amount of leverage, using a stop loss, trailing stop, and take profit for each trade, and managing your position sizes. If you’re wondering just how much to risk on each trade, it’s helpful to know that many professionals recommend risking no more than 1% of your total account balance per trade. In the end, you should remember to never invest more money than you can afford to lose. If you need to, you can also adjust the amount you risk based on other factors, for example, increasing your position size if you feel confident that the trade will be a winner or risking less when you aren’t completely sure about entering a trade. 

The forex market offers an endless amount of opportunities for investors that know how to manage their money and make smart financial decisions. If you keep these three key ideas in mind, you’ll be on the right path to making money in the competitive industry of forex trading. 

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Forex Basics

Avoid These 5 Trading Mistakes Like the Plague!

Mistakes are simply a part of life. Even so, there are times when mistakes can be completed avoided through information and education. Allow us to save you both time and money by pointing out five of the most problematic mistakes made by Forex traders.

Mistake #1: Trading Without an Education

Forex trading is great for the fact that anyone can decide to take it up, as long as said person is at least 18 years old with a few dollars or so to invest. On the downside, some traders rush into things too quickly out of eagerness to start making money as quickly as possible. Those that don’t know much about what they’re doing are bound to make mistakes and might not even realize how the mechanics of trading work, thus resulting in a loss of funds or of their entire deposit.

The good news is that many different educational resources are available online for free. One can simply search for terms like “forex trading for beginners” to get started. Once you think you’re ready, you can use more hands-on resources like quizzes that test your knowledge or try practicing on a demo account to get the best idea of where you stand.

Mistake #2: Risking too Much

Have you considered how much you want to risk on any single trade? The answer is different for everyone, but we should keep the same principals in mind. The more you risk, the more you could lose. Yes, risking more can lead to more profits, however, it’s better to trade with risk management in mind than it is to risk large amounts on a single trade. If you want to avoid this problem, it’s good to know that many experts recommend only risking 1% of your account balance on a single trade, or in some cases up to 5% at the maximum. This helps to ensure that you don’t lose too much if the market goes in an unfavorable direction. You can also accomplish risk management through other means, such as setting a stop order, trailing stop, take profit level, and so on. 

Mistake #3: Emotional Trading

This mistake has a lot to do with trading psychology and the ways that your emotions can affect your trades in a negative manner. Revenge trading, overtrading, or analysis paralysis are notable examples of this problem. While this category covers a lot of ground, the results of these various emotions usually lead one to lose significant amounts of money. For example, a trader that is overconfident is more likely to take larger risks and might not base their strategy off of solid facts because they feel as though they are on a lucky streak.

Controlling your emotions can be difficult, but the first step is simply identifying that a certain emotion is affecting your trades in a negative way. From this point, you can try to deal with that specific emotion and learn to control it. Some people like to use calming techniques or might need to be reminded that it’s okay to lose sometimes. If you’re ever feeling overwhelmed, it’s also okay to take a break from trading until you can gather your thoughts.

Mistake #4: Trading Without a Plan

Having a trading plan and strategy is crucial for success because it helps to determine the whys and how’s of your trading. With specific goals in mind, you can make more informed trading decisions that are based off solid evidence like technical or fundamental analysis, or both. If you trade without a plan, you’re likely to lose money. You also don’t want to rush in and try a new strategy with your real, hard-earned money. The best way to start is by testing a new strategy on a demo account before using it on your real account. Even if you’re a more experienced trader, you should still use demo accounts to your advantage for this purpose to avoid losing real money. 

Mistake #5: Not Staying Up to Date on the News

The price of currency pairs is closely related to certain economic factors and events. You need to know about news that can affect the economy in other countries as well as the one you live in so that you can be prepared for any news that might affect the markets. Often times, big news can cause market volatility. If you aren’t aware of what’s going on, then you might find yourself caught in an unfavorable market, which could result in some large losses. Since there are several countries that you need to know about, the best way to stay up to date is by using an economic calendar. Many economic calendars are even color coded so that you can see what is expected to have a high, medium, or low impact on the market. Or you can choose to avoid trading altogether if things look bleak.

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Forex Basics

Top 7 Frequently Asked Forex Trading Questions Answered

If you Google “forex trading questions”, you’ll find many different common searches from those that are curious about the field. Today, we thought we’d provide some answers to some of the most commonly asked questions about trading. 

Question #1: Can I trade forex with $10?

The short answer to this question is yes! However, there are a few things you need to know. First, you’ll have to find a broker that will allow you to open an account with this amount, but this shouldn’t be much of a problem as more and more brokers are offering entry-level accounts that don’t require a large investment. You’ll also want to have realistic expectations about how far your investment will get you. It’s true that your $10 can grow into more money, but you shouldn’t expect to become rich off of a small investment. Still, there’s nothing wrong with starting small and working your way up.

Question #2: Is it Worth Becoming a Forex Trader? 

This depends on how much time and effort you’re willing to invest in trading. Those that are looking for an easy way to get rich with little effort will probably tell you that forex trading isn’t the answer. On the other hand, if you’re determined and ready to learn, trading can be a profitable and sustainable source of income that can help you today and even into retirement. 

Question #3: How Much Do Forex Traders Make a Day?

The answer to this question is quite subjective. First, you have to consider the amount of money you’ve deposited, your overall experience, your strategy as in how often you trade, and so on. Someone with a small investment and little experience just isn’t likely to make as much as an experienced trader with a sizable investment. One common article found that a trader that makes 100 trades per month with an initial investment of $30,000 could make around $3,750 a month. While it would be difficult to replicate these results exactly, this can provide a general idea of how much you could make. 

Question #4: Is Forex Trading Just Gambling?

Not at all. When you’re gambling, you rely on things like luck and probability and you’re likely to take big risks in order to win big. Forex trading is different because you actually enter trades based on supporting evidence. Rather than simply entering trades for no reason, you work with a detailed trading plan and use mechanisms to limit the losses you could take. You can also look at things like the news and current events to have an idea of what to expect. 

Question #5: How Long Does It Take to Learn Forex?

The answer to this is subjective, as it will depend on how much time you can invest in learning per day and how fast you learn. Many traders also continue to learn lessons long after they’ve opened their trading account. If you’re eager to get started, the best thing you can do is carve out some time each day or longer blocks of time on the weekends for researching. 

Question #6: How Safe is Online Forex?

This depends on the broker you’ve chosen. While there are scammers out there, there are also many reputable brokers that want to help you. Finding a trustworthy option only requires some time researching. You can start by reading over everything on their website, including their terms & conditions, checking their regulation status, and looking online for honest user reviews on other websites. If you can’t find much information about a particular broker, go with a more popular choice. 

Question #7: Does Forex Trading Have a Monthly Fee?

This question likely stems from the inactivity fees that are charged by some brokers. These fees are typically charged in amounts anywhere from $10 to $30 or more after so many days go by without any trading activity on the account. Most brokers don’t charge this fee, but the best way to check is to read your broker’s terms & conditions and to check their website for a page related to their fees. While inactivity fees aren’t always charged, brokers do make money by increasing the spread and charging commissions.

Categories
Forex Basics

Using Non-Conventional Methods to Fast-Track Your Forex Education

Starting with forex trading has a few stages before the real live account trading. Forex is a specific kind of business where you need to acquaint yourself with the terminology, the tools, how to use indicators, and price action elements. It puts you as the main subject and your actions isolated from everything else, so trading is more likely to be a lonely, one on one business with forex.

Of course, trading can also be teamwork of like-minded individuals or companies but you can only be a part of them if you have experience with trading. After the first stage, you can move on to learn about the strategies, money management, and psychology, how it all fits into a trading system. At this point, beginner traders can try to demo trade and try out the endless possibilities of trading effectively. If you are asking the title question because you do not want to read or follow other professionals, you are out of luck, you will have to acquire basic knowledge the old way. Practice comes next, your demo account will be your playground after the first stage and it will stay like that for the whole trading career if you choose to step into the world of forex. Perfecting the trading system requires trying out new things, with a demo account you can try out anything without any real money losses. 

Aside from following experts and their various strategies, you have many options on how you want to take this market. You can trade using automated scripts, apply for a managed account, copy trade others, invest in the long term, stake, and so on. However, you will need to acquire knowledge. Experimenting with indicators and strategies on a demo account is definitely beneficial to your learning curve. Sometimes, having a coach might come as an idea if you struggle to advance. Some prop firms give support to their traders, but the help is mainly aimed to stabilize their mindset on a losing streak.

Traders have two options if reading is excluded. There are free but rare coaching channels and those that charge for their service. Those that charge are not necessarily of better quality than those that offer free education. Often the coach traders will stick to one or two ways of trading, their strategies may not be what you want to follow for various reasons, and that is ok. Still, try new things, what you previously disregarded might surprise you with good results. Coaches that do not charge a fee often use video streaming services, podcasts, and YouTube. Sometimes you will see ads, on the other side, some uploaders want to keep ad-free content and still be free. One such channel is created by Partick Victor, also an author of a book, by the name of “No Nonsense Forex”. His channel is mostly based on pure technical trading strategies, if you tend to learn more about price action style trading then you will have to search elsewhere.

Finding a free education may not be that hard, but finding advanced knowledge is. When you have an opportunity to take a glance at something different than what you are used to, take it. This knowledge will give you so many new ideas even though it is not directly related to your starting strategy. Inner Circle Trader is another channel where you can learn about scalping if this is your initial idea about how you will take forex trading. Both traders are experienced and have their blogs and other social media pages. If you want to take trading heavily on fundamental analysis, follow people who are independent, who are not tied or biased to some institution, asset, or groups. Additionally, identify that their opinions are backed up with sound data. Our advice is to slowly get away from the popular analysis on the news if you already follow them, use it mostly to learn the terminology. To sum it up, there are two options, listen to the podcasts and videos or hire a coach, which leads us to the next topic.

There is a difference if you are seeking more than just reading, and if you do not want to read to learn forex trading. If you fall into the second category, your chances of succeeding are slim, maybe if you only take a lucky trade or two, cash out and stop. Of course, few will walk away if they feel lucky. If you fall into the second category, this is great, you are an explorer and want to learn more. Hiring a coach has its cons. The coach might do this for additional income, but he also has to be experienced and consistently successful in trading. If your coach is not a real trader or used to be, know he failed and now he is doing what he can in this business. This kind of coach is just a hand holder, he will not give you anything special that is not already explored many times over. If you are new to trading all this might be new, but ultimately there are better and much less expensive options.

Now, if you just need someone to hold your hand during the learning process, this is a problem if you want to establish the right trader’s mindset. Asking for special treatment is a bad sign, trading forex is not really teamwork where you can share the load with others, it is all on you. Asking to depend on others might leave you empty-handed when you are alone at some point. Mentorship will get you used to relying on other opinions on advanced topics and depending on the basics. When it is decision time, you will be alone after the sessions are over. Independent critical thinking is now tested, you will likely fail and you might feel like you do not know anything, especially when things get downhill. There is no excuse to plead for help and make yourself special if you are on the same path as everybody else trying to get into forex trading.

The internet, videos, and books are all giving you a lot to learn, but to some people, this is not enough, and need a guide that is just basically reading this content out loud. When some problem, a situation, or question needs answering, these people will just ring a bell for help. It is about being independent, if you are not ready to be your own boss, do not try trading. Do yourself a favor and do not try anything if it will reduce self-reliance. Any question you cannot google you can ask for free on specialized forums. Find a forum or a portal where you think it is appropriate and ask other members. Pay attention that you first exhaust all other sources, it is very likely somebody already asked the same question and there is an answer to it. 

In addition to all this, most of the successful traders shaped their strategies and systems according to their ideas and thinking. None of them are the same, even if the same strategies are applied. The trading plan and systems are specific to them and only they can effectively use them. Some technical traders have developed strict rules based on indicators and tools, leaving the ability to be used by others. Such systems are sometimes publically shared, all with the rules when to enter and exit a trade, however, even then you might not be successful with it. This is one more reason to follow your own path to forex trading, use all material you can find and if you need more, try the free options mentioned above. Likely, you will never need a mentor at all.

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Forex Basics

Help! How Do I Start Trading Forex?

Are you looking for information on how to start trading currencies? Surely, you must have read numerous tips, but today we are giving you the most important 11 instructions to take into consideration on your path to becoming a professional trader.

1: Be honest and realistic

Naturally, we all want to earn a higher income, yet to make it happen continually, one does need to set his/her priorities straight. Prioritizing means that each trader must dedicate himself/herself to ongoing development through education, testing, and self-analysis. Additionally, be realistic about your expectations and see if it is plausible for your ideas and plans to come to fruition. Most commonly, traders expect to start trading and immediately get impressive returns when, in fact, everyone is limited to a specific percentage even with impressive skills.  

2: Work on your research skills

Forex is not really a marketplace where you can go and find information nor is there a book where you can look up the answers to your burning questions. You should start by discovering credible information sources on the internet, be they social media outlets or YouTube channels. See what type of learner you are because you may do better by enrolling in a course on forex trading.

3: Maintain individuality in all ways possible

Whether you are good at looking for definitions of forex-specific terms or you like to discuss matters you feel excited about with others, you must exercise independence from the very beginning. Try not to seek support from your friends, family, or other members within the forex community. Strive to grow your ability to assess your steps on your own and do not ask for understanding or approval externally. This will allow you to grow an invaluable mindset that will be of extreme importance once you start creating your system. 

4: Learn to let go

After you have read about the basics and are looking to apply the theory you have absorbed so far, the time has come for you to discard what is not serving you in terms of information, strategies, and tools to trade. Only keep what you have measured through thorough testing, having previously obtained tangible proofs that something produces good results. Also, learn to let go of any people who may have been assisting you on your path to becoming an independent trader because these individuals are only doing you a disservice after a certain point. 

5: Start a demo account

Most experts will tell you the same thing – do not proceed to real trading before you have seen how trading functions in a safe environment. Whatever you feel you may know or believe you have figured out should be assessed through your demo account. Get the impression of what it looks like to trade for real and use this opportunity with your eyes open, as a professional trader is often much scarier because real money is involved. 

6: Carry out testing properly

Testing is your best friend in that it will show you the areas that need improvement. Get yourself acquainted with backtesting and forward testing that will help you generate the ultimate version of the algorithm you will use to trade real money. Also, any scientific or quantitative assessment requires proper recording skills, so prepare yourself for detailed journaling of every entry and exit point, among other key items of data. Discipline in this respect is the only way for you not to set yourself up for some major disappointment with your algorithm.

7: Give yourself time

We are all anxious to see the fruits of our labor, but this must not by any means influence our growth. If you feel that you are under a lot of pressure, find exercises or techniques that could help you calm down. And, most importantly, do not assume that there is a way out from doing things step-by-step, as becoming good at forex is a gradual process. Any attempt to speed up the learning or testing part will most probably lead to a scenario that we unnecessarily see too often in the trading world. In the beginning, for example, you might need to readjust your schedule and see how you can absorb all the information without any disturbances. Later, when you feel satisfied with your results, you may even choose to forsake your day job. Nevertheless, whichever stage you are on, make sure that you are not needlessly adding pressure to your everyday life. 

8: Get to know yourself

As you are slowly gathering all information you may need and seeing how theory works in practice, give yourself the space to understand how you may be blocking your growth. Are you aware of your major triggers? Are you a perfectionist, never feeling truly happy with your results? Are you a massive controller, feeling compelled to tweak the settings here and there in the middle of the trade? Or, are you potentially scared of success, so you fail to recognize the moments where you can maximize your profit? Do a personality test and discover which traits or characteristics may turn out to be fortunate or detrimental to your trading to know where to divert your attention.

9: Exercise control in every step

Whatever your own set of blockages is, make sure that you get to it before your emotions get to you. Trading is all about knowledge, testing, and a sober mind, so your emotions must be kept under control. Likewise, any laziness in terms of being dedicated to taking notes on your trades or really being present when trading needs to be dealt with before you move on to trading with real money. Being in control also entails properly protecting your assets, so make sure that your trades will never go on and on without you even noticing that your stop losses are off for example.

10: Really devote yourself to growing your money management skills

Trading without money management is basically the same as betting because you are not protecting your trades (thus your finances) properly. You surely do not want to spend all your hard-earned money just like an all-in casino goer, wasting it all in one go. See how you can manage your trades more effectively and make the habit of using the tools and methods that will help you with that. Each trader is individually responsible for fostering and developing a profound understanding of how to handle and invest finances. Understand that without adopting a sustainable mindset, your winnings may eventually go to waste.

11: Expand your options

If your current financial status cannot help you to get the return that would make a difference in your life or let you switch to trading alone, you can be even more motivated to succeed. Do not get discouraged if your initial investment will not provide you with an amazing return, as you only need great demo trading results to be noticed by a prop company for example. If you manage to achieve a good return percentage and present your accomplishments to a certain institution or a hedge fund, you may easily get an offer to trade on their behalf.

As you can see, many of the requirements to start trading involve the development of soft skills, which go hand-in-hand with any technical knowledge. However, we cannot broaden our minds or improve our life standard without curiosity, which will remain to be one of your best allies from the very beginning to some more advanced trading stages. Besides, understand that trading starts the moment you create an account even though no real money is involved. Professional trading is just another term for trading real money for a living, and since we know how success varies individually, do your part the best you can and everything else will fall into place.

Categories
Forex Basics

Top 8 Secrets That Successful Forex Traders Won’t Ever Tell You

If you want to get the same results as a professional forex trader, you have to behave like one. Unfortunately, there’s a lot of myth and speculation surrounding forex trading; therefore, it can be difficult to understand the truth about what does and doesn’t work, especially with false statements floating around. We want our readers to know the real truth about the market, so stay with us to find out 8 things that you’ll never hear a successful trader say. 

“I Taught Myself”

If you ask any trading professional about the key to success, they’ll tell you that a solid trading education is one of the most crucial steps to becoming a profitable trader. None of us are born with knowledge about forex trading, so we all have to start with the basics regardless of our IQ score.  

While there are many different resources for information online, like videos and articles, one of the best ways to learn is to ask other traders for help. Online courses, one-on-one training sessions, and trading forums are considered to be some of the most interactive tools out there. Keep in mind that every trader had to start from the same place, so don’t be afraid to seek help with topics you might be struggling with. 

Finally, you have to expect that mistakes are a natural part of the learning process. Remember that you’re only human and think of any bumps in the road as a learning experience. The good news is that everyone has the ability to become a profitable forex trader if they can remain disciplined and work on developing healthy trading habits, so a little hiccup every now and then doesn’t have to be a big deal.  

“I Don’t Lose”

A successful trader will never claim that they don’t lose money when trading because losses are an inevitable part of the process. Even trading legend George Soros lost $1 billion after Donald Trump’s surprise election win back in 2016 – and if it can happen to him, it can happen to anyone. 

What traders need to know is that trading success isn’t measured in short-term wins and it’s possible to have a higher loss ratio but to still walk away with positive profits. When thinking of trading success, you should look at the bigger picture with consistency over time. You will not win every single time and any trader that claims to is only lying to you to boost their ego.  

“My Predictions are 90% Accurate”

The forex market is highly volatile and full of surprises, which makes it impossible for any trader to accurately predict what is going to happen over 90% of the time. In fact, most successful traders claim to be accurate about 70% of the time or less, which is far more realistic. 

Keep in mind that trading is different than gambling, so it is possible to increase your chances of success by analyzing chart patterns and data, but you still won’t be able to hit a 100% success rate. In forex trading, you win some and you lose some, so don’t put unnecessary pressure on yourself to win every time. 

 “Risk-Management Doesn’t Matter”

While forex traders can’t be right 100% of the time, they can increase their chances of success by practicing effective risk-management rules. This involves only risking money you can afford to lose and taking other steps, such as setting a stop loss in case things don’t go in your favor. Even if you think you are making good decisions, risk-management helps to soften the blow if you lose money and it should never be downplayed as an important step to forex traders.

If a trader tells you that risk-management isn’t important, then they’re giving out some truly terrible advice. Even the big fish take precautions to limit the amount they could lose on their trades, regardless of how much money they have sitting around. You don’t want to make the avoidable mistake of risking too much and losing big-time. Sadly, this is a common trading problem that results in big losses for many unsuspecting beginners.

“The More You Trade, the Better”

While trading more often might sound more productive, it actually works against you. This is because there are times when it’s best to take a break from trading, for example, when political news is about to be released. Some traders do thrive in volatile environments, yet it is inherently more risky to trade during these times.

You also run the risk of overtrading if you become addicted to the general rush from trading. This works like any other addiction and can cause traders to make bad investments for the sake of entering a trade. It’s better to know when NOT to trade so that you don’t lose money in bad market environments. 

“My Strategy Never Fails in Any Type of Market Condition”

No trading strategy can be profitable 100% of the time – it just isn’t possible. Some strategies will work better than others in different kinds of conditions, but you have to remember that market conditions are constantly changing. A method that was working well in one condition may become obsolete once things change, and methods that didn’t work before may become a better option later on. Overall, you can develop a solid plan that works well in several different kinds of market conditions, but you’ll never find a 100% foolproof option because it simply doesn’t exist.

“Forex Trading is Always Exciting!”

You might have seen forex trading painted in a glamourous light in movies, where investors tend to jump up and down shouting in glee and frustration. Advertisements also seem to make things more exciting with flashy cars and hours, men surrounded by beautiful women, and other exaggerations. In reality, online trading can get a little boring. After all, most traders work in a quiet environment without any distractions, where they are kept busy analyzing charts and whatnot. This doesn’t exactly make for an exciting evening, but it’s important to remember that trading is still a job (that you can do in your pajamas). 

“There’s Nothing I Don’t Know About Forex”

Regardless of how many hours you’ve poured into your trading education, how many books you’ve read, or the number of YouTube videos you’ve watched, you can’t know everything there is to know about forex because there’s so much information out there. Technological advancements, changing economic factors, and other developing factors also introduce new things to learn constantly.

Professional traders might have more experience and knowledge, but they would need a computer for a brain to actually acquire all of the knowledge that’s out there about trading. Even once you become a more established trader, you should never stop pursuing knowledge about the industry by reading articles, researching different strategies, staying up to date on economic data, and keeping a close eye on new developments and technological advancements.

Categories
Forex Basics

Top 20 Quick Tips for New Forex Traders

Ready to join millions of others who are currently trading Forex for profit? Great! As you likely already know, education is critical to success and we’re here to help. Check out these quick tips before diving into the markets!

  1. Make sure you’re prepared before you open a trading account, or else you’ll be more likely to make beginner mistakes like risking too much and blowing your account balance.
  2. Develop a solid trading plan that covers topics like what you will and won’t trade, how much you’re willing to risk, how often you’ll trade, and so on.
  3. Practice on a demo account before you open your first live account and try taking forex quizzes to see if you’re truly ready to move on.
  4. Spend time researching trading psychology so that you will recognize any emotional issues that could interfere with your trades later on.
  5. Spend time doing research on any broker before you make a selection to ensure that you’re getting a good deal and doing business with a trustworthy company. 
  6. Set realistic goals beforehand without focusing so much on how much money you’d like to make. Instead, set short-term and long-term goals that focus on your growth as a trader, and money will follow.
  7. Never stop educating yourself on topics regarding trading. Always be on the lookout for articles, videos, new strategies, and other pieces of information.
  8. Take breaks from trading when you need to, especially during times of stress or when the market just isn’t giving you any good opportunities.
  9. Never enter a trade just to do something or for the rush if evidence doesn’t support that it’s a good move.
  10.  Know how to spot trends, even if it isn’t necessary to do so based on your trading plan.
  11.  Make sure your broker doesn’t charge ridiculously high withdrawal fees, spreads, or commissions if you want to bring home as much of your profits as possible.
  12.  Don’t fall victim to overtrading because it is a recipe for reckless trades that aren’t well-thought-out.
  13.  Never risk more money than you can afford to lose and never deposit money into your trading account if you need it for groceries, bills, etc.
  14.  Always take steps to manage your risk, like placing a stop loss and using reasonable position sizes. 
  15.  You should be confident in your trading plan, but don’t make the mistake of becoming too sure of yourself as it often causes one to make bad trading decisions. 
  16.  Experiment with new strategies and ideas on your demo account before trying them out on your live account – this way you’ll know beforehand if the strategy does or doesn’t work.
  17.  Figure out what time of day you are most productive and try to trade during that period, whether it’s first thing in the morning or later in the afternoon.
  18.  Always keep a trading journal to monitor your progress and to get an overview of how your strategy is or isn’t working.
  19.   Keep your emotions in check while your trading and don’t make the mistake of revenge trading, avoiding trades because of fear and anxiety, etc.
  20.  Know beforehand that losses are part of trading and don’t be too hard on yourself when you do lose. Instead, figure out what went wrong and learn from any mistakes you might have made.
Categories
Forex Basics

The Best and Worst Days of the Week to Trade Forex

All forex traders have a different amount of time to dedicate to trading. Some of us may only get online a few times a week, while others are on as often as possible in an effort to take advantage of the market’s 24-hour a day operating time. Still, it’s impossible to be online 24/7 because you need time to eat, sleep, and recharge, along with taking care of other daily tasks.

There’s one way around this if you want to be online as much as possible – you simply need to know when the best times to trade and not to trade are so that you can be as productive as possible when you’re online. In addition to knowing the best times to trade, you’ll also need to know when the worst times are so that you can avoid them altogether. This way you can have more free time without feeling guilty while avoiding the worst market hours so that you’re less likely to lose money! It’s a win-win either way, so break out that book you’ve been dying to read, get some chores done, or just take a nap and enjoy having the time to do things you’ve been putting off.

The BEST Times to Trade

  • One of the best times to trade is when two market sessions are overlapping because pip movement tends to skyrocket. Major news events can also cause volatility and lead to a lot of trading opportunities during these times. This includes the US/London session (8 a.m. to noon), the Sydney/Tokyo session (2 a.m. to 4 a.m.), and the London/Tokyo session (3 a.m. to 4 a.m.).
  • The London session usually tends to be the busiest of the three sessions we mentioned above, making the hours of 8 a.m. to noon the most ideal for trading.
  • The beginning of the week can be slow, but things usually seem to pick up towards the middle of the week due to the fact that the pip range widens for most major currency pairs during this time. 

The WORST Times to Trade

  • On Friday, liquidity starts to die down, so it isn’t such a bad idea to have a three-day weekend from time to time.
  • On Sundays, most people are off spending time with their family or relaxing, so there isn’t much movement in the markets. Don’t feel bad about taking Sundays off yourself, as you won’t be missing out on much market activity.
  • Holidays are another time when it’s perfectly acceptable to take a break, especially when it comes to Christmas day. Your broker’s customer support team will likely be offline as well.
  • Anytime major news events are expected to be released, it’s a good idea to avoid the market. Things can get a little crazy during these times, so it’s better not to take chances unless you’re the kind of trader that thrives in this type of market environment.
  •  If you’re experiencing emotional turmoil in your personal life, it’s best to relax and take a break so that your emotions don’t spill over into your trading decisions. This could be anything from a breakup to a death in the family, so don’t try to convince yourself that your feelings don’t warrant a break. 

The Bottom Line

If you don’t want to eat, sleep, and breathe trading 24/7, the best thing you can do is to trade during the most opportunistic market sessions, with the best chance being during the daily London session and during the middle of the week. If you’re feeling upset because you aren’t free during these times, you might want to consider swing trading as an alternative. The worst times seem to fall during periods where many other traders are taking a break, like holidays, Sundays, and Fridays.

Yet another time to avoid trading is when big news releases are expected, as the market can become very unpredictable during these times. Last but not least, you’ll want to avoid trading whenever you’re dealing with emotional issues, otherwise, your emotions might cause you to make avoidable mistakes that can cause you to lose money. After all, it’s better not to trade at all so that you aren’t losing money than it is to trade and lose out.

Categories
Forex Basics

Are You Secretly Afraid of Forex Trading Success?

From our youth, we’re encouraged to chase success. From making good grades to performing well in sports, we’re usually influenced to do our best in every single we try to do. While one might think that aiming for success is the only way to go, the constant pressure to succeed can actually stress us out and make us anxious. The better you perform; the more people will expect from you.

For example, if you’re an athlete that just beat a world record when running a race, nobody is going to be impressed if your future performances are less than the best. This problem can have a ripple effect on traders as well, as they might find themselves performing well but feel apprehensive to continue trading because they don’t know if they can keep it up. After all, there is no way to avoid losses altogether in the market, which causes traders to become anxious. Anxiety then causes these traders to think twice about entering trades, even if the evidence supports it, and they might find themselves regretting the decision to sit out later on when those trades go on to be winners. If this problem sounds familiar, read on to find ways to cope. 

Don’t Focus on Losses – Instead, Trust in Your Process

When it comes to gauging success in the forex market, many traders think of monetary gains as the overall decider of how well they’re doing. Instead, you should be more focused on following your trading plan without freaking out over losses. The most successful forex traders will tell you that losses are an inevitable part of trading and that you’ll never make it far if you beat yourself up over every single one. If you do tend to focus on your losses, you’re more likely to make huge bets to overcompensate or to avoid entering trades thanks to the hit your confidence will take. When you lose money, just keep the “water off a turtle’s back” mindset and stay confident. 

Adapt to the Market

There will be times when your plan just doesn’t work well, for example, in a ranging market. In times like these, you may need to adapt your trading plan or strategy to fit with changing market behavior. Some traders have a hard time doing this because they want to be right so badly, so they continue to use a plan that doesn’t fit the market, while those that adapt find that they can make money in different kinds of markets. Don’t be too stubborn to change things when you need to or sit out if you know that the market isn’t going to be doing you any favors for the time being. 

Make Sure Your Goals are Realistic

What kind of forex goals have you set for yourself? Some traders might say something along the lines of “make a million dollars” or “get rich quick”, but these kinds of goals only set you up for failure. Your goals are a model of your expectations. If you expect too much, you will only set yourself up for disappointment when you can’t reach your self-imposed quotas. It’s okay to set short-term and long-term goals, just try not to put an exact dollar figure on those goals since it is difficult to predict how much money you’ll make. Your brain will thank you for the serotonin reward when you meet small goals and you can treat yourself whenever you reach a bigger goal that took more work. Also, remember that goals leaning towards self-improvement will impact your profits in a big way. If you become a better trader by learning healthy trading habits, spend more time researching, and find ways to stay disciplined, the money will follow.

Categories
Forex Basics

Top Quality Forex Education Is Essential to Success – Here’s Why…

Those that are looking for a source of primary or extra income can take advantage of the ability to buy and sell currencies online through the foreign exchange market. Through this unique opportunity, traders can place orders from any device with an internet connection thanks to electronic execution, which eliminates the need to place trades at a centralized location. The sheer accessibility offered by this electronic system has attracted more than 9 million traders from all corners of the globe. 

In order to make money by trading forex, traders attempt to profit from the differences in value between two currencies that they are buying or selling. The general idea is to buy when the price is low and to sell once the price goes up. For those that know what they’re doing, forex trading can help to make large amounts of money, and it has even produced many self-made millionaires. However, this isn’t something that can be accomplished without hard work and there are things to know beforehand if you’re considering becoming a forex trader.

First, you should know that there are risks involved with trading, just like with any other investment. You have the potential to make a lot of money, but you could also blow the money you’ve invested and wind up with less than you had in the first place. One of the best ways to avoid losing money is to secure a proper education for yourself, rather than simply jumping in feet first. Many beginners make the mistake of opening a trading account without knowing what they need to know, especially in light of the fact that it is notoriously easy to open a live account through a broker. If you’re 18 years old, have a little bit of money to invest, and you have access to a device with an internet connection, you can easily open an account within a few minutes. The sheer simplicity of this process leads many aspiring traders down the wrong path because they assume that trading will be easy since they can open an account without any hassle. 

If you want to be among the percentage of traders that achieve real success, you shouldn’t rush out and open an account after having only read a few articles. It’s important to take your trading education seriously by taking part in college-level courses that will help you excel. If you’re in the United States, you can find many of these courses offered by business schools with subjects that cover detailed information about trading in different financial markets. This training can teach you what you truly need to know to be successful and guarantees a much more thorough education that you could give yourself.

Reading charts is one of the most important topics that your courses should cover, so be sure to check that this is included with the curriculum. If you choose a highly rated business school, this shouldn’t be an issue. This skill is important because it will help you read charts to see where currency prices are going, thus aiding you in making decisions about which currencies to buy and sell. This is one of the best ways to make more accurate predictions that are founded on evidence, which increases your chances to profit significantly. 

Another thing to look for in your college courses would be a hands-on experience that helps you truly grasp the physical act of trading. Practicing on a demo or dummy account and trading with virtual currency is one way this can be accomplished, but you should also expect your school to ask you to open a real account (ideally with a small capital investment) to practice on once you advance further into the course. This practice will give you insight into which trading systems you prefer while increasing your confidence along the way. You’ll also have others to speak with if something confuses you and you will be more likely to avoid making mistakes later down the road. This is the best way for aspiring traders to be introduced to the trading world, rather than being forced to open a real account on their own after finishing their schooling. 

Those that are considering trading need to be aware that it isn’t something you can just jump into, despite how easily you can open an account. Investing in a good education will increase your chances of success in both the short-term and long-term, while failing to do so makes you more prone to mistakes and you will likely join the large percentage of traders that blow their accounts right out of the gate. It’s important to remember that forex trading is not a quick and easy way to become rich, as it requires a lot of hard work and dedication, but it does open a pathway to potential riches with the right education. 

You should take your education seriously and attend a good business school that teaches you important fundamentals like reading charts, which will help you to make smarter, more founded predictions when it comes to deciding what currencies to buy and sell. Your trading courses should also offer hands-on practice by trading on demo accounts or even on a real account to set realistic expectations and to truly prepare you for trading in the real world. At the end of the day, it’s up to you to take your forex trading education seriously and to make the right decisions that will lead you to success later down the road. 

Categories
Forex Basics

What is “Recency Bias” and How Can You Avoid It?

Recency bias is a common trading mistake that many forex traders make without even realizing they’re doing so. Since this issue can cause losses and lead to other problems, it’s important to understand what recency bias is and how to overcome it. 

The term recency bias refers to the tendency of traders to take recent events into consideration without paying any attention to older pieces of information. The information that is ignored is often just as important as what the trader is looking at, or even more important in some cases. Without looking at the full picture, traders are put at a disadvantage because they don’t have all the facts needed to make proper judgment calls about what and when to trade. Here are a few examples:

  • Trader A only considers a new economic event without thinking about longer-term microeconomic factors that could also affect his trade.
  • Trader B primarily focuses on newly formed candles without tracking long-term trends.

Another way that recency bias can affect traders is when they are looking at their own success over a period of time. If you only think about things that have happened recently, you will have a skewed perception of the truth. For example:

Trader A has a record of 4 total wins and 6 total losses, with his last 3 trades being winners. Trader A has managed to increase his overall account balance by 1%. Trader B has a record of 8 total wins and 7 losses, yet he has just made 3 losing trades in a row. However, trader B has managed to increase his account balance by 5% overall.

In the moment, trader A is likely feeling successful because he has made 3 winning trades in a row, while trader B is beating himself up over his losing streak. These traders are only thinking of their most recent trades, however, and if they were to step back and look at the bigger picture, it would be clear that trader B has actually made more profits in the long-term. 

From here, recency bias can pose other psychological problems. Trader A may become overconfident and begin entering trades without enough supporting evidence, resulting in a quick end to his winning streak. Meanwhile, trader B might try to make up for his recent losses by placing larger trades without thinking of his risk management rules, or he could practice overtrading or revenge trading to make up for the lost money. 

If you’ve suddenly realized that you have also been prone to succumbing to recency bias, don’t panic – we’ve got you covered with helpful tips that can eliminate the problem altogether.

Track Everything in Your Trading Journal

If you’ve already been keeping a trading journal and logging every trade, then you’re on the right track. If you haven’t, this isn’t something you should put off any longer. To be clear, you need to log detailed information about every trade you make in your journal, including specific information like your profits and losses down to the pip, along with details about emotions you may have been feeling. Once you’ve been using your journal for a while, you’ll be able to see the bigger picture that you might have missed otherwise. Instead of only thinking about your most recent trades, you will be able to go back further and look at your results over a longer period of time. 

Stick to Your Trading Plan 

One of the best ways to stay disciplined is to write down a solid trading plan with strict rules and stick to them. This guide helps traders avoid emotional mistakes that can lead them down the wrong path, like overtrading, revenge trading, increased anxiety, and so on. Your plan tells you when and how you will trade and how much you’re willing to risk so that you can stay level-headed if the notion strikes you to risk more than is reasonable or to enter a trade when you shouldn’t. 

Review Your Winning and Losing Trades

The concept of deliberate practice refers to analyzing your winning and losing trades so that you’ll know what (if anything) you need to change. The best traders learn from their mistakes by figuring out what went wrong and where their trading plan failed, rather than sulking over their losses. Examining your winning trades is another part of deliberate practice that many traders may not regularly do, although this step can show you where your trading plan is the strongest. Engaging in deliberate practice is yet another way that you can get a bird’s eye view of your trading plan in the long-term.

Pay Attention to Your Emotions

We’ve mentioned emotion a few times throughout this article so far. To summarize, good and bad emotions can have a big negative impact on your trading results, as they lead us to make mistakes like overtrading, being overly hesitant to enter trades, revenge trading, overtrading, and so on. If your emotions start to get the best of you, take a step back, look at the bigger picture, and take a break if you need to. You might be feeling like you just aren’t cut out for trading because you’re on a losing streak, but you might only feel this way because you are suffering from recency bias. If you take a look at your overall results, you may find that you’re still profitable and that these losses aren’t a big deal. Just remember to give yourself time off if you’re still feeling irritable or try to do something to calm your nerves before you get back to trading, like listening to music, taking a nap, or anything that generally helps you relax. Afterward, you’ll be able to come back to trading more focused and less likely to make emotion-based mistakes.

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Forex Basics

Is Forex Trading Legal in India?

Are you interested in trading currencies in India? This global decentralized financial market with an estimated daily volume of exorbitant $6.6 trillion keeps expanding steadily. Nevertheless, some regions on this planet remain unwilling to completely open up to the world of foreign currency trading.

India, one of the most populous countries in the world, is also said to be the 16th largest forex market on the globe. Despite it being one of the most fluid markets, the legal status of currency trading in India still causes confusion in many people. Take a look at today’s selection of key questions and answers to get an insight into how you can enter the forex market in the territory of India without having to bear any legal consequences. 

When is the history of the Indian FX Market?

Upon the 1978 permission of the Reserve Bank of India (RBI), local banks commenced intra-day currency trading and the Indian foreign exchange market sprang to life. In the coming years, the Indian rupee (INR) underwent many changes and more economic reforms were introduced to balance out the inflation differential, level the INR against other currencies, and maintain competitiveness.

The Securities and Exchange Board of India (SEBI), which now protects forex securities issuers, investors, and forex-related agencies, was established in 1992 for the purpose of regulating forex activity in India. This autonomous authority also protects forex securities issuers, investors, and forex-related agencies. In addition, in 1994, a committee was appointed to further develop the forex market in the country. As the result of its actions, banks were granted the freedom to fix their trading limits, borrow and invest funds in foreign markets up to certain limits, and use derivative products to manage assets and liabilities.

Corporations were given approval to rely on instruments such as interest rates and currency swaps in the international currency market. It is interesting how Indian people living abroad are said to have substantially influenced the expansion of the Indian forex market although locals initially seemed to show little interest in currency trading. The FX market in India keeps growing and more and more people seem to be drawn to foreign currency trading. 

Who is eligible to trade currencies in India?

Any resident of India or an institution (banks and companies) in the country’s territory can take part in the forex market. The regulation excludes the possibility of foreign institutional investors and non-resident Indians trading in the country.

Why is currency trading questionable in India?

As per the regulations of the Securities and Exchange Board of India (SEBI) and its central bank RBI, no Indian citizen can trade currencies through any electronic or online forex trading platform in the Indian territory. As per the Indian government’s decision, Indian residents can do limited trading in that it is only possible to trade currency pairs benchmarked against the INR. The reasons behind such restrictions concern the fact that the INR is weak against the USD, which can only be purchased from the Central Bank of India.

Where can one trade currencies in India?

The first recognized exchange in the country was the National Stock Exchange of India (NSE). Nowadays, currency trading can also be carried out within other Indian exchanges such as the Bombay Stock Exchange (BSE) and Metropolitan Stock Exchange (MSE). While trading currencies with international brokers is illegal, Indian citizens can legally trade currencies through specified foreign exchange trading platforms and all forex brokers and stock exchanges must be licensed by SEBI to be able to operate within India. The broker’s website does not contain any information from the Securities Exchange Commission (SEC), the Financial Industry Regulatory Authority (FINRA), or similar regulatory bodies, traders should look for another broker.

Which currency pairs can be traded in India?

Before, the only tradable instruments used to be EUR/INR, GBP/INR, JPY/INR, and USD/INR. Nonetheless, as of 2015, the RBI permitted the Indian exchanges to offer cross-currency futures contracts and exchange-traded currency options in three additional currency pairs – EUR/USD, GBP/USD, and USD/JPY. One of the most popular pairs is believed to be the USD/INR owing to its said attractive return rate.

What are the consequences of legal violations?

Under the 1999 Foreign Exchange Management Act (FEMA), any individual can be fined or imprisoned for illegal forex trading carried out in India. However, non-resident Indians will not be persecuted for doing foreign exchange trading in India. Generally, one would need to violate the FEMA law drastically to draw any attention. In case of any violation, the RBI will typically take action against the bank rather than the individual. 

Can these regulations be evaded in any way?

While illegal trading is not advised in any form or fashion, Indian citizens are known to have been evading the FEMA in the past by utilizing the same RBI policy loopholes Indian banks use without breaking any rules. Indian citizens can apparently trade currencies without remitting through the Liberalised Remittance Scheme of RBI (LRS), assuming that they rely on a different scheme with the RBI’s permission, and any money received online from abroad can be used in this manner. Nonetheless, all individuals willing to pursue this form of trading need to be reminded of the risk of suffering a total loss, where one would still be able to remit money but not through the LRS.

An additional piece of advice for this approach includes the need to be alert and avoid such trading schemes in case of any emergency within the country. All traders interested in trading in this way should also make themselves acquainted with the LRS and think of other means of sending money. Technically speaking, one can still use the LRS and not send the money to a forex broker. All in all, all traders are said to be safe unless there is proof that the money was sent to a forex broker, yet going against the law is still considered a criminal act and should be thus avoided regardless of how innocent it may seem.

Is Forex trading profitable in India?

While India is a market with high liquidity, traders usually find their greatest challenge to be dealing with a limited number of currency pairs. Nonetheless, after investing in education and practical application, every Indian citizen should be able to overcome this difficulty. What is more, certain currency pairs such as the USD/INR and the EUR/INR can move up by 1000 pips in a matter of several weeks, which can prove to be quite profitable in the long run.

What are some general pieces of advice for forex trading in India?

You should primarily use a device with fast internet connectivity where they can check the currency pairs’ rates as they frequently fluctuate. It is mandatory that you find a trusted online broker that will allow you to trade the INR. You should then create an account on the broker’s website having previously read the requirements such as the minimum deposit. Make sure that you transfer funds to your account after understanding the conditions (e.g. see if you are only permitted to use your native currency). You can then download a forex trading platform although it may be wiser to test your skills with a demo account using virtual money first.

It is curious how the forex market is still restricted in some areas despite its vast use all over the world. While currency trading in India is not entirely illegal, traders still face challenges with the choice of currency pairs they can trade. Nonetheless, forex trading in India seems to be an emerging market, especially since INR currency pairs have a tendency of moving up by hundreds of pips in only a few weeks. Trading the INR can certainly prove to be lucrative in the long run, so practice your patience and strive to stay within legal bounds.

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Forex Basics

Is Forex Trading Profitable? Here’s the Truth…

The study of human neurology shows how reward increases the activity of dopamine neurotransmitters, which explains our cravings when we smell the coffee brewing in the morning or satisfaction upon completing a task. The same reward system has a tremendous impact on how we approach business ventures, which is why we often need to conceptualize the results of our efforts in advance.

The interest in the profitability of trading currencies in line with this human behavior and, while we may not always process this consciously, we can in fact help our motivation to take on new tasks, provided that exercise control and minimize the risks. Today, we are going to assess what the word profitable means in terms of numbers and how we can increase our return from trading currencies.

We all know how high the percentage of losses for the majority of traders, especially in the beginning. The reason for these unfortunate outcomes often lies in the fact that many only learn the basics (i.e. reading the chart, some essential terminology, and tools to predict where the price will go). Beginners hear some compelling success stories which make them believe that they will easily turn their initial investment of 500 USD into millions just by following the tricks they read online. Along with these assumptions, traders immediately expect to be able to quit their day jobs in a matter of a few years, which is why they further encumber their bank accounts with new loans right at the start of their trading careers. 

Unfortunately, once traders set up their systems and start trading real money, they frequently realize that the intermittent and inconsistent wins can hardly make up for the losses they are taking. This typical scenario is further affected by poor money management skills, in which so many beginners fail to invest because they are preoccupied with the idea of amassing a fortune overnight. Even more appalling circumstances involve the traders who, despite seeing how their predictions and moves are not leading to any gains, stay in those trades hoping for a positive turn of events. This deadly combination of factors offers an explanation for the staggeringly high failure rate in this market.

Many people cannot afford to blow out their accounts, and despite each trader’s starting point, we all need to change the perspective to properly measure profitability. To ensure a better start, beginners are advised to bury the hopes of their initial deposits being able to make any changes in terms of their financial stability. The first 500 USD investment simply cannot suffice for the projection many traders make for their future, yet they should still deposit this sum and keep going. It is absolutely crucial for any trader to become comfortable trading real money after having traded with a demo account for a while. Real, professional trading will allow you to learn how to manage your emotions and understand how market conditions will simply not allow you to get 20 pips each day as promised on some blog online.

So, finally, we come to the question of how much money one needs to make through trading currencies to be able to earn a living. First of all, very few people have the luxury of being able to invest the initial 500 USD and, after calculating the yearly return, you can see how you can use the amount of money you made in a year. Even though we all know about the impressive 20% return per year Warren Buffet makes, we need to maintain a realistic perspective and learn how to plan objectively.

Some of the most affluent figures in this market willingly give exorbitant amounts of money to their advisors just to get a 13% yearly return, which is certainly worth the effort in their case. Therefore, with a 100 thousand USD account, one can get a yearly profit of 20 thousand USD before tax with the extraordinary 20% return only a handful of professionals can obtain. This unfortunately does not do much for the vision of living off forex, as it realistically provides just a few thousand USD over the poverty line in the U.S.

Luckily, there is another way for any trader who is ready to commit to learning and offering consistent results year after year. Some experts shared how they had significantly less money than the above-mentioned 100 thousand USD, but managed to get hired by prop firms, hedge funds, and financial institutions to trade on their behalf and with their money. The requirement for this type of business deals is to develop a functioning system and showcase your consistent results. Even if you have only a demo account or a small trading account records, you can still find an individual willing to take a look at your achievement, provided that your results reflect the minimum span of one year.

Be ready to take these companies’ tests and expect to go through a probationary period where you will have to show them how well you can do in real-time. These companies keep a percentage of the profits traders make and they often require traders to set aside some amount of money as a form of protection in advance as well as cover certain fees. Even if you do not have a degree a great trading record can help you, as long as you are honest and straightforward with your numbers and achievements. 

If you have a proven high-functioning system, you can trade your own money and earn additional profit through another company, which enables you to trade professionally with minimum investment. As you can see, the only condition that you truly need to satisfy is to be legitimately good at trading currencies. Some prominent traders explain how, due to the lack of information, they needed a lot of time to accumulate knowledge and skills to be able to display their results to any company. Circumstances are much different now although traders keep making the same mistakes.

Success does not happen overnight, so instead of being hasty about what your future holds, overcome the instant gratification hurdles and compulsions and start slow. Rather keep your risk small in the beginning and learn how to trade steadily in the meantime. The investment you make can be minimal, as you can trade forex professionally regardless of where you get your results. Whether you invested your own money or used a demo account, you need convincing results owing to which you will be able to be noticed by a company willing to take traders to work for them. 

As you can see, the topic of profitability is a loose category and it mainly depends on what your lifestyle and aspirations are. Many countries in the world other than the United States offer entirely different living conditions and, what is more, you may not want to depend on trading currencies alone. Nonetheless, if you are willing to take the time to learn everything there is to know about this market, set up your algorithm, test it thoroughly, open a demo account, and understand your reactions and emotions, you have a great advantage that can open doors to unexpected ventures and outcomes, regardless of your starting point.

As a final piece of advice, the best way to achieve your objectives and see the lucrative side of the forex market is to not give up, withstanding any challenges with a clear goal and a sense of gradual development.

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Forex Basics

Forex Demo Account Vs. Live Account: Similarities and Differences

Forex brokers usually offer two main types of trading accounts: demo and live accounts. Although the accounts are very similar in some respects, there are also a few key differences that traders need to recognize. We will start by outlining what qualifies an account as being live or a demo. 

  • A live account is a real trading account that one opens through a broker. You invest real money into this account. A broker might offer several different types of live accounts, which include but are not limited to Micro, Cent, Standard, Classic, Premium, VIP, etc. Traders then trade in a real environment and either profit with the option to withdraw their funds, or they lose their investment.
  • A demo account can also be opened through a broker and it allows one to trade with fake, virtual currency in a live simulation environment. These accounts are used for practice and one does not invest any real money or make a real profit from them. 

If you’ve never opened a real account before, starting with a demo account can help provide the opportunity to practice in a real environment with zero risks. These accounts are offered by most brokers, but you should know that a few brokers out there don’t offer demo accounts. If your current broker or one you’re considering doesn’t have demo accounts, then a quick Google search will help you find several free options. Opening a demo account should always be 100% free through any broker.

Once you get started, a demo account can serve several helpful purposes. It can help you become more acquainted with a trading platform, practice different strategies, try out different leverages and settings, and see how far you’ve progressed towards being ready to open a live account and make a real investment. However, it is important for traders to know that there are some differences between demo and live accounts so that they do not have a bad experience when they inevitably switch from a practice account to a real account. These are the main differences that every trader should be aware of:

  • Since demo accounts involve virtual money, traders aren’t subjected to the emotions they would feel in a live trading account. Losing $100 on a demo account will not make you sick but losing it on a real account might be a different story. Anxiety, greed, excitement, and other emotions will be present once you switch over to a live account. Remember that making decisions based on emotion should be avoided, otherwise your trades will suffer. 
  • Demo accounts do not see slippage, requotes, delays, or other unexpected situations that might affect a real account. Slippage is a common example where there is a delay between the quoted price and the execution of the order. These types of events are more likely to occur when market volatility is high, but they won’t affect you on a demo account, so you need to be aware of them once you move on to a live account.
  • Execution speed is important when you’re trading on a live account. If you have a problem with your internet connection or a power outage, you could lose real money. Everything happens faster on a demo account, while the speed of your connection will directly affect your orders on a live account.

Demo accounts offer a lot of perks. They can help one to become more acquainted with trading and offer an opportunity for practicing basic skills and more advanced concepts without the fear of losing real money. While demo accounts are mostly useful, traders do need to remember that there can be problems with delayed order execution in times or high volatility or because of events like power outages or slow internet connection speeds. Another major fault with demo accounts is the fact that they cannot prepare one for the rollercoaster of emotions that come with trading on a live account.

Since demo accounts are free practice tools, there is no reason not to test one out before moving on to a live account. However, traders need to remember the ways in which demo accounts differ from live accounts so that they are better prepared to deal with those issues without losing money because of altered expectations. 

 

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Beginners Forex Education Forex Basics

I’m Ready to Trade! What Type of Trading Account Should I Choose?

If you’ve ever considered opening an account with a forex broker, you likely considered an option that offered multiple account types. While some brokers only offer one account with the same conditions to all of their clients, others offer two, three, or even several completely different accounts with separate conditions. Choosing the right account can be beneficial, but some beginners have a hard time figuring out which option is right for them. Do keep in mind that each broker has separate offers and conditions will be different wherever you go, but we will break down the main types of accounts that are usually offered below.

Account Type 1: The Mini/Micro/Cent Account

These accounts are usually marketed towards beginners for a few reasons. For one, they can be opened with a small amount of money, with minimum account opening deposits typically falling between $1 and $100. This is attractive for those that don’t have a lot to invest in or those that don’t want to put in a lot of money at first. These accounts are also known the limit the maximum trade size offered, but this usually isn’t a problem for new traders that aren’t prepared to make larger trades. On the downside, these accounts often come with the highest spreads and don’t offer many other perks. If you do plan to open one of these account types, be sure to shop around to find the best conditions possible. 

Account Type 2: The Standard Account

A standard account is the most common type of trading account that is available. The minimum opening deposit varies widely for these accounts depending on the broker you choose, but it is typically as low as $100 to $500, although the cost can go into the thousands. Maximum trade size options are usually equal to or higher than those on the broker’s mini account, but leverage options are usually slightly tighter. Expect average commissions and spreads starting at 1.5 pips on these accounts, but do be aware that some brokers will still try to charge you insane rates if you don’t open a more expensive account, so check with several different brokers to find the best deal.

Account Type 3: The Platinum/Silver/Gold Account

While names for accounts of this tear can vary, many brokers offer one or more accounts that fall in between their standard and VIP accounts. You’ll usually find a lot of perks on these accounts, like tighter spreads and reduced commissions, along with other possible perks like an account manager, one free withdrawal a month, better bonuses, etc. On the downside, you can expect to invest a pretty penny into one of these accounts, with most opening deposits starting in the thousands. If you do plan to make a larger investment, you will probably find a much better deal if you can find a broker with one of these accounts available. 

Account Type 4: The VIP Account

Brokers reserve their VIP accounts for traders that can afford to deposit a ton of money, usually anywhere from at least $20K into the hundreds of thousands of dollars. If you can afford a VIP account, you’ll be receiving the very best perks offered by the broker, starting with the tightest spreads (often starting at 0 pips) and very low or zero commission charges. Many brokers also sweeten the pot with a personal account manager or one-on-one lessons with an expert and great bonus options, along with expedited or fee-free withdrawals and superior customer service options in some cases. If you can ever afford to open a VIP account, be sure to find a broker that will shower you in perks for making such a large investment.

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Forex Basics

How Long Does It Take to Become a Truly Profitable Forex Trader?

Making the choice to become a forex trader can be an exciting one that causes many traders to feel eager about getting started. This is especially true if you’re feeling inspired after talking with a colleague who might have mentioned how much money they make trading, read an article that makes trading sound easy, watched a video that promotes the luxurious lifestyle trading can provide, and so on.

Unfortunately, you won’t be ready to open a trading account immediately, no matter how eager you’re feeling. Opening a trading account too soon is actually one of the top mistakes that beginners make and can lead you to lose your money altogether. This often causes traders to give up out of frustration before they really even get the chance to get off to a good start. 

So, how long does it take until you’re ready to start trading? The answer differs for everyone and will mostly depend on how fast of a learner you are, along with the amount of time you have to spend brushing up on your trading education. There’s a lot to know, including these topics and more:

  • Forex terminology (leverage, stop-loss, pip, margin, etc.)
  • Forex basics
  • Forex mechanics (navigating a trading platform, placing a trade, exiting a trade, etc.)
  • Factors that affect prices in the forex market
  • Trading psychology
  • Risk-management (setting a stop-loss, how much to risk on each trade, etc.)
  • Trading strategies (scalping, swing trading, day trading, etc.)

Each of the above topics can go into a lot more detail, for example, if you’re learning about trading psychology, you’ll want to learn about overconfidence, the way fear affects trading decisions, analysis paralysis, trading when you’re on a losing streak, and much more. You should expect to spend a great deal of time studying these topics to ensure that you completely understand everything you need to know.

If you’re in a hurry, we suggest devoting as much time as you can to learning. If you work or attend school full-time, you could try researching in the evenings and on weekends, or anytime you have a chance. This is the best way to fast-track your education, but remember not to let yourself get burnt out before you begin trading. Even if you have a large amount of money burning a hole in your pocket, you have to remind yourself that investing too soon might cause you to lose everything.

Instead, learn when you can and hold on to your money. One good way to check your progress is to test out your knowledge by taking free forex quizzes online or to try a hands-on approach by opening a demo account. Both options will allow you to see if you’re ready to begin trading or if you need to spend a little more time learning. 

In conclusion, we’re sorry to say that we can’t provide you with an exact timeline of how long it takes to become a trader, but this article should help you gain an idea of what you need to know and how to prepare yourself. Some traders might invest a lot of time into researching and be prepared in a week, while others might take longer to learn and could take a month or more to prepare. We can assure you that you won’t be ready to start trading overnight, however. Know that investing too early is a risky mistake that is likely to cause you to lose money.

If you hold onto your money or even allow it to accumulate while you learn and wait to open a trading account until you’re truly ready, then you can ensure that you’re starting out on the road to trading success.

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Forex Basics

Is ECN the Best Forex Trading Model for You?

The forex market offers many different broker models, including ECN, STP, and market makers. One of the more popular styles is ECN, which stands for Electronic Communication Network. This method is widely approved by traders because it cuts out the middleman by directly connecting traders to top-tier liquidity providers, including options like banks, brokerages, and other traders across the globe. Several perks and a general sense of transparency cause many traders to find ECN trading superior when compared to other options.

How Does ECN Trading Work? Does it Have Advantages?

Traders have the Financial Information Exchange Protocol (FIX) to thank for powering ECN trading. The international electronic communications protocol services real-time information exchanging between those that are trading the market, including individual traders and larger institutions. Traders can take part in ECN trading during market hours and after hours. ECN trading also allows traders to remain anonymous so that neutral prices cannot be slanted against them through certain market tactics. 

One of the main advantages to FIX is its ability to provide clients with tighter bid/ask spreads than what would be offered through other services. The protocol keeps latency as low as possible to support faster trade executions while matching purchase and sell prices through an automated system. The automated system eliminates the need for a middleman, connects traders with the best liquidity providers, automatically matches and executes orders instantaneously, allows passive order matching, and provides prices that match the lowest ask price and highest bid price on the market in the case that specific order information is unobtainable. Here are the benefits of ECN trading in a nutshell:

  • Maximum price transparency 
  • Revolutionary trading technology through the FIX protocol, which matches traders with the best liquidity providers
  • Instant trade execution with no delays (ideal for using EAs or algorithmic trading)
  • Better prices and tighter spreads than those offered by STP or market makers
  • No re-quotes and more limited slippage thanks to the absence of an NDD (No Dealing Desk)
  • Brokers never trade against their clients 

As you can see, there are many advantages associated with ECN trading. Brokers do not trade against their clients, traders have access to lightning-fast automatic execution which is the best option for those using services like Expert Advisors, and prices and spreads are lower and more transparent. This trading style is also highly beneficial to scalpers because they thrive in conditions that are more volatile. 

What is an ECN Broker?

Your ECN broker delivers your orders to liquidity providers, while primarily dealing with interbank and large financial institutions. This type of broker does not trade against their clients and therefore offers tighter spreads with fixed commission charges on each transaction. The anonymous factor involved with ECN trading eliminates any possibility for bias while ensuring that traders will have access to neutral prices that are not skewed against them based on market tactics. 

It’s important to find a broker with a platform that offers good access to market data. Different traders will have different needs when it comes to charting features and technical analysis tools, so be sure to write out your wish list and check that any potential contender is offering everything you need. Accessibility is one factor to consider, as you might like to trade through your computer’s browser or on an app. Consider the interface and navigation as well. Try to avoid anything that is overly simple with zero features or overly complicated and confusing. Overall, you’ll just want to find a platform that you can navigate easily enough without skipping out on any important features that you’ll miss. 

Choosing an ECN Broker: What to Look For

If you decide to trade through an ECN broker, they’ll need to pass the test first. Be sure to check for the following:

  • Floating and variable spreads
  • Check that order execution is priced fairly and seamless
  • Commissions fees should be zero or fixed
  • A trading platform that fits your individual needs
  • No mention of a dealing desk
  • No negative slippage

You’ll want to scour the broker’s website to check for all of the above, however, the best way to really make sure you’re dealing with a true ECN broker would be to check out their demo account. This should give you enough insight to know whether the broker’s claims are true and can give you peace of mind before you open a real account through your chosen broker.

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Forex Basics

What Does One Lot Represent in Forex Trading?

If you’re new to the forex trading world, you might find yourself scratching your head at some of the terminologies. Terms like leverage, broker, and pip often confuse beginners, but it’s easy to understand these terms if you spend time researching what they mean. Today, we will start by discussing the common trading term “lot”, which simply refers to the size of a trade or the amount that the trader is trading at any given time.

There are four different lot sizes

  • A Standard lot is equal to 100,000 units of the base currency
  • A Mini lot is equal to 10,000 units of the base currency or 10% of the standard lot
  • A Micro lot is equal to 1,000 units of the base currency or 1% of the standard lot
  • A Nano lot is equal to 1,000 units of the base currency or 0.1% of the standard lot

A standard lot is often considered to be the default lot size, but many brokers offer accounts that support the trading of mini and micro lots. It’s a bit harder to find an account that supports nano lots, although this isn’t impossible. 

For example: If you trade 1 lot (100,000 units) of AUDUSD, the size of your trade is equal to 100,000 units of the AUD currency.

What is a Pip? Understanding Pips and their Value

We mentioned the term “pip” earlier as another trading term that leaves many beginners feeling confused. A pip, also known as a percentage point, refers to the change in value between two different currencies. With the exception of yen pairs, a pip is typically 0.0001. With yen currencies, a pip is 0.01.

For example: If the value of EURUSD opens at 1.1465, and closes at 1.1475, the difference in value is 10 pips. 

Traders use this formula to calculate the value per pip: 

Pip value in Counter/Quote currency = (pip in decimal X 100,000)

If you’re still confused, you don’t have to worry about calculating pip value manually, as you can simply use a free pip value calculator online. It’s important to understand why pip value is needed because traders need to know about lots, pips, and pip value in order to calculate their profits and losses. In order to do so, you’ll use this formula:

Profit/Loss = Number of Pips x Value per Pip x Lot size

Example 1: You buy Euros at $1.2178 per Euro and sell at $1.2188 per Euro with a transaction size of 100,000 (one standard lot). In order to calculate your profit or loss, you’ll plug the numbers into the provided formula:

(1.2188 – 1.2178) X 100,000 = $100

In this example, we subtracted the buying price from the selling price and then multiplied by the transaction size of 100,000 (one standard lot). The result shows that there was a $100 profit from this transaction.

Example 2: You buy GBP at 1.8384 and sell at 1.8389 with a transaction size of 10,000 (one mini lot). You’ll then plug these numbers into the formula:

(1.8389 – 1.8384) X 10,000 = $5

In this example, the transaction produced a $5 profit. Note that we multiplied by 10,000 because the size of the transaction was one mini lot, while we multiplied by 100,000 in the first example because the size was one standard lot. 

Using a Position Size Calculator

As we mentioned earlier, you can find a free position size calculator online if you’d prefer to avoid manual calculations. A quick Google search for “forex position size calculator” will bring up several results. From there, you’ll just need to plug the details into the calculator and sit back while it does the work for you. 

 

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Forex Basics

How to Successfully Trade Forex While Working a Full-Time Job

When you consider becoming a forex trader, do you find yourself thinking of a list of reasons why you just can’t realistically do it?

We could probably debunk a lot of those, but today, we will talk about time. As far as excuses NOT to trade go, the lack of time is one of the top reasons why many people never even try. Many of us are already juggling full-time jobs while struggling to keep up with our personal lives, run errands, clean our houses, raise children, and the list goes on. How could you possibly add trading into the mix when there’s so much going on already? 

Believe it or not, it’s possible to take up trading in your free time, even if you do work full-time. This might mean taking on more responsibility, but isn’t it worth it if you’re getting paid? Allow us to provide some tips that can help you with time-management so that you don’t have to miss out on all that trading has to offer: 

Study Charts in Your Free Time

A lot of people assume that traders sit around looking at charts all day long, therefore, they don’t think they have the time to study charts as they should. In reality, it’s possible to do analysis around your job’s schedule. This means nighttime analysis if you work during the day and vise versa. Research and planning can also be done in one’s spare time, including weekends and non-market hours. 

Don’t forget to do the following when you run your analysis:

  • Keep your specific strategy in mind when studying the charts. Stop for the day if you don’t see a set-up that supports your strategy.
  • Try not to perform analysis if you’re stressed out or emotional. If you often feel this way after work, try to do as much as you can on the weekends when you aren’t as burned out or get some of it done before you head to work for the day. 
  • Set a time limit for analysis and stick to it.

Avoid Trading if Necessary

We mentioned earlier that you shouldn’t analyze charts when you’re stressed out or emotional, but you’ll also want to take it a step farther and avoid trading altogether during these times. If you don’t have a clear head, you’re more likely to make mistakes, such as overlooking data, entering trades without proper evidence that you should, putting yourself down if you lose money, and so on. If you simply avoid emotional trading altogether, you’ll be less likely to make mistakes that are influenced by those strong emotions. Likewise, you aren’t doing yourself any favors by forcing trades when there isn’t any evidence to do so. Both of these issues will likely cause you to lose money when you could have kept your account balance the same by knowing to do nothing. 

Focus 

You want to be sure that you can focus solely on trading when you decide to do it, so try to plan it around your schedule the best way you can and avoid distracting situations. If you can, try trading in your car while on break at work or take your laptop into another room if you have household distractions to deal with. Silence your phone and avoid background noises as well if possible. It might be difficult to find the time for distraction-free trading at first, but there are usually ways to make this possible if you’re creative enough, even if you have to tweak your daily schedule. It also helps to make yourself available during specific times, like when a certain currency pair you’d like to trade is most active. Most movements for currency pairs occur during two different timeframes:

  • From 8 a.m. to 11:00 a.m. EST
  • From 1:00 a.m. to 8:00 a.m. EST

This provides separate opportunities to trade when the market is more active, so you’ll want to take advantage of these two options. You could trade before going to work by waking up earlier, for example. 

Use the Right Strategies 

Those that are juggling trading with working a full-time job can take advantage of certain strategies that involve holding trades for shorter periods of time, like scalping or day trading. Scalping provides an advantage because traders often open and close trades quickly in order to profit from small price movements, meaning that you could accomplish some trading activity during a short break. Day trading is another potential solution where traders only open trades for a few hours at a time and close them out by the end of that trading day. You could open a few positions, check on them during your break, and close them if necessary. You’ll basically be making money in the background while you work your regular job if you can get the hang of multitasking. 

Remember that Consistency is Key

If you can develop a solid trading plan and follow it consistently, you’ll be more likely to bring home consistent profits. This means you need to set a schedule and stick to it, so it isn’t a good idea to switch strategies. Instead, traders should follow the same rules and guidelines, even if they do take a loss, and stick with their trading plan through thick and thin. This can also help you get into a good trading routine that will keep you going if you ever quit your job to become a full-time trader.

Do You Want to Become a Full-time Trader?

If you’re dreaming of quitting your desk job, know that you aren’t alone. However, there are a few things to consider first, so don’t march out without thinking things through. Here’s what you need to know:

  • Full-time trading won’t be as time-consuming once you’ve developed your strategy and gained enough practice, as many trading decisions will come to you without much thought. You’ll have a much easier time analyzing charts and information as well, which cuts back on time.
  • Think before you quit your job and remember that profits aren’t guaranteed in trading, while you know you’ll be bringing home a paycheck from your regular job. You need to be making consistent profits before you make the decision to let everything ride on trading profits. 
  • If you quit your job at the wrong time, you’re more likely to make emotional trading mistakes because of the financial burden that will be on your shoulders. This is why it’s a good idea to ensure that you’re earning enough to support yourself and to have some backup cash in the bank to ease some of that post-job stress.
  • Consider copy trading or using a trading robot if you’re still feeling pressed for time. Both can trade for you automatically, but you’ll want to be sure to choose a reliable option and keep a close eye on the results. 
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Forex Basics

Is Forex Trading Expensive? Here’s the Low-Down…

Anyone who has ever considered trading currencies has pondered on the idea of whether it is a costly endeavor available to only a few well-to-do individuals on the planet. However, no matter what your starting point is, there are several questions to be answered to be able to approach this topic systematically, objectively, and pragmatically. Today, we are covering key areas of interest that will provide any interested individual with direct insight into prices, expenses, and overall monetary requirements to start trading in the spot forex market.

What Does Expensive Mean?

Before we continue with actual data on expenditures, we need to ask ourselves what we consider to be expensive. Forex enthusiasts are diverse in all possible aspects – background, professional experience, academic qualification, and income, among others. Due to these qualitative and quantitative differences, we all have a different start in terms of how financially prepared we are to cover the basic costs this market entails. As we will be discussing these later in the text, the main idea here is that some people may find 500 USD to be an exorbitant sum they had to save up gradually over time. While this group of people that needs to be careful with spending is considered to be the majority, some wealthy individuals may not have to give their expenses much thought. Therefore, whether you are like most beginners, someone who cannot afford to lose the initial investment right away, or you belong to a fortunate handful of those who need not worry as much about their finances, you will need to consider topics such as money management and trading psychology to be able to manage your traders effectively.

How Do You See Trading?

Many beginners have an ultimate goal of becoming a professional trader, often confusing the term professional for profitable. However, the only requirement traders may be lacking, in the beginning, is using real money, regardless of the amount invested. For some people, forex trading is aimed at providing for their existence, while others choose to trade currencies on the side. We have discussed before how the U.S. market’s size is big enough for the locals to enjoy great volume in a variety of markets, while forex is almost the only option for traders to build their finances in some other countries of the world. However, whether you choose to partake in different lucrative activities or direct all of your attention to trading currencies, you are a professional trader the moment you start investing your own finances. Naturally, for this to be a successful and sustainable source of income, beginners are always advised to slowly invest in education and demo test their trading knowledge.

What Part Do Your Expectations Play?

Traders often hear inviting stories about someone who was able to create an empire from scratches, starting with a 100 USD and building his finances to what you see as your dream-come-true scenario. The problem with this is that trading functions differently and there is no magic formula that will take all of your daily problems away and cover your loans and future investments in a matter of three years or so. It can be quite discouraging and stressful for any trader to enter this market thinking only about the ultimate goal, which often derails their attention from topics that are much more important. Whether your goal is to quit your job and trade alone to make a living or have a side activity to cover some of your expenses, always think about creating a solid foundation that will make this business endeavor possible and profitable down the road.

General Costs in Forex

The exact expenses depend on a number of factors such as brokers and trading styles, habits, and positions, among others. The usual minimum brokerage fee equals 500 USD although some may go down to a 100 USD limit. In terms of general expenses, most brokers offer an automatic calculator that should help you get an idea of your overall expenses and whether you see this market as worthy of your time and effort or not. Traders also need to consider commission fees charged for entering and exiting a trade. Commissions can vary substantially, so 1k lot on major currency pairs can amount to 4 cents USD, while the fee could be as high as 6 cents on more exotic pairs.

Another cost to take into consideration is spreads, i.e. the difference between the bid and the ask prices, which can, for example, be only 0.5 for major currency pairs or exceed 175.00 for more exotic currencies. You will also need to include rollover in your expenditure calculations, which is the interest differential between the two currencies comprising the pair you are holding during the time of the day when banks are closed. Aside from the previously mentioned fees, there are often other hidden costs to remember such as, for example, inactivity fees, monthly or quarterly minimums, margin costs, and the ones related to calling a broker on the phone.

Risk and Leverage

The two terms are extremely important for all traders, be they beginner-level or more advanced. In forex, we use leverage as a tool to increase returns on the initial investment. However, most traders typically struggle with overleveraging, which may lead to a loss of 25% (or more) of one’s account, which can be extremely difficult to compensate for. Traders are always advised to learn how to manage their leverage as high leverage is an inherent part of trading currencies. While starting with lower leverage is a wise decision, it is also vital that traders get used to adding leverage to the winning trades.

These steps reflect traders’ ability to exercise control over themselves and their trades, thus helping them minimize the risks in which this market is so profoundly abundant. Traders also need to ask themselves questions related to the capital they are willing to allocate to any one position, the amount of money they are ready to put at risk on a single trade, and how much exposure to risk they are comfortable with. Trading expenses, therefore, do not only stem from fixed fees traders are charged at some point, but the decisions they make along the way, which can have a severe impact on their financial stability.

Returns, Losses, and Gains

The final point to take into consideration is how you plan your finances to increase and how you expect to react to wins and losses. Our expectations often include some unrealistic return percentages that exceed the capabilities of the best traders out there. So, when we lose, we tend to increase the leverage hoping to overcome the discomfort, pushing ourselves further in the losing group. The same happens with wins because many traders view forex-related activities like gamblers, entering traders with no specific goal or criterion, which naturally affects one’s finances. Traders require a system that will explicitly tell them how and when they should enter and exit trades, which requires time and effort rather than money alone.

Last but not least, it is important to mention that most people give up trading in the first 90 days because they start investing too quickly. For you to be able to see whether this market is expensive or not, you alone need to see what your goal is and what you wish to achieve in trading. As you can see, the answer depends solely on you because, between the costs, profits, and other ventures, you will be the only person making the decisions. Forex can certainly bring money to everyone ready to learn, but you need to see whether you would be satisfied with the percentage return based on your initial investment and how you can create consistent and sustainable returns. With the right money management and proper attitude of going slow and learning steadily, any beginner can learn how to manage his/her finances and evade the challenges this market entails.

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Forex Basics

What Are the Best Soft Skills for a Forex Trader Develop?

Soft skills enhance our abilities to adapt to our work environment and enable a smooth exchange of information or services. While traders are not standard employees one can find at a typical workplace, they still need to exhibit skills related to personality, attitude, flexibility, and motivation, among others. As forex trading is a rather solitary endeavor, unless you are overly dependent on your Twitter forex community or your trading coach, you still need to develop such skills despite the lack of interpersonal contact.

Unlike hard skills, the soft ones cannot be mathematically measured, but their quality lies in their ability to increase traders’ potential to see benefit from trading. Many traders who failed in this line of business attempted to approach forex in a simplified fashion, downgrading it to betting and, hence, substantially affecting the end result. Therefore, to be able to understand forex and ensure prosperity, adopting a variety of soft skills is a requirement. Since trading currencies is a unique sort of business, we are going to highlight the skills that have proved to fortify healthy practices, boost self-development, and increase returns. You will find this article to be divided into three major sections that comply with the natural progression of every trader’s experience, which you can use as a guide to monitor your own development and ensure profitable trades in the future.

Stage 1: Learning

At the very beginning of a trading career, each individual intends to find proper learning materials that would best support the acquisition of new terms, understanding of the market, interpretation of charts, and acquaintance with concepts such as strategy, indicator, and algorithm. To be able to facilitate this educational process, you will need to exhibit the willingness to learn and employ research skills extensively. In addition, to further build resourcefulness, you will also need to make use of critical thinking to be able to discern whether the information you obtained is applicable or useful. Some people like to be creative in terms of how they adopt the knowledge, so they will use post-it notes or turn to drawing, thus showing their eagerness, motivation, and respect towards education.

If you learn how to value the opportunity to learn, you will much more easily go over all other stages of trading development because every step is a part of a bigger process that takes time, patience, and effort. Last but not least, you will need to start seeing yourself as an entrepreneur and demonstrate leadership and management skills so that you can properly assign times of the day/week when you will focus on learning, regardless of other responsibilities you may have. While intrinsic motivation is quite rare, exploit curiosity and envision your goals and potential changes that can support a balanced learning routine and reveal the importance of building forex education.

Stage 2: Practice

At this stage, traders are creating a demo account, through which they can practice technical analysis and fundamental market analysis as well as test their strategies and algorithms. As can be seen from the previous sentence, analysis is a vital skill, which can help you learn how to determine when and how exactly to enter and exit trades. By demo trading, you are testing your ability to make tough decisions and manage situations independently. While some people may find it easy to draw the line, others will come to realize that they lack emotional preparedness and confidence to proceed with a trade or to end it. This phase is ideal for reflecting on your emotional intelligence where you will need to show honesty and courage in determining how your own emotional responses affect your overall trading. Being sincere with yourself will also allow you to make necessary changes that can only help you down the line.

Of course, to be able to track your progress, you will also find journal keeping to be an absolute must, where the skill of discipline can help you build a proper routine. Lastly, understand that each trade is similar to a project, where you are the project manager, responsible for the technical, the emotional, the budgetary, and the organizational side of things, and it is thus also your duty to monitor whether each step is taken at the right time. If we overinvest and disregard the alarming risk levels, our projects will fail. However, if we invest too little, these projects will never come to fruition, so we need to exercise control as well as money and risk management. Remember that the ability to adjust to new circumstances and balance other life roles and responsibilities will also determine how well you can direct yourself, plan your strategy, control your emotional responses, and build your trading stamina. 

Stage 3: Professional Trading

The last stage, or the stage where you are finally ready to trade real money, is the moment when all your skills and knowledge of trading psychology will be tested. By now, you have already shown dedication, persistence, attentiveness, resilience, humility, the openness to change, and the ability to be corrected and trained, among others. Here you will need, more than ever before, to show faith in your system, regulate your compulsions to make changes in the middle of a trade, and monitor your risk and money management so as not to overexpose for example. While you may have a plethora of other responsibilities, you will demonstrate the skill to work under pressure but with a clear mind, which may require you to follow expert directions on how to relax and prepare yourself mentally/emotionally before trading.

Since real money trading tends to awaken our deepest fears, you know that you may at times need to build your attitude more devotedly and work on your positivity, and you should find comfort in knowing that have already proved to be able to troubleshoot anything that needs fixing. Remember to employ critical observation skills when it comes to assessing your technical skills, results, and psychology, but also strive to nurture tolerance and accept your flaws as areas where you can keep growing and enhancing your trading experience.

While forex does imply a different and possibly either stricter or more lenient schedule, depending on what reality you are used to, use your soft skills to perfect your technical skills and maximize your returns. Not everyone finds it easy to plan and strategize although every person needs to bear the responsibility for overcoming his/her shortcomings. Intrinsic motivation, control, determination, and critical thinking can get you far, as long as you accept the role of being your own leader. As you can see, leadership and management, together with all other skills, need to be used comprehensively in all areas of trading development. Therefore, these skills are not stage-exclusive, so the skills we use at the very beginning will probably need to be used later on as well.

Motivation is equally necessary for the early stages of trading where everything is new and complicated and later on when we need to record each trade to be able to track our progress to ensure sustainability. If we desire to build a lasting forex career, it is vital that we think of currency trading as a real job where we have the executive role. And, even though we do not have different people to manage, we have just about the same handful of duties trying to balance different sides of our personality, our goals, and technical knowledge. To summarize, in order to build your trading skills and increase your profit, you also need to develop soft skills that will allow you to control yourself and your trades, keep journals regularly, invest in practice and troubleshooting, support proper money management, and fortify your sense of responsibility regardless of your life circumstances. 

Categories
Forex Basics

Is Forex Trading Legal In South Africa?

If you were to go through any of the major social media platforms and look for things related to Forex, you will most likely find quite a large community of people that are from South Africa. Forex and trading have started to become quite a popular pastime and business opportunity for those living in South Africa. This is on the rise due to the increase in the accessibility of trading with the entry requirements being as low as having an internet connection, phone and just $1 to trade with.

There is however quite a bit of confusion in regards to whether or not forex trading is actually legal in South Africa. On one side of the discussion is the minister of finance in South Africa, Tito Mboweni, stating that forex trading is illegal in South Africa and that residents are not allowed to speculate against the South African currency, the rand. On the other side is the Financial Sector Conduct Authority (FSCA) who has stated that it is legal for South Africans to trade in forex, including the rand as long as they are trading derivatives from a fully licensed broker. To add to the confusion, the minister of finance has also stated that regulated brokers can allow people to trade derivatives, which was contradictory to his previous comments. This has made trading quite a grey area, yet it doesn’t seem to stop people from getting involved in the industry.

One thing that has been made clear from both Tito Mboweni and the regulatory body FSCA is that it is illegal for people in South Africa to purchase forex or to use forex based services from firms or people that do not have the proper authorisation to sell and offer those services, it has also been made clear that it is actually illegal to speculate against the rand. The problem is that there is a lot of confusion being created from the fact that not everyone actually understands what forex actually is.

Forex trading is a form of contract for difference (CFD) trading, these are financial instruments that get their value from the underlying assets, this includes things like the exchange rate of a currency pair or the price of metal or equity. Due to the CFDs getting their price from an asset, they are classed as a derivative, when you make a trade in forex, neither the trader nor the provider of the trade is taking ownership of that asset.

Due to forex trading being classed as derivative trading, this word means that trading would be legal in South Africa as both the minister and the FSCA have confirmed that it is ok for South Africans to trade these derivatives. The FSCA still states that any South Africa based firms must be authorised and regulated to offer these services, but there is no law in South Africa which prevents its people from trading with a broker that is based outside of South Africa, or even with brokers that are not regulated by the FSCA, they are strictly there to monitor the providers rather than the trader.

The rise of online brokers who are offering CFDs to trade has made it far easier for South Africans to trade. In fact, it would be quite difficult to find a broker that would be classified as illegal in South Africa. This is simply due to the fact that for it to be classed as illegal, you would need to be making a purchase directly with real currency, which would cost a fortune, millions of dollars in order to make any trades of value. All online trading in South Africa Derivative trading does not however mean that it is without its issues or grey area. Brokers such as JP Markets which was one of the biggest South African brokers have just gone into liquidation and showed us that there were a lot of issues within the South African trading scene, but it would appear that illegal trading would not be one of those issues.

The regulation within South Africa is regularly changing, the recent collapse of JP Markets was based around a change in the regulation from the FSCA, where they introduced a new licence for brokers within South Africa which was called the ODP licence. When the FSCA investigated JP Markets, they did not hold this new license and so they were then able to quickly shut the operation down

The thing to take away from this is the fact that as a trader in South Africa, there are no legal issues or reasons as to why you should not be trading with an online broker. As long as it is CFD trading to which 99.9% of online brokers are, then you are fully within your rights and the law to trade, even from brokers that are not stationed within South Africa. If you are going for a South African broker, then ensure that they are regulated by the FCA and that they have all the required licenses, this way you will be sure that you are trading with a legal firm and that you are at least partly protected from any wrongdoing.

So to answer the question as to whether or not reading and forex is legal in South Africa, it is a yes, as long as it is CFD/derivative trading.

Categories
Forex Basics

Is Forex Trading Honestly Really Worth Your Time and Effort?

It is a well-known fact that forex trading brings together a truly vast range of diverse personalities all over the world, and being such an incredibly big and booming market, it easily arouses interest in individuals regardless of their background and past academic and professional achievements. Naturally, we all desire to gather as many pieces of information right from the start, so we browse the internet in search of evidence that would confirm our compatibility with the market demands and benefits.

Not only do we want to see the fruits of our labor as fast as possible but we also realistically demand to have a clear vision of what responsibilities and tasks we can or cannot expect to take on or carry out ourselves. This thirst for concrete and relevant facts can now be quenched because the entire mental turmoil boils down to the question of whether forex trading is really worth it. For these reasons, let’s objectively analyze the key aspects that determine our motivation, satisfaction, and persistence in this market. 

Education

Forex is, fortunately, or unfortunately, an entire field that is defined by specific terminology and rules that all need to be studied and understood. On a positive note, having a subject so well defined and studied as extensively offers more and more sources of information than ever before, including articles, podcasts, social media posts, videos, and trading courses. The ease of access and the myriad of places and vehicles to get educated, however, do not always support the learning process because the information offered does not always reflect original thought and what we can expect in real trading situations.

What is more, while cramming a whole set of new vocabulary and concepts they have never heard before, traders with experience in some other markets (e.g. stocks) may increasingly face difficulty due to seemingly identical tools and techniques. And, while there is so much to learn, potential or beginner traders also need to bear in mind that this is just the theoretical side of what needs to be done and that all theory ought to be properly exercised and tested to reach excellence just like in any other learning program. Nevertheless, after completing this stage, traders can rest assured that they will likely never need to go back to studying the basics, provided that they invested them conscientiously and whole-heartedly.

The Costs 

People are, understandably, drawn to trading currencies because they are keen on improving their finances. Nonetheless, forex newbies often discover later on how they already need to have a specific sum of money prepared in advance to be able to enter the market. Even though investing occurs in one of the later stages in a beginner’s trading development, we do not want to have any relevant items of information escape our focus, so we must learn about brokerage, commission, spread, and all other more obscure fees. An important part of this topic includes the topics of risk and leverage that, if not properly handled, may affect your trades and ultimately your account. If traders do not learn how to properly manage their trades and restrain their shadier personality traits (e.g. greediness, fear, impatience, laziness, etc.), their accounts may suffer consistent or intermittent blows that may never be compensated for by any wins no matter how big they are.

Time Committment

Time is an invaluable asset and the reason why many experts opted to put effort into learning how to trade currencies in the first place. Now, even though traders at the beginning of their careers may have already heard professionals talking about how their routines changed after learning about forex, they should still not forget that it is the decisions we make each step that have a say in how our life is going to look like in the future. First of all, in order to become knowledgeable about forex, you will need at least six months to study theory and start a demo account where you can apply what you learned.

Under the condition that you spent the learning period actively and without being superficial, you can become a professional trader (i.e. someone trading real money) even after a year, after which you will be able to tweak and improve your system if and when needed. It is also important to include psychological growth in this section because trading tends to bring out our worst fears and limitations in people, and overcoming emotional hurdles often takes more than 12 months. Finally, you may also need to consider a bigger time frame if you wish to make some significant lifestyle changes, as many traders become dependent on trading all day, missing out on the opportunity to experience a different type of routine.

Prospective Returns

You will double your investment in the blink of an eye, they say on various blogs, but they fail to mention that the market conditions and simple math will not let you go beyond a specific percentage simply because the big banks would lose their profit in that case. Some of the most prominent figures in this market make 20% per year, and while this can turn out to be quite a large sum, you need to calculate your own return based on your initial investment. Therefore, if you deposit 500 USD and manage to get a 13% return, you will get a realistic image of your yearly earnings from trading currencies. Also, if you happen to struggle with your algorithm and start taking severe losses, understand that the world forex does not offer any trick by which you can magically let you start over with a clean slate. Despite these difficult aspects of trading currencies, you can always present your records to a company that would pay you to trade on their behalf and increase your returns in that manner.

Routine

We all have a different starting point in terms of age, available capital to invest, social obligations, and work/school schedule, among others. Any trader wishing to become successful at forex needs to set aside a designated period in a day or a week that he/she would dedicate to learning and testing. Some traders may choose to do currency trading on the side, keeping their day jobs or prioritizing other trading activities, while others may want to focus on forex only. Therefore, both before and after one feels ready to start investing real money, it is absolutely crucial that each step be free of the stress and the turmoil of the outside world. A proper routine also entails methods to calm oneself down and direct one’s attention to trading alone.

Another vital piece of advice for all traders, be they beginner- or professional level, concerns developing the habit of meticulously recording each trade. Not only does proper data management help traders track their growth, improve their trading systems, and perfect their strategies but it also leaves room for traders to enter into a trading agreement with a desirable company, fund, or institution as discussed above. 

Potential or beginner traders have much to ponder on before changing their lives in a way that would impact their finances, time, and schedule. Some people may be quite reluctant to apply anything new in their life and others cannot bear the idea of having to sit down to study or take records each time they enter or exit trades. The key ingredient in all this decision-making is the individual vision of the future and balanced expectations of oneself and forex. Forex can offer much, but at the same time, it is you and you alone who need to make things happen. It is important to be honest with oneself from the very start as well as be prepared for a steep learning curve before being able to reap the benefits of this market.