Tag: Forex Basics

Categories
Beginners Forex Education Forex Basics

Forex Isn’t As Difficult As You Think: Here’s Why…

With all the warning signs that you got all over the place about trading, the little notices that say things like “Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 77% of retail investor accounts lose money when trading CFDs with IC Markets (EU) Ltd. […]

With all the warning signs that you got all over the place about trading, the little notices that say things like “Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 77% of retail investor accounts lose money when trading CFDs with IC Markets (EU) Ltd. […]

With all the warning signs that you got all over the place about trading, the little notices that say things like “Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 77% of retail investor accounts lose money when trading CFDs with IC Markets (EU) Ltd. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.” You would think that trading would be pretty hard wouldn’t you? Well, the truth of the matter is that trading forex is simply not that difficult, at least not as difficult as you may think it is.

That is quite a bold thing to say, considering so many people have lost money. In fact, a lot of people have lost everything that they own due to trading, but is that because it is hard? Or is it due to the fact that there may have been some flaws in their plans, or even in their own personality which has caused them to lose, or maybe it was simply the unfortunate event where they signed up with a scammy broker or apparent account manager. Whatever the reason was, there are things that you can do to prevent these losses and ultimately make forex trading a lot simpler and dare we say it, easier.

The concept behind trading is simple, we are taking one currency, converting it to another, and then converting it back once the price of the currencies has changed. If they change in the right direction then we profit, if they change in the wrong direction then we lose. That is the very basic concept of trading and why it is fundamentally very easy to do. All you need to get started is a broker, of which there are thousands, a little money, some brokers allow you to trade from as little as $10, and an internet connection. You can then use your phone or computer to load up an application and start trading, that is as easy as it is to start trading.

So if it is so easy, why do so many people fail and lose money? The simple fact is that they did something wrong, it was not the markets that did anything wrong, they work how they work. It is up to use to analyse and work out what it is that they will be doing, something that a lot of these losing traders did not do due to either a lack of knowledge or simply not being bothered and wanting some quick profits. Trading and forex are not rich quick schemes, even though it is described like this in various places. It is a methodical, long-term endeavor that takes patience and understanding.

Forex is all about creating a plan and then sticking to it, if you are able to do this then there is a good chance that you could end up being a successful and profitable trader. When we start trading we always need to create a trading plan, this plan then includes a number of different things like our strategy and our risk management plans. These things combined make it so that trading can become a lot simpler, it can be a lot more straightforward and more importantly, it can become a lot easier.

Your trading plan should involve creating your strategy. It is important to understand that you need to develop a good understanding of your strategy. Simply having one is not good enough, you need to understand how it works and also why it works. Doing this will enable you to adapt things should the market conditions change, and they will change, regularly. Being able to adapt will mean that you are able to maintain your profitability and also keep risks low in multiple different trading conditions, something that a lot of new traders fail and so end up losing out.

The other and arguably the most important thing that you need to have in place in order to make trading more successful and easier is our risk management plan. This will set out the different aspects of you trading that is to do with risk Your risk to reward ratio will detail how much you will risk on each trade and how much you are aiming to profit. With this being a positive ratio, 3:1 as an example, you only need to be right 33% of the time in order to be profitable, something that is much more achievable than some people who try and be right 80% of the time. This risk management plan will also detail things such as where you will be putting your stop losses. Trading without a stop-loss, putting extra risk on your account, is not something you want to be doing at all.

Another tip for making trading easier is to keep a trading journal. This journal is somewhere that you will be writing down pretty much everything that you do. It is a little tedious and a little boring, but it is vital and doing it gives you access to a whole lot of information that is beneficial to you. You are able to use what you have written down to analyse your own trading, to find out what you are doing right and what you are doing wrong. You can then use this to try and alter your trading or your trading rules to be a little more profitable. Consistency in doing this will result in much safer and more profitable trading.

The final tip to give you is simply the fact that you need to ensure that you are not taking on any scams. There are a lot of them out there, do not take people’s word for granted and if something looks like it is going to be too good to be true, it most certainly is, so beware. Trade yourself, learn yourself and you will thank yourself for it, as you will be able to trade for years to come and will be able to adapt should you need to, not something you would be able to do if you were relying on someone else.

Trading seems very difficult from the outside, especially with all the warnings about it, but when you dig a little deeper there are things and rules set in place that are there to protect you. These are there to make things easier for you and they are there to help you to be profitable. Do not rush in, plan your trades, plan your education and things will end up being a lot easier than you may think they are.

Categories
Beginners Forex Education Forex Basics

Fundamentals of Forex Trading You Didn’t Learn in School

This is what trading should be about. It should give you the freedom to not depend on the money you are getting but to be in control of it. Sometimes, this is easier said than done. That is why we have selected a few critical points that need to be reiterated for every beginner trader […]

This is what trading should be about. It should give you the freedom to not depend on the money you are getting but to be in control of it. Sometimes, this is easier said than done. That is why we have selected a few critical points that need to be reiterated for every beginner trader […]

This is what trading should be about. It should give you the freedom to not depend on the money you are getting but to be in control of it. Sometimes, this is easier said than done. That is why we have selected a few critical points that need to be reiterated for every beginner trader to read. With the present-day market expansion and ease of internet access, novice traders can read about lots of things that really aren’t that relevant. We have a different agenda. Today, you will read the things they don’t teach you. We will show you the bigger picture.

“If you work for money, you give the power to your employer. If money works for you, you keep the power and control it.” (Rich Dad, Poor Dad, Robert Kiyosaki)

Who runs the world?

Traders often miss this one key fact about trading – not all markets are governed in the same way. With stocks, things are quite clear. The money flow will dictate how the prices are going to be determined. But that flow can be out of the context of the free market sometimes (printing). In spot forex, however, when the money flows into the market, everything works mostly how the banks set. The prices will always go the opposite way traders go because this is how the big banks (i.e. Citibank, Deutsche Bank, Chase Bank, and HSBC, among others) manipulate the market. 

↳ Get educated and don’t let the prevailing thought affect your critical thinking.

“One of the reasons the rich get richer, the poor get poorer, and the middle class struggles in debt is because the subject of money is taught at home, not in school.”  (Robert Kiyosaki)

What’s money worth?

When we think of stocks or commodities, we think of balance sheets, assets, and products that help us assign a price to any equity. What traders often fail to understand is that currencies act differently. So, when experienced stock traders wish to expand their portfolio and start trading forex, they overlook the nature of today’s currencies. The currencies we know now are fiat, which means they don’t have the value of their own like they did during the gold standard. The currencies’ value is nowadays solely determined by big banks. 

↳ Understand what you are willing to trade as well as the essential differences between various instruments, tools, and markets.

“A person can be highly educated, professionally successful, and financially illiterate.” (Robert Kiyosaki)

Where did everybody go?

When beginners first start trading, they look for valuable content and support for development. Still, many make the mistake of following groupthink that immediately puts them in the losing group. Why does this happen? Traders who develop herd mentality don’t rely on their own analytical skills, knowledge, and experience, which is one of the main reasons why they can’t remain traders long term. Secondly, if you are a forex trader and you just look for the areas in the chart where everyone else is, you will soon be disappointed because the big banks will soon step in and change the price direction. 

↳ Look up IG client sentiment and avoid outdated tools that are likely to give you this type of information. Your system should tell you how to avoid big banks, not how to be under their radar.

“Most people go along with the crowd. They do things because everybody else does it.” (Robert Kiyosaki)

Become rich in 30 days

Your favorite YouTuber or your trading mentor won’t be there to hold your hand forever. You must get in the game on your own. Yes, wealthy people do have advisors to keep getting the lofty return year after year, but to get there you first need to learn how to trade on your own. Even trading robots (expert advisors/EAs) can’t help you much if you don’t know which strategy or style of trading you want to use. 

↳ Know what you care about. Explore your options and don’t believe the promises of getting unprecedented returns. You owe yourself that.

“There are no bad business and investment opportunities, but there are bad entrepreneurs and investors.” (Robert Kiyosaki)

Who are you? 

This is a deal-breaker if you want to be good at trading in any market. As a human being, regardless of your gender, you are prone to feeling different emotions that will either make you go forward or tell you that something isn’t the best choice for you. Sometimes, however, these emotions push us to do things we shouldn’t. We overleverage or under leverage; we enter too many trades; we don’t sleep and so on. This is not sustainable and you, like anyone else, will break at some point.

↳ Get to know yourself and understand your triggers so you can have control over your actions. Do the trading psychology test to get more insight.

“Emotions are what make us human. Make us real. The word ‘emotion’ stands for energy in motion. Be truthful about your emotions, and use your mind and emotions in your favor, not against yourself.” (Robert Kiyosaki)

Do you put all of your eggs into one basket? 

What do the experts do? Besides relying on experience, successful traders always diversify. They never depend only on the profit they can get from one market, and so should you. If you are a crypto trader, you will firstly diversify your coins. If you are a forex trader, you will think of different currency pairs to trade. Still, to be free of having to depend on one source of income (as one market is one source), you will look for other markets to trade. 

↳ Make sure that you understand the similarities and differences between the markets and always have money management in place.

“When it comes to money, the only skill most people know is to work hard.” (Robert Kiyosaki)

How can traders lose the right way?

At the moment of experiencing a loss, traders are often unable to stop overreacting. They chase losses and enter new trades, which only takes their accounts further into the abyss. If you’ve been there, you know that this isn’t the right way. Therefore, the first step is to accept the loss and step away from your computer. Then, you will be smart about this experience and learn as much as you can. 

↳ Use testing and journaling to understand how a particular trade loss can be mitigated. Then, improve your system, strategy, and money management to change your future trading.

“Wealth is a person’s ability to survive so many days forward— or, if I stopped working today, how long could I survive?” (Robert Kiyosaki)

How can you become a pro?

Leave no stone unturned. Learn about yourself, your weak points, your algorithm, and your skills, and make room for development. Don’t cry over spilled milk but shift from thinker to doer. Also, if you really want to stay in the game, get rid of the casino mentality and learn to wait patiently while working diligently. There is no instant gratification in the long game, only demo trading, journaling, testing, and revising before you invest your real money. 

↳ Professional trading is trading real money for a living. Still, everyone can try that. Be a trader who persists in the struggles. Be the one who sees the bigger picture.

 “There is a difference between being poor and being broke. Broke is temporary. Poor is eternal.” (Robert Kiyosaki)

And, finally…

If you always see yourself as lacking, you can see neither the market potential nor the potential that comes from losing. Sometimes we fear loss; other times, we fear success. The question is what you will do about it.

Categories
Forex Basics

Is It Safe (and Wise) to Trade Forex? Let’s Discuss…

The global Forex market has more than $5 trillion in daily trading volume, making it the largest financial market in the world. The popularity of Forex attracts traders at all levels, from novices learning about financial markets to more professional and experienced veterans. Because it is so easy to do Forex trading – with all-day […]

The global Forex market has more than $5 trillion in daily trading volume, making it the largest financial market in the world. The popularity of Forex attracts traders at all levels, from novices learning about financial markets to more professional and experienced veterans. Because it is so easy to do Forex trading – with all-day […]

The global Forex market has more than $5 trillion in daily trading volume, making it the largest financial market in the world. The popularity of Forex attracts traders at all levels, from novices learning about financial markets to more professional and experienced veterans. Because it is so easy to do Forex trading – with all-day sessions, access to high leverage, and relatively small costs – but it’s also very easy to lose when trading Forex. In this article, you will see 10 ways in which traders can avoid losing money in the competitive Forex market and can safely make Forex investments.

Do Your Homework

Just because it’s easy to get into the world of Forex doesn’t mean it’s easy to operate in this area. Learning about Forex is fundamental to a Trader’s success in foreign exchange markets. Although most of the learning comes from live trading and experience, a trader must learn everything possible about Forex markets, including geopolitical and economic factors that affect the currencies to be traded. The task is a continuous effort as traders need to be prepared to adapt to changing market conditions, regulations, and global events. Part of this research process involves the development of a trading plan.

Choose a Reputable Broker

The Forex industry has less oversight than other markets, so it is very likely to end up doing business with a reputable Forex broker. Because there is a concern about the security of deposits and the overall integrity of a broker, Forex traders must only open an account with a member company of the National Futures Association (NFA) and which is registered with the U.S. Commodity Futures Trading Commission (CFTC) as a futures commission merchant. Every country outside the United States has its own regulatory body with which legitimate Forex brokers must be registered.

This is basic and indispensable and cannot be emphasized further, only duly regulated Forex brokers should be traded. Traders should also investigate each broker’s account offers, including leverage amounts, commissions and spreads, initial deposits, and account withdrawal and financing policies. A representative of useful customer service should have all this information and be able to answer all questions regarding company services and policies.

Using a Practice Account

Almost all trading platforms have a demo account to practice, sometimes called a dummy account or demo account. These accounts allow traders to place hypothetical transactions without a funded account. Perhaps one of the most important benefits of a demo account is that it allows the trader to become an expert in order entry techniques.

Few things are as harmful to a real account (apart from the trader’s overconfidence) as pressing the erroneous button when opening or exiting a position. This is quite common, for example, for a new trader to accidentally add to a losing position rather than close the trade. Having many errors in order entry can lead to having large losses without protection. Apart from the devastating financial consequences, this situation is incredibly stressful. Practice makes perfect: experiment before placing real money online.

Keep the Graphics Clean

When a Forex trader has hired an account, it can be tempting to take advantage of all the benefits of technical analysis offered by the trading platform. Although most of these indicators are perfectly adapted to foreign exchange markets, it is very important to consider keeping analysis techniques to a minimum to be effective. The use of the same types of indicators-such as two volatility indicators or two oscillators, for example, can be redundant and may even give opposite signals. This must be avoided.

Any analysis technique that is not routinely used to improve the performance of the company must be removed from the table. In addition to the tools used for the chart, the overall appearance of the workspace should be considered. The colors, fonts, and types of price bars chosen (line, Japanese candle bar, distribution bar, etc.) should create an easy-to-read and interpret chart that allows the trader to respond more effectively to changing market conditions.

Protect Your Trading Account

While there is a lot of focus on making money in Forex trading, it is very important to know how to avoid losing balance in your account. The most appropriate techniques of monetary management are a very important part of successful negotiation. Many experienced traders would agree that anyone can enter a position at any price and still earn money – the important thing is how he leaves trade.

Part of this is knowing when to take your losses and move on. Using stop-loss protection is always an effective way to ensure that losses remain reasonable. Traders may also consider using a maximum amount of daily losses beyond which all positions would be closed and no new trading will start until the next trading session. While plans must be made to limit losses, it is equally essential to protect gains. Money management techniques, such as the use of stop drags, can help preserve profits.

Start Small

Once you’ve done your homework, spent time with a practice account, and have the Trading plan instead, it may be time to start live – that is, start trading with real money. No amount of trading in a demo account can accurately simulate actual trading, and as such, it is very important to start with a small amount when going live.

Factors such as emotions and slippage cannot be fully understood and accounted for until live trading is performed. In addition, a trading plan that was used as a champion in backtesting results or trading practice could, in fact, fail miserably when applied to a live trade. Starting small, the trader can evaluate your trading plan and emotions, and gain more practice in executing order entries – without risking the entire trading account in the process.

Use of Reasonable Leverage

Foreign exchange trading is unique in the amount of leverage offered to its participants. One of the reasons why Forex is such an attractive market is that traders have the chance to make high profits with a small investment – sometimes as little as 100 US dollars. Properly used, leverage provides growth potential; however, leverage can easily amplify losses. A trader can choose the amount of leverage he wants to use when basing the size of the position on the account balance. For example, if a trader has 20,000 USD in a Forex account, a position of 200,000 USD (two standard batches) would use leverage 1:10. While the merchant might open a larger trade if he were to take maximum leverage, a smaller position would limit the risk.

Leverage is you have a chance to use something small to control something bigger. In short, Forex trading means that you can have a small amount of balance in your account and be able to control a much larger amount in the market. In trading currencies, there is no interest charged on the margin used, and it doesn’t matter what kind of Trader it is or what kind of credit it has. If you have contracted an account and the broker offers the margin, you can trade on it.

The most obvious advantage of using leverage is that you can earn a significant amount of money using only a limited and small amount of capital. The problem is that, in the same way, you can also have a loss of a considerable amount of money in leverage trading. Everything depends on the prudence with which it is used and the conservativeness or aggressiveness of its risk management.

You have stricter control than you think; The advantage makes a pretty boring market incredibly exciting. Unfortunately, when your money’s on the line:

Exciting DOES not always = Good

But that’s exactly what leverage has brought to FX. If there was no leverage, traders would be surprised to see a 15% move in their account at a year. However, a trader who uses too much leverage can easily see 15% moving in his accounts in a day.

While typical leverage amounts tend to be too high, leverage trading five times more; it is very important for you to know that much of the volatility you experience when trading is mainly due to leverage of your Trade than the same movement in the underlying asset.

Amounts of Leverage Provided

Leverage usually occurs in a fixed amount that may vary depending on the broker. Each broker grants leverage based on its rules and regulations. The amounts are usually 1:50, 1:100, 1:200, and 1:400.

Leverage of 50:1 Percent

Leverage of fifty to one means that for every $1 you have in your account you can place a value of $50. For example, if you deposited $500, you could trade amounts up to $25,000 on the market using leverage 50:1. It’s not that you should trade the full $25,000, but you would have the ability to trade up to that amount.

Leverage 100:1 Percent

Leverage of a hundred to one means that for every $1 you have in your account, you can place a commercial value of $100. This is a standard amount of leverage suggested in a standard account. The typical minimum deposit of 1000 USD for a standard account would give you the ability to control 100,000 USD.

Leverage 200:1 Percent

A leverage of two hundred to one means that for every $1 you have in your account, you can place a value of $200. This is a frequent amount of leverage suggested in a mini lot account. The typical minimum deposit on that account is around 250 USD. With 250 USD you would be able to open operations up to the amount of 50,000 USD.

Leverage 400:1 Percent

A leverage of four hundred to one means that for every $1 you have in your account, you can place a value of $400. Some brokers offer 400:1 in mini-batch accounts. I would personally take care of any broker that offers this kind of leverage for a small account. Anyone who makes a $300 deposit into a Forex account and tries to trade 1:400 leverage could be wiped out in a matter of minutes. Not that Brokers force the Trader to deposit only $300, but if they make it possible, the suspect doesn’t?

Professional Traders and Leverage

For the most part, professional traders trade very low leverage. Having lower leverage has the ability to protect your balance when you do business mistakes and keeps your returns more consistent. Einstein once said that the definition of Madness is: “Always do the same and expect different results.” Without a business log and a meticulous log book, traders are likely to be able to continue making the same mistakes, minimizing the chances of being a profitable and successful trader in the future.

Understanding Tax Implications

It is very important to have clear tax implications and how it deals with the foreign exchange trading activity that will be prepared at the time of filing taxes. Consulting with a qualified specialist or tax specialist can be beneficial and help avoid surprises when paying taxes and can be great to help people take advantage of an existing diversity of tax laws. As tax rules often change, it is prudent to maintain a relationship with a trusted professional who can handle all tax-related matters.

Treat Trading Like a Business

It is very important to consider foreign exchange trading as a business and to keep in mind that gains and losses are not important in the short term. As such, the operators must avoid becoming overly emotional beings, no matter what the gain or loss, and treat each as one more day at the office. As with any other business, Forex trading incurs losses, expenses, taxes, risks, and uncertainty. Also, just as small businesses rarely succeed overnight, so it is for the vast majority of currency traders. Planning, setting realistic goals, being organized, and learning from both successes and failures are key to achieving a long and successful career as a foreign exchange trader.

In Conclusion

Forex trading around the world is attractive to many traders because of their low account requirements, 24-hour trading, and access to large amounts of leverage. When approached as a business, foreign exchange trading can be profitable and rewarding. In short, traders can avoid losing money in currencies and make a safe Forex trading, as long as they:

  • Are well prepared
  • Have the patience and discipline to study and investigate
  • Apply money management techniques
  • They resemble their trading activity as if they were running a business
Categories
Forex Basic Strategies

WARNING: You’re Losing Money by Not Using this Forex Strategy

What if there is a solution to keep your account afloat no matter the strategy you are using? Would you follow it to the letter? Well, such strategies already exist, the issue is beginner traders cannot resist not to stray away from it. Ridiculous as it sounds, most traders lose because they start gambling instead […]

What if there is a solution to keep your account afloat no matter the strategy you are using? Would you follow it to the letter? Well, such strategies already exist, the issue is beginner traders cannot resist not to stray away from it. Ridiculous as it sounds, most traders lose because they start gambling instead […]

What if there is a solution to keep your account afloat no matter the strategy you are using? Would you follow it to the letter? Well, such strategies already exist, the issue is beginner traders cannot resist not to stray away from it. Ridiculous as it sounds, most traders lose because they start gambling instead of trading, even though they have something that already works. Apply this strategy and it would be very hard to blow an account. 

Money Management (“Oh no, that again”)…

You will find many strategies online, ready to be implemented. However, rarely you will find information about how big your trade or position should be. It is a risk management strategy. Yeah, the thing “no one” wants to listen, it is not as cool as some pimped indicator you can plug in. It is the same rule you need to follow when on a diet. You can eat this and this much every day. The desire to eat forbidden food may get the best of you, but if you persist, positive results are unavoidable. 

The brain just wants excitement…

Except in trading, you feel the gambling desire. The idea you can double your account tomorrow is very exciting and lucrative. The truth is it may happen, it can happen more than once. The feeling gets you moving. Unfortunately, everything will end badly. Excitement will be replaced with rage or depression. This game has no good ending unless you cash out and never return after a successful account doubling. But again, you will have to stop thinking about doing it once more, the idea of getting rich quickly. 

Fundamental, technical, it does not matter…

Fundamental analysis, all the news, and events that you think might get the price of some asset going are answering the question of when and in which direction. Technical analysis does this but more strictly. Money Management answers the how much question. No analysis will help you if the Money Management plan does not exist. Spend so much time developing a good entry and exit strategy, all is for nothing without this boring MM plan. Luckily, once you set it up, it is done, just follow it. Oh, yeah, you have to follow it to the letter. 

Your strategy should work…

Finding new ways to trade is great. However, now you know that a strategy needs optimal capital allocation for each trade. If you do not spend much time finding indicators and like to draw support and resistance, Fibonacci, and so on, that strategy is good too. The good news is money management makes any strategy work, essentially it is this thoughtful position sizing that drives your account value up and down. The even better news is that once rounded up, money management does not require you to work on it, just repeat the same for every trade you do. 

Easy MM with Ratios…

Ratios are easy to set up. Once you understand the Stop Loss and Take Profit idea, try to go with the generally accepted approach of having at least a 2 to 1 ratio. This just means your TP is two times away from the trade entry price than the SL. Where to place TP and SL is something we have discussed a lot before, but initially, you can take any channel-type indicator that measures volatility. Place TP at the top or bottom of it, depending on which direction you are trading. SL point is easy to place now, just halve the TP distance for a 2 to 1 ratio. 

Easy MM with Price Action pivots…

Simply said, pivots are price tops and bottoms you see on the chart. These extremes are used to place support and resistance lines, especially if they are repeatedly appearing at the same price levels. These lines are easy picks for your SL positioning, and if you follow the ratio rule TP is also defined. You can experiment with your ratios, extending them to 3:1 or higher. Now when you know how to protect and capture profits at the basic level, the only thing that remains is how much money to put into every trade.

How much to put into a trade…

Technical traders like indicators and indicators are really good at precisely telling you how much to invest. Volatility indicators usually produce a number to tell how something is volatile. You can try and open fixed-size trades. For example, if you have a $10000 account always open $500 positions. That can be 5% per trade. However, when an asset is really moving, more than others and more at that particular time, that 5% can suddenly become a serious loss, even with a proper SL. Of course, we can simplify things. Currencies or assets that are more volatile, such as the GBP, are not going to follow the same 5% trade saying rule. Simply have it to 2.5%. If you see chart candles that are higher than usual, do the same. Now if we really want to get nerdy and precise as technical traders, we can use volatility indicators to calculate precisely how much to invest. One such indicator is now a standard issue on many trading platforms, the ATR indicator.

Strategy example with Keltner Channel…

The picture below contains two indicators, the mentioned Keltner channel and a simple volatility indicator using the TradingView platform. The strategy uses the Keltner channel to set the SL level, at the bottom for long trades and the top for short. Since the channel can be used for breakouts and reversal trading, and it also shrinks if the volatility is getting lower, we have a universal tool for placing SL and TP. Mix in the ratio rule and the position sizing rule and your Money Management is all set. The green vertical line is our long entry moment. We enter a trade when the price breaks out of the channel AND the volatility indicator is rising, but also we consider if the price has broken previous resistance marked with a red horizontal line. The middle channel line is our SL and TP is twice as far from the market with the green arrow.

As you can see, our TP was hit almost at the top of this small trend. Now, the price action went into consolidation, new support and resistance levels are formed until we notice a new breakout of the Keltner channel. It was a short trade that pierced the support line but failed to make the way to the TP level, we were stopped at the SL. Even though we have 1 win and 1 loss, we are still in the money since the TP to SL ratio was 2 to 1. If we fail again, only then we are at breakeven. Testing your strategy, you will aim to be better than 50%, right? Because 50-50 is just coin-flipping. Even then you will be profitable just because you have a money management plan in place. Now you can do the fun stuff. Find a winning strategy of your own.

Sources of knowledge…

On your way to finding a winning strategy suitable to your lifestyle and psychology is fun, it is like finding parts of a money-making machine. On this very website is a whole library of strategies, concepts, and indicators. Of course, consider tweeter and youtube but also dedicated forums where people share ideas. You will notice that something could blend into your strategy. The best part is you do not have to worry about losing. Even if you are very bad, Money Management will give you many more chances to slowly get it right. It is one universal thing that can be used in many other markets.

Categories
Forex Basics

The Beginner Trader’s ABC’s of Forex Trading

Is it really possible to make money in the financial markets? It absolutely is. With that being said, you must know what steps to take to be successful. The beginner’s guide that we provide here will help you to start earning straight away.  Learning, Learning, and More Learning Not having the right education is the […]

Is it really possible to make money in the financial markets? It absolutely is. With that being said, you must know what steps to take to be successful. The beginner’s guide that we provide here will help you to start earning straight away.  Learning, Learning, and More Learning Not having the right education is the […]

Is it really possible to make money in the financial markets? It absolutely is. With that being said, you must know what steps to take to be successful. The beginner’s guide that we provide here will help you to start earning straight away. 

Learning, Learning, and More Learning

Not having the right education is the main reason why we will never be the CEO of JP Morgan Stanley tomorrow. To obtain the desired position, we study at school, we study at university, we go on a refresher course, etc. If we successfully overcome all this, we will have the opportunity to occupy the desired position. Are there many people in high-ranking and highly paid positions who have no education? They are not there at all. Therefore, to achieve something, we must study.

It is the same with currency trading. If your desire is to be a trader, you must first learn how to do it. A consistent and successful trader in addition to what he once learned, is constantly improving and learning new methods and ways to increase his income. Therefore, if you want to have the opportunity to earn money on Forex, start by studying the educational materials your broker will provide you with kindness. Trade within a demo account before you start trading in a real one. And don’t save money on your education.

Test, Test, Test

Did you lose your first deposit? Do you think trading is not your thing? That’s not so. Anyone with an average IQ has enough talent to trade in Forex. However, not everyone will have enough determination. As I have already reported, the first difficulties always discourage us, and we tend to be quite reluctant to continue. Here the situation is similar, the first losses are the first difficulties. We should focus and overcome the problems.

It is essential and necessary to know very well the causes of the problems and then start again after they have been eliminated. We must know that this is the only way to succeed in trading. Do you think the advanced traders we’ve seen before have never had a loss? They have in fact, and now too. But they can overcome the losses and make sure the loss doesn’t affect the end result. Remember, no matter how the team played, the final score only matters.

Update Your Trading Strategy

As you learn and read more and more trading methods, your own methods will lose relevance. Don’t stay in one place. If you found a good approach to trading, met a new pattern, read about a new indicator, don’t be afraid to try. Modify your current trading strategy, try the new pattern. It may be something you’ve been looking for! Then, never stop there, always go further. The market changes constantly, therefore, you should be changing.

Sharing Your Experiences

The longer you trade, the more hands-on experience you get. And the hands-on experience is the most valuable trading experience. You can read a lot of trading books, but your knowledge will not give you any results if you have never traded in a real account. The community of traders is huge, and there will always be people whose experience is greater or less than yours. In other words, some traders can teach you something, and some traders can learn from you. Always share your experience with traders of your level, this can bring a lot of benefits to your own result, plus you can expand your network of contacts. These are basically the main points you should start with if you have decided to change your life and move towards success.

Common Beginner’s Mistakes

Well, we’ve defined what you must do to succeed in trading. But, as in other businesses, there are many difficulties in currency trading. Therefore, I would like to warn you about the typical mistakes that beginner traders make, to avoid them.

  1. I want to earn quickly. 

We all want to succeed as soon as possible. And often this desire plays a bad joke on us. When we want to look for big profits, we usually start not respecting the rules of our system, not complying with our business plan, and this leads to an inevitable loss of money. If your desire is to succeed, convince yourself that what you need is to achieve success little by little, it is a path that you have to travel step by step. There are many times when success can come quickly. But as experience shows, people are usually not prepared for this and cannot develop this success).

  1. Misunderstanding of leverage principles.

Leverage is a unique mechanism that brokers provide to their customers, and if you can use this mechanism correctly, it will become an ally for you. If you use it incorrectly, it will become the cause of your losses. Before you start using leverage in your trading, make sure you understand how it works, know the principle of its use, and how it will affect your performance. Simply put, don’t employ high leverage, for stable earnings, 1:100 is enough. Let’s take an example, the trader, whom we have studied in detail work before, does not use leverage above 1:30.

  1. Lack of money management.

Overall, it’s a pretty important issue. To put it briefly, money management is a complex of measures you take to better manage your funds. The basic points of any money management are the correct management of your funds, the calculation of risk parameters, the management of leverage, the recording of statistics of executed operations, the operation with a small part of its capital, and other points. Money management is basically mathematical at the level of your wallet. He always knows how much money his wallet has, how much he’s going to buy, and how much money he’ll have left after he buys it. The same goes for your Forex account. You must know the amount you want to win if you succeed and how much you will lose if you fail. The result obtained by your operation should not surprise you.

  1. Operate for a long time.

This is the time you spend trading. If your time is distributed correctly and effectively, you are always in a good mood and for this reason, nothing, in terms of psychology, prevents you from thinking correctly and making the right trading decisions. The result of such work will almost always be positive. If you are operating day and night, your brain gets tired and cannot respond adequately to current events. This results in irritation, exhaustion, inability to think rationally and make decisions, which negatively affects your trading performance. Define the appropriate period to work and do not work too much.

How to Maximize Profits

Among the benefits of being able to trade on their own, the markets offer you many opportunities to earn extra money in trading. If you’re not too tired, let’s move on!

  1. Transaction Copy System

Remember when we were studying the case of the successful trader, what I said is that this trader did his trade publicly. This is done to receive additional income from people who copy their operations. Remember, the reward? Well, the transaction copy system allows inexperienced people to make money. Simply select the trader, whose trading performance you like and copy your trades. In return, you will share a fixed share of your earnings with this trader. I think this is little compared to the fact that they will do all the work for you and make money for you. In this system you can earn as a trader, start trading, and in addition to your own profits in your account, you will receive a commission from the investors who copy it. If you want to earn money as an investor, simply copy successful trades and make a profit without any effort. You decide!

  1. The Affiliate Programme

Brokers are always very interested in being able to develop their business more and thus be able to attract new customers. They make profits by receiving commissions for the transactions made by their clients. They themselves do not always manage to attract a sufficient number of new customers. That’s why Forex brokers often turn to the help of existing customers, offering them the opportunity to make money by attracting new customers. In other words, if you operate on Forex and your friend also wants to start trading on Forex, you can conclude a partnership agreement with your broker, in which the broker will pay you a portion of the commission that the new customer you have attracted will pay. Or you can even pay him a fixed amount for each new customer attracted. I think it’s a good deal.

  1. Contests for Traders

The main brokers usually hold different contests with good prizes among their clients. For example, there are popular traders contests, in which participants are given a period of time, such as a month, during which they must trade in their accounts and display the result. The top three that performed the highest returns receive broker awards. In a recent contest, a trader from Malaysia made a profit of 314% for one month, starting trading with USD 100. And the broker, as a first prize, gave the trader a check for 5,000 USD. There might be someone in your place, for example, you.

Conclusion

I think I’ve put forward enough arguments that you can and should make real money on Forex. No matter how you do it, there are many opportunities. What you need to do is not be passive and start moving.

Categories
Forex Basics

What NOT to Do When Trading Forex For the First Time

Let’s be honest with each other, we have all made some silly mistakes when we do something for the first time. This is certainly true when it comes to forex trading. We have made a number of mistakes and when we look back at them now, we can see how silly some of those mistakes […]

Let’s be honest with each other, we have all made some silly mistakes when we do something for the first time. This is certainly true when it comes to forex trading. We have made a number of mistakes and when we look back at them now, we can see how silly some of those mistakes […]

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

Trading Too Soon

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

Diversifying Too Early

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

Not Continuing to Learn

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

Devoting Everything to One Trade

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

Trading Too Much

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

Not Using Stop Losses

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

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

 

Categories
Beginners Forex Education Forex Basics

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

Forex and trading are becoming an ever-popular activity. For many, it is just about making a little extra money on the side, while for others, it is about the enjoyment that they get out of it. There are a lot of ups and downs when it comes to trading, but overall, those that trade it […]

Forex and trading are becoming an ever-popular activity. For many, it is just about making a little extra money on the side, while for others, it is about the enjoyment that they get out of it. There are a lot of ups and downs when it comes to trading, but overall, those that trade it […]

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

The Incredible Highs

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

The Adrenaline

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

The Money

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

You Don’t Need A Lot to Start

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

It’s Highly Accessible

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

You Can Do It From Home

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

There Is No Boss

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

Helps Us Manage Our Risks

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

It’s Always Changing

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

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

Categories
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, […]

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, […]

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

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 […]

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 […]

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.

Categories
Forex Basics

Your Money-Related Forex Questions Answered

Those that have considered a career in trading often ask many questions in the beginning regarding many different topics, however, one of the most common themes seems to revolve around money. After all, the main reason why you would choose to trade forex would be to make money, so this raises a lot of questions […]

Those that have considered a career in trading often ask many questions in the beginning regarding many different topics, however, one of the most common themes seems to revolve around money. After all, the main reason why you would choose to trade forex would be to make money, so this raises a lot of questions […]

Those that have considered a career in trading often ask many questions in the beginning regarding many different topics, however, one of the most common themes seems to revolve around money. After all, the main reason why you would choose to trade forex would be to make money, so this raises a lot of questions about whether it is actually possible to do so or if trading is simply too good to be true. Stay with us to get answers to some of the most common money-related trading questions.

Q1: How much money do you need to start trading?

A1: If you’re willing to start with a mini account, you can usually start trading with a very small amount of money, with some entry barriers as low as $1. Of course, it would be wise to try to deposit more than this so that you can place at least a few trades before you need to top up your account. If you’re looking to open a standard account or better, you’ll need to commit to making a larger deposit, usually in the field of $100 – $500 or more. 

Q2: Can trading make me rich?

A2: Absolutely! However, you need to know that there are several factors that will affect how much money you make. For example, if you only deposit $100 at first, you can’t expect to become a millionaire rapidly. Other factors, like the effectiveness of your trading plan, your experience, market conditions, etc. will also affect how much money you make.

Q3: How much money can I make trading?

A3: Once again, this depends on several factors. In one study that has been published, it was found that a $30,000 deposit could yield over $3,000 in profits per month if you were to make several trades a week. Still, this is only a ballpark estimate because results would be different for every trader.

Q4: Can I quit my job to become a full-time trader?

A4: Technically yes, but we wouldn’t recommend quitting immediately. It’s a good idea to start trading part-time so that you can ensure you have realistic expectations and to make sure that you’re good at trading. If you’re seeing consistent profits and know that you could make enough to support yourself, then you could make the move to full-time trading.

Q5: Why should I become a trader when money isn’t guaranteed?

A5: It’s true that profits aren’t guaranteed, but trading does offer several perks. For one, you could make a lot of money in a short amount of time instead of getting paid by the hour like you would with a regular job. This is a great way to make money in your spare time from the comfort of your own home, which makes the risk worth it for many people.

Q6: What if I’m interested in trading but I can’t commit to making a deposit?

A6: The best place to start would be with a demo account, which will allow you to trade in a live environment with virtual money. Since there’s no risk, you can walk away from the demo at any time with no obligation to open a live account. If you do well, you’ll probably feel more comfortable making a deposit. 

Q7: Aren’t most brokers scammers?

A7: Some are, but many aren’t. You do need to research any potential broker you’re looking at beforehand so that you can avoid falling victim to any scams. It’s better to stick with more popular brokers and to double-check their regulation status. If the broker passes these tests, you’re safe to open an account. 

Q8: What if I lose all the money I invest in my trading account?

A8: Unfortunately, you’ll be out of luck if you lose your deposit because of your own trading choices. This doesn’t mean you should give up, but it is usually a sign that you might have opened an account too quickly. If this happens you should open a demo account with no financial risk and spend some time learning about trading, then you’ll be more prepared and less likely to lose the next deposit you make. 

Q9: I know I can open a trading account with a small deposit, but is there really a point?

A9: Did you know that many brokers offer bonuses that will double your starting deposit, along with welcome bonuses that give you free money to trade with? There’s nothing wrong with starting small either, as long as you start somewhere. Over time, your account balance will grow. 

 

Categories
Beginners Forex Education Forex Basics

Is Forex Trading Actually Profitable?

You probably know that most retail Forex traders lose money. In this article, we examine the statistics reported by Forex brokers on the profitability of customers under ESMA regulations, as well as the conclusions of the research on this topic, to answer the question of which traders lose or earn money in long-term Forex trading, […]

You probably know that most retail Forex traders lose money. In this article, we examine the statistics reported by Forex brokers on the profitability of customers under ESMA regulations, as well as the conclusions of the research on this topic, to answer the question of which traders lose or earn money in long-term Forex trading, […]

You probably know that most retail Forex traders lose money. In this article, we examine the statistics reported by Forex brokers on the profitability of customers under ESMA regulations, as well as the conclusions of the research on this topic, to answer the question of which traders lose or earn money in long-term Forex trading, and why.

We’ve all heard statistics cited as 95%, 90%, or 80% of people opening an account with a Forex/CFD Broker exploit their account within six months. Some traders may think this out of respect for the Pareto principle, which says that 80% of profits are made only in 20% of cases. There are ways to know with some certainty if any of these estimates can be true? Yes, according to the new ESMA regulation in the European Union, which force Forex/CFD brokers to prominently disclose on their websites what is the percentage of loss or profit of their average retail investor.

Profitability of the Clients of the Largest Brokers

All major Forex/CFDs retail brokers report very similar data, so it is reasonable to assume that approximately 70% of all CFDs retail operators lose money. The percentage of losers is very similar among brokers, suggesting that is the market and other traders, and not the brokers, those responsible for the long-term losses of their customers.

Although these data include customers operating non-French products, there is no reason to believe that the results differ between customers operating CFDs Forex and non-French. Even Forex retailers appear to be more profitable than expected, as traditional estimates of 80% to 90% as losers appear to be an overestimate.

Why do 70% of Forex retailers lose money? Now that we know that for 70% of people who try, Forex trading is not profitable, we should ask ourselves why. Finally, if markets are changing as the well-known “efficient markets” hypothesis says, then the winners and the losers should not be divided into approximately 50 – 50?

A fair division between winners and losers could make sense if Forex were a zero-sum game, as there has to be one loser for each winner, and vice versa. However, the Forex / CFD retail trade is not a zero-sum game, but a negative-sum game, because the Forex retail trader:

-You must pay a spread, a commission, or both to get in and out of an operation.

-You should normally pay a one-day commission for any open transaction that takes place around 5 pm New York time.

This means that the odds stack up against the Forex/CFD retailer. But, if it is possible to overcome these probabilities, as 30% of profitable retailers can testify. A few years ago, a large Forex retail broker published data showing two distinct differences between profitable traders and losers. Traders who:

  • Made larger deposits in their accounts
  • Used the lowest real lever they were more likely to be profitable

We will study each of these elements separately, although they are related because traders with lower deposits tend to use greater leverage.

Why are the best-capitalized Forex traders more successful?

Retail Forex traders who deposit more money are more likely to take their trading seriously, because they have more money invested, and they know instinctively that their chance to make a significant profit is also greater. For example, an operator who deposits 100 dollars and gets a return of 20 dollars should be as proud of himself as an operator who deposits 10,000 dollars and gets a return of 2,000 dollars, since this is the same business achievement: a return of 20%. However, very few people anywhere in the world can be excited to make $20. So, to some extent, this could just be a matter of focus and meaning.

Why are Forex traders with less leverage more successful?

A feature of retail Forex operations is the relatively high leverage offered by many Forex / CFDs brokers, specifically those outside the European Union (Australia allows Forex leverage of up to 500-1). Many brokers also allow accounts with deposits even below $100 to be opened. This means that many Forex retailers can deposit $50 and use leverage of 400 to 1 to make a $20,000 transaction. This operator will then delete your account or perhaps triple it, which would probably lead to another excessive leverage operation with a similar result. Although there is some logic at stake here – a series of winning and highly leveraged operators would be a way to get a huge return quickly in theory – the odds that such a bet will result in anything but a bankrupt account after a few operations are very small.

It is also worth recalling that lower leverage facilitates risk control and limitation, which is a key factor in long-term profitability. This issue of risk is best illustrated by the fact that once a trader has decreased more than 20 percent from its maximum capital, it becomes exponentially more difficult to recoup the loss. A loss of 20% requires a gain of 25% to be recovered; a loss of 50%, a gain of 100%.

How Is It Possible to Be a Profitable Forex Trader?

Use very low leverage or do not use it. Now that we’ve looked at the evidence, the odds look better for you. 30% of Forex traders are able to be profitable, and that number would probably be higher if not all traders using too much leverage were taken into account. So the first thing you can apply is to use a low leverage or even invest without leverage. In reality, this means not risking more than 0.5% of your account in a single transaction. Don’t try to be greedy, in the Forex trade, it’s counterproductive.

Make a significant deposit: If you can only deposit 100 USD, that’s fine, but you have to respect that $100 without getting greedy. If the $100 doesn’t mean much to you, you’re almost certainly not motivated enough to negotiate well.

Use a realistic trading strategy: You can’t expect to start doing business and make money. You have to wait for the opportunities when you think the market is putting the odds in favor of long or short trades, and then take the trades according to your plan. If you don’t have a strategy to identify those opportunities, then you’ll be groping in the dark.

It is fairly well established that markets are not efficient and that trend-tracking strategies if carefully executed, are profitable in long-term liquid markets, and that includes major Forex currency pairs such as EUR/USD and USD/JPY. One of the best-functioning strategies in the Forex markets in recent decades is to operate in these two major currency pairs up to new peaks or lows of 50 days, using relatively tight loss stops and some sort of downward profit-taking. Drawback strategies can also be used to trade Forex currency pairs profitably while on a strong trend.

Most of the time, Forex pairs have a range: if the price goes up one day, it will most likely go down the next day. It is hard to take advantage of this, but when it seems obvious that the price of a Forex pair goes nowhere, you can try to trade the bounds of the range in short terms, using adjusted stops to increase the risk-reward in winning trades.

It can be said that business strategies based on fundamental analysis are less successful in Forex, but fundamental analysis can be used to filter commercial entry signals generated by technical business strategies effectively.

Follow your trading strategy and be consistent.

Having a good and profitable business strategy will not help you use money if you don’t execute it correctly. It is essential not to be frustrated by the loss of trades, remember, it is all part of a plan to have something to lose operations, and it is not a big problem as long as you keep the sizes of small individual operations. You must expect the lost legs to be more than compensated during the winning legs. However, you must be consistent, because if you stop trading, you will probably miss the winners who would have made the difference. It is important to control your emotions: most operators are excited, but profitable operators find a way to prevent their emotions from ruining the execution of operations.

How much money can you earn by trading in Forex? In Forex trading, profits tend to arrive unevenly, so it is best to look at long-term performance as the most profitable possible performance. The results can be changing and there is no guarantee of profit, but good Forex traders tend to outperform stock market benchmarks. I’ve seen the best ways to turn $10,000 into $1 million trading Forex before.

Conclusion

Although investing in Forex does not bring benefits for most retailers, you can put the odds of return in your favor by using very little or no leverage, keeping the maximum risk for trading, and following an effective trading strategy without becoming greedy or impatient.

Frequently Asked Questions

Can you get rich trading with Forex?

It is possible to earn a lot of money trading on Forex, but it is very difficult to do so unless you start with a lot of money, as 70% of Forex retailers lose money in the long run. However, overcoming long-term stock markets is a realistic goal.

How much do Forex traders earn a day?

A Forex trader can earn or lose any amount of money in a single day without worrying about it, as long as the losses are not excessive. What counts is the long-term performance, as one-day trading is statistically irrelevant.

Is negotiating in Forex a good alternative?

Trading in Forex can be a good idea if you capitalize properly and trust in a good long-term business strategy, limiting risk, as it is accessible and can be a diversified investment.

Categories
Beginners Forex Education Forex Basics

Five Great Habits for Beginner Traders to Practice

Like with anything we do, traders can choose to practice good habits that help improve their results, or they can succumb to bad habits that will work against them. In trading, some bad habits can revolve around laziness, for example, no longer using your trading journal. Other bad habits like revenge trading or overtrading can […]

Like with anything we do, traders can choose to practice good habits that help improve their results, or they can succumb to bad habits that will work against them. In trading, some bad habits can revolve around laziness, for example, no longer using your trading journal. Other bad habits like revenge trading or overtrading can […]

Like with anything we do, traders can choose to practice good habits that help improve their results, or they can succumb to bad habits that will work against them. In trading, some bad habits can revolve around laziness, for example, no longer using your trading journal. Other bad habits like revenge trading or overtrading can wreak havoc on your trading account. If you want to avoid bad habits while practicing good habits that will improve your balance, take a look at the 5 good trading habits we’ve listed below.

Habit #1: Prepare Beforehand

Before you even think of getting started, you should have a detailed trading plan and strategy picked out so that you know why and when you’ll trade. With these handy, you’ll know that you’re making decisions based on your comprehensive plan, rather than only playing chance. This can also help you to avoid falling victim to some common psychology-related trading issues as well as making self-biased trading decisions. In addition, you’ll want to put some more time into preparing by checking charts and economic events, keeping up with the news, researching important topics, and so on. It will only cost you a little time to have the peace of mind that you are well prepared to start each trading day. 

Habit #2: Use Stop Losses

If you think that you’re never going to have a losing trade, then you thought wrong. Even the greatest traders of all time have had a bad day along the way, so don’t make the mistake of thinking that you don’t need to set a stop loss. Stop losses can be widened, tightened, and adjusted to ensure to take more control of the amount that you can lose on each trade. Of course, you’ll enter each trade with confidence, but setting a stop loss simply ensures that you’re protecting yourself from losing too much money if the market moves against you. Traders that skip this step in the beginning usually learn the hard way once they lose a lot on one trade or blow their account. 

Habit #3: Devote a Specific Time to Trading Each Day

You don’t have to sit in front of your computer 24 hours a day, but you should set aside a certain timeframe each day that’s just for trading. During this trading window, you can cut out all distractions, including background noise. This good habit is extra beneficial if you trade during your most productive daily window, as some of us are more productive first thing in the morning, while others can think more clearly around lunchtime or into the afternoon. You can also avoid feeling burnt-out by ensuring that your trading window isn’t too time-demanding. 

Habit #4: Keep a Journal!

How will you know what’s going right or wrong if you don’t keep up with your trades? Sure, you might have a general idea of whether you’re making money or losing it, but a trading journal can tell you so much more than that. If you want to be able to pinpoint problems, see where you’re making improvements, know where your strategy is working perfectly, and so on, trust us – you need to keep a trading journal. Sadly, some traders begin with one but stop using it after some time, either from laziness or because they become confident that they don’t need it anymore. 

Habit #5: Figure Out What Works for YOU

There are a lot of different strategies out there and it’s easy to get swept away in thinking that one that has worked for a colleague will work just as well for you. This doesn’t mean you shouldn’t take advice from other experienced traders, only that you should realize that your trading style may be completely different from someone else’s. There are enough strategies out there that you can avoid choosing one that’s too difficult or confusing, that requires more time than you have, that doesn’t work with your schedule, etc. Instead, spend the time searching for a plan that will work for you perfectly and feel that unnecessary stress melt away.   

 

Categories
Beginners Forex Education Forex Basics

Top 3 Steps to Take Before Trading Forex

Starting your journey as a forex trader may seem rather daunting at first. You’ll probably ask yourself where you should even begin, what you need to know, and how will you know when you’re ready to open a live account. Following our three-step guide can help to make the process less intimidating.  Step 1: Educate […]

Starting your journey as a forex trader may seem rather daunting at first. You’ll probably ask yourself where you should even begin, what you need to know, and how will you know when you’re ready to open a live account. Following our three-step guide can help to make the process less intimidating.  Step 1: Educate […]

Starting your journey as a forex trader may seem rather daunting at first. You’ll probably ask yourself where you should even begin, what you need to know, and how will you know when you’re ready to open a live account. Following our three-step guide can help to make the process less intimidating. 

Step 1: Educate Yourself

While this category might seem broad, allow us to explain in more detail. Education is the most important factor that will affect your success as a forex trader down the road. If you don’t have this, then you’ll join all the other beginners that have wiped out their accounts and walked away from trading for good. No matter how eager you are to start, remember that taking the time to learn is tied in with investing in your future. Profits aren’t guaranteed in forex trading, but a trader that really knows what they’re doing will always get farther than a beginner that only knows the basics.

There’s a lot of information out there, so you may not know where to start. Here are some of the things you’ll want to learn about:

  • Forex Basics – this would include terminology, articles that explain what forex trading is, etc. A Google search for “forex basics” will bring up a lot of helpful information. 
  • Mechanics of Forex – like navigating a trading platform, placing orders, exiting orders, setting a stop loss, how-to videos, and so on. Most brokers work with the MT4 platform, so it would be helpful to watch YouTube tutorials for it. 
  • Forex Strategies – there are a lot of them and reading about the various strategies other traders use will help you to decide what might work best for you. Scalping, Bollinger Bands, trend following, and swing trading are a few well-known examples. 
  • Technical and Fundamental Analysis – this involves making trading decisions based on charts and data or information in the news. 
  • Risk-Management – this is one of the most important parts of your trading plan. Setting a stop loss and using trailing stops are common ways that traders limit their losses. Only risking a small percentage is another helpful practice. 
  • Miscellaneous Articles – articles about trading psychology, tips and tricks, and various other tidbits of information can help to expand one’s overall knowledge of trading. 

While there’s a lot to learn, the good news is that you do all this research for free. There are also several different mediums for learning, so everyone can find something that helps them take in that information. For example, free YouTube videos, webinars, and seminars can help auditory learners, while articles and eBooks can help those that would rather read the information. Free training courses are also available and really go into detail about the things you should know. 

Once you think you’ve taken in enough information, there are a few things you can do to test your knowledge. Start out by taking quizzes about forex information – if you don’t know most of the answers, then chances are that you haven’t studied enough. If you’re acing those tests, then move on to a free demo account, which is like a practice simulation account with virtual currency. Do keep in mind that some things differ on a demo account, so you shouldn’t walk into a live account with overconfidence just because you get amazing results on your demo account. 

Step 2: Choose a Broker and Open a Live Account

Once you’re ready, the next big step you’ll need to take is opening a live account. The crucial factor in this step involves choosing a good forex broker. If you open an account with a scammer or a brokerage that charges high fees, you aren’t likely to profit. Therefore, it’s important to find a broker that is preferably regulated with good user reviews online. Be sure that any potential broker has a transparent website and a helpful customer support team that doesn’t seem pushy.  Here are a few questions you’ll need to ask yourself when you’re comparing forex brokers:

  • What do the spreads look like? Are they lower or higher than average?
  • How much are the commission fees?
  • What types of accounts are available? Some brokers offer Mini/Micro/Cent accounts, Standard/Classic accounts, Platinum, VIP, and other accounts with different perks. 
  • Can you afford the minimum deposit requirements? There are brokers out there that will let you open an account with $5, but some want $500+ for their cheapest accounts. 
  • What trading platform does the broker offer? MT4/MT5 or cTrader are some of the most popular options.
  • Does the broker charge fees on deposits and/or withdrawals? Also, what type of funding methods are available? If you want to fund quickly, look for options like credit/debit, or eWallets and cryptocurrencies like Bitcoin. If standard bank wire is the only option, funding will be slow. 
  • What type of leverage does the broker offer? Beginners should be satisfied with 1:100 or less, but more experienced traders may prefer higher leverage.
  • Does the broker offer any extra perks, like free educational resources or bonus/promotional opportunities? This isn’t necessary, but it is attractive if one or more of these is available.

Of course, there’s more you’ll need to look at when choosing a broker and you can find articles online that explain in more detail. Always be sure to read the fine print and terms & conditions as well so that you’ll know about any crazy withdrawal policies or hidden fees. Remember, opening an account with a good broker is crucial for success.

Step 3: Build Your Trading Strategy

We mentioned the need to research trading strategies in step one, but this is where you’ll need to put your trading strategy together. Here’s a quick overview of some of the most well-known strategies:

  • Scalpers make many small transactions quickly, essentially profiting from very small price changes. The idea is that these profits add up over time, but one large loss can eliminate everything that the trader worked hard to make in one sweep. 
  • Day trading involves making many trades during the day, sometimes in the hundreds. These traders almost always close their trades out before the day’s end, rather than allowing them to carry over to the next trading day.
  • Swing traders primarily look at technical analysis and attempt to capture gains in a financial instrument over a longer period, such as a few days or weeks. 

There are many other trading strategies out there. Some look to profit over the short-term, while others are longer-term plans. No matter which strategy you choose, you’ll need to have risk-management precautions in place to limit your losses. Building a good trading strategy is the final step to becoming a successful forex trader. Once you start using your strategy, consider keeping a trading journal to watch for any changes that need to be made. Also, don’t put all your faith into indicators or Expert Advisors. You should always keep a close eye on these things and double-check that indicators are giving off accurate signals. Beginners might do better to avoid these altogether, as many have made the mistake of thinking that they are the answer. 

Conclusion

The process of becoming a successful forex trader doesn’t have to be intimidating if traders take things step by step. You’ll need to start by getting a free education online, and there’s a lot to learn. Don’t rush, even if you have the money to invest and you’re feeling eager. Remember that opening a trading account without enough knowledge is the number one mistake that beginners make. Once you’re ready to move on to a live account, you’ll need to put in an equal amount of effort researching different brokers and comparing their offers. Finally, you’ll want to perfect your trading strategy with risk-management in mind. We can’t guarantee profits to any forex trader but following these steps will help to set you up on the road to success. With enough knowledge, a good broker, and a well-thought-out trading plan, you could go on to have a very profitable career.

Categories
Beginners Forex Education Forex Basics

Can You Start Trading Forex With Only $200?

Can you really start to trade Forex with as little as $200? Let’s take the short and sweet answer here, yes you can. Many brokers allow you to open up accounts for as little as $10, so it is incredibly accessible, however, should you be trading with just $200 let alone the $10 entry requirement? […]

Can you really start to trade Forex with as little as $200? Let’s take the short and sweet answer here, yes you can. Many brokers allow you to open up accounts for as little as $10, so it is incredibly accessible, however, should you be trading with just $200 let alone the $10 entry requirement? […]

Can you really start to trade Forex with as little as $200? Let’s take the short and sweet answer here, yes you can. Many brokers allow you to open up accounts for as little as $10, so it is incredibly accessible, however, should you be trading with just $200 let alone the $10 entry requirement? This is where the answer is not quite as straightforward and we need to consider a number of different things before deciding whether to go ahead with such a small balance.

Many people often ask the question of how much they are able to make with a balance such as $200. Forex and trading as a whole is very much a have money to make money industry, so you may well be held back by your capital at one point or another. But we aren’t here to look at how to get rich, we are simply going to look at whether or not it would be advisable or sensible to trade with a balance as low as $200.

The first thing that we need to consider when going for such a low balance is how your risk management skills are and whether they are at the standard that you will require. The lower your balance, the stricter they need to be and the less wiggle room you will have. Have you actually tested with a balance similar to what you want to go into? Many people get the wrong idea when they sign up to a demo account and it comes with a balance of $50,000. The risk management that you can do on that account is far higher than you can on a small account, the little mistakes are hardly noticed, while on a small account, those little mistakes could potentially blow the entire account. One thing though, is that it would be a real credit to your risk management skills if you are able to grow a small account. Many people try and the vast majority of them fail, so if you are able to then it simply means that you have a knack for trading and know what you are doing.

You won’t be making millions on your $200 account, that this is perfectly clear. You can, however, make money and in the future, that may be considerably more than it is now. The wonders of compounding, this where you add whatever profit you have onto your next trade to trade slightly larger. Over a long period of time this can add up and that $200 account can grow to something substantially bigger, it will take time but it is possible. So having the motivation to carry on and to start small can mean in the future you are doing quite well for yourself.

So starting with a small account you should still be thinking about the usual risk management, things like only risking 1% of your account per trade as an example, of course, 1% of a “400 account is only $2, while on a $10,000 account it is $100, so the wiggle room is a little smaller. The good thing is that it will really allow you to hone your skills and to develop much stricter management of your funds and your account. Something that you can use in the future to really benefit yourself. Then whatever you have learned to do on your small account, it should be pretty easy to use the same techniques on a larger account in the future should you get there.

More than 20% of traders these days start with accounts lower than $999 which is often referred to as a micro account, so you are certainly not alone in starting with a smaller balance. Not everyone has the money available to trade and some are simply not serious about it, simply dipping their toes in to try it out, there are many reasons why people open up smaller accounts. It is important to remember that the higher the balance, the more flexibility that you will have. Build your account up with patience, do not risk more than you need to, and simply take your time, treat this as a long term business, and not a short term get rich quick scheme. 

We touched briefly on a demo account, something that you should have been using before going into a live account. Try and get one set up that is at a similar balance to what you are going to be using with your live account. This way, the risk management that you are using on the demo account can simply be transferred over to a  live account. There is no point practicing on a $50,000 demo account if you are going to be using a $200 account, as when you transfer over your skill, the account will most likely blow pretty quickly.

So some final thoughts to think about. If you are thinking of joining with a small balance, it is certainly possible for you to be successful, it will simply take a lot longer to achieve than it would if you start with a larger balance. It is important that you are on point with your risk management skills, do not try to push them as your account will not have the wiggle room available to do this, stick to the plan and do not deviate from it. One of the benefits of having a small account is the damage is limited, you can only lose what you have put in. So the loss of $200 will be much easier to take than the loss of $10,000, however, we know for some, that $20 is an awful lot, even or reason to ensure that you are taking your time.

So to answer our original question, yes you can trade with a $200 account. It will simply be a long and rather slow process, but something that if you are able to achieve. You can be proud of saying that you have achieved something that a lot of traders have tried but failed at.

Categories
Beginners Forex Education Forex Basics

Is Forex Trading Easy Or Difficult To Master?

So you want to be a forex trader? Before you start, you may have already come up with an idea of what it is that is involved with trading and what you will need to learn. Let’s get one thing straight from the get-go, there is a lot to learn. For a complete beginner, it […]

So you want to be a forex trader? Before you start, you may have already come up with an idea of what it is that is involved with trading and what you will need to learn. Let’s get one thing straight from the get-go, there is a lot to learn. For a complete beginner, it […]

So you want to be a forex trader? Before you start, you may have already come up with an idea of what it is that is involved with trading and what you will need to learn. Let’s get one thing straight from the get-go, there is a lot to learn. For a complete beginner, it can be incredibly overwhelming, we are talking about things like charts, numbers, trends, rates, pips, spreads, leverages, and many other terms and ideas too. For many, it may simply seem like it is too much and there is no point in trading. But when we break it down, is it actually as complicated as it seems? That is what we are going to be looking at today, we are going to work out exactly how hard or easy it is to learn to be a forex trader.

So what exactly is it that makes trading look so difficult? When we look at things from a sample statistic viewpoint, the forex markets can span over $2 trillion each and every day. This straight away gives the impression that reading is most likely just for those that you would consider mega-rich or at least rich who simply use their hired expert to do their trading for you. While this is true, it is for them, it is also a little deceiving, it is also for pretty much everyone else. While a few big fish such as the banks have large amounts of money in the markets, there are also millions of individual retail traders in there too, each with a much smaller amount. Pretty much anyone with access to the internet is now able to trade.

The main thing that would separate those so-called experts and the average trader is simply their knowledge and experience, not simply the amount of money that they have available to trade with. We need to remember that the markets are the same for everyone, regardless of how much money is in your trading account.

If we look at trading in simple terms, it consists of two different teams, the buyers and the sellers. The buyers are simply trying to push the price and value of a currency or asset up while the sellers are trying to push the same currency or asset down. Due to this tug of war, the markets are constantly moving up or down. A successful trade is simply a trade where you have predicted the movement of the markets the correct way which then means that you can close your trade in profit. It is a very simple concept, but this doesn’t mean that it is necessarily easy to implement.

You have also probably seen the various warnings that are up on pretty much any site to do with trading, the fact that the majority of people that trade end up losing money. Again, this does not on its own mean that trading is hard, but it certainly gives the perception of it, after all. If it was easy, surely the majority would be successful. The main reason why people fail is either the lack of knowledge and understanding or they are simply not disciplined or dedicated to their cause. Learning things before you actually start could help to reduce some of the early losses (and there will be losses) when you decide to start trading. The one thing that you cannot do is to simply expect to be successful and profitable.

The number one reason why a lot of people get into trading is simply the fact that they can potentially make a lot of money. Yet the reason why people should be getting into it is to simply be in control of your money. If we take your current balance and simply leave it in the bank, the value on your money will actually go down, due to things like inflation which are often higher than the interest rates that you will be receiving, the value of your money will potentially go down by about 2% per year.

Managing and maintaining your finances is an uphill battle, pretty much everyone out there is designed to part you with your money. Learning to trade gives you the opportunity to manage your own finances and to even use it to your advantage to allow it to grow. Finance causes stress to many people, so being in control and using that stress to give you added determination and drive to be a good forex trader is a fantastic thing and this is of course a great opportunity.

So back to the question of whether or not forex trading is hard to learn, well technically no it is not, there are vast amounts of information out there which can help you and can teach you to trade. The issue is that many people do not want to go through it all. Trading can be very simple, as long as you are putting in the effort to learn and taking your time. When you have bad results, you get through them and carry on instead of giving up. It is those that give up after a loss or two that make it seem harder than it is, just stick with it and continue learning and you should be fine.

Learning to trade is much like anything else in life, it is generally harder to do the older that you get. However, this does not mean that you should be put off if you are slightly on the older side. The best way to learn is to simply try to clear your mind, come at it fresh without any of your preconceptions in the back of your mind and do not use your own opinions during your learning, use only what you are reading or being taught.

A lot of what makes learning to trade easy or hard is the way that you are learning, there are various methods available and so you need to find the one that works for you, as it may be different to the person next to you. If you simply try and force yourself into trading, forcing trades, and not putting in all the required work, it will be a hard journey, but it will also be an unsuccessful one. This also goes for simply endlessly and aimlessly looking at information on the internet. This won’t help, it will be too much information and it will all be jumbled up. You need to have a plan and a reason for what you are learning. It is also worth having the right people around you, people with a similar mindset or goal. Use them to work out what you are doing well or not so well, use them to analyse what you have done, and to also get ideas from them about what else you could be doing.

Something that a lot of newer traders do is to make things too complicated, far more complicated than it needs to be. Knowledge is a fantastic thing, but it can also be overused, or at least it can be attempted to have too much of it too quickly. If you begin to read everything around, you will be reading far too much, and it won’t be in order, this can confuse you and can make working out what information you actually need pretty complicated. Many people also have their own ideas and assumptions that lie in the back on their mind, you need to get rid of these, as these are what can cause you to second guess what it is that you are learning or they can even make you misunderstand what it is that you are reading.

So the question as to whether or not forex trading is easy and hard is complicated and it will all come down to the individual that is looking to trade. Take in as much information as you can, but do it in a methodical manner, not simply reading as much as you possibly can. Do Things slowly, do things properly and trading can be easy, but do it out of order or without a plan and you will certainly struggle at becoming a profitable trader.

Categories
Beginners Forex Education Forex Basics

10 Steps To Starting to Trade Forex

Forex trading is complex, there’s no doubt about it. However, it is an absolutely fantastic opportunity to get yourself some financial freedom to get out from under that horrible boss that is holding you back and making your life hell. While it is a great opportunity, it also isn’t an easy one, if it was, […]

Forex trading is complex, there’s no doubt about it. However, it is an absolutely fantastic opportunity to get yourself some financial freedom to get out from under that horrible boss that is holding you back and making your life hell. While it is a great opportunity, it also isn’t an easy one, if it was, […]

Forex trading is complex, there’s no doubt about it. However, it is an absolutely fantastic opportunity to get yourself some financial freedom to get out from under that horrible boss that is holding you back and making your life hell. While it is a great opportunity, it also isn’t an easy one, if it was, there would be millions of more successful traders out there. Many people end up giving up or losing whatever it is that they have invested, this is down to the simple fact that they simply did not know what they were doing, or at least not properly. They have not had any guidance and so they do not have any obvious routes of progression.

We have come up with 10 steps that you can follow that will help guide you through the starting points of your trading journey. They are not perfect and there may be some things that you feel you want to do differently, but stick to at least a similar track, and it will make the process of learning and developing yourself as a trader a lot easier. So let’s get on with 10 steps to start your forex trading career.

Step 1: Learn everything!

Ok, so maybe not absolutely everything, that would be impossible, but you need to be willing to learn everything that you need to, which may actually turn out to be a lot more than you are expecting. If you are just starting out then you probably don’t know much about it, you probably only know what you have been told or what you have seen from the outside. There are a lot of different terms and phrases out there that will make little to no sense to you, these are things that you are going to have to learn. 

Forex is a game of probabilities, many see it as gambling, you need to come in with the mentality that it is not, you are there to play the game, not to gamble. You should never place any trades without first understanding why you are placing it and what your chances are of it being a good trade. One thing that you need to understand is that you will never really complete this stage, there are always new things to learn when it comes to trading so you will be constantly learning throughout our trading career, but coming into it knowing that you are required to keep learning and to learn pretty much everything you can is a great first step.

Step 2: Get a broker

There are a lot of brokers out there, thousands if not potentially millions, so it would be unreasonable to have you look at every single one in order to work out which one is right for you. As you were going through the first step, you most likely would have come across a number of different brokers In an ideal world you would go with one of the more trustworthy and well-known brokers, checking reviews from independent sources and also asking any actual traders that you may know who they use. Try not to look for special offers or bonuses, instead go for one with better trading conditions and ones that others give good recommendations for, these in the long run will work out a lot better.

Step 3: Open an account

Each broker that you find will most likely have a number of different account types available, each one offering slightly different trading conditions Our favourite type of account is an #eCN account as they generally come with low spreads and if the commissions are kept low they can be a dream to trade on. As You are just starting out we would suggest opening up an account that does not have a hefty initial deposit limit, in terms of leverage, it is not too much to worry about at this point as again, you are just starting out so you do not want to over-leverage yourself. Be sure to play around with demo accounts too, try to get a demo account that does not start with a million bucks, this is not realistic, you want a demo account with a similar amount to what you would be trading live. Just bear in mind that while this is your first account, it certainly won’t be your last, so it is not the end of the world if it isn’t perfect, you can always open up another one before going live.

Step 4: Download a trading platform

Different brokers will offer different trading platforms. The most popular ones around the globe at the moment is from the MetaQuotes company, they have two platforms, the most popular MetaTrader 4 and the slightly less popular MetaTrader 5. MetaTrader 4 dominates the retail trading market and is one of the best supported by the various brokers. It also comes with tons of documentation as well as addons through the form of indicators and expert advisors (automated trading robots). Try out a couple of different platforms, but if you are really not sure, we would say to play it safe and stick with Metatrader 4 as your trading platform of choice. This is an important choice as not having a platform basically means that you cannot trade, however, much like with the accounts, it is not the end of the world if you start with one which you end up not liking, you can very easily switch to one of the other available platforms.

Step 5: Get a risk management plan

It may seem like a relatively small thing to do and it doesn’t actually take much time, but creating your risk management plan is one of the most vital things that you can do. It can be the make and break of your strategy, it is the thing that stands in the way between a small loss and a blown account. You can of course trade without one, but it is not something that pretty much anyone would recommend. The risk management plan is simply a set of rules that you have put in place to protect your account. Many people look at risking 1% to 2% of their account per trade, the risk management plan ensures that no more than this is lost with each trade, without one that 1% loss could in fact turn into a 100% loss. Try to make it in like with your own risk tolerance so things do not get too stressful for you.

Step 6: Learn to analyse the markets

This is where you can work out which trades to actually make. There are a lot of different ways to analyse the markets and each person will probably tell you differently. We are not going to instruct you on exactly how to do it, that will be up to you to learn the way that suits you, but we will give you some ideas on what to look for. Many forms of analysis will fall under one of two categories, fundamental analysis or technical analysis. Fundamental analysis is all about looking at how things like news events will move the markets, things like GDP or unemployment rates. Technical analysis is where you look at the markets as a whole, many people use indicators to gather this information, they can measure a number of different things and many traders seem to edge towards the technical analysis side of things. It is important that you go for the one that better suits you, so try out a few different techniques.

Step 7: Place some trades

Hopefully, you now have a grip of some of the basics, you have a broker, an account, and a trading platform, you also know how to do some basic analysis and have a risk management plan in place, the next thing to do is to actually place some trades. You should be doing this initially on a demo account, of course, and this is where you will really get a feel for trading. This is where you will work out what has worked for you and what has not, giving you the opportunity to change things and improve. Make sure you do not have the expectation of being able to win straight away, many go approximately a year before they have winning months, so you should be expecting something similar. Use these trades as a gauge for the level you are at, use them to improve.

Step 8: Look at trading styles

There are a number of main trading styles, the shorter-term day trading and scalping and the long term swing trading and position trading. Being able to find the one that both matches your personality but also works for the amount of time that you have to trade. Generally the shorter the trading timeframe the more time you need to be sat at the front of the computer. So if you only have a few minutes each day, scalping will not really work for you. Starting out, you are probably doing it part-time along with your job, so try out the longer-term ones initially, of course, if you have days off during the week, scalping could still work for you. Try out all four styles before deciding though, you may find that you enjoy one of the ones you otherwise thought you would not.

Step 9: Start and keep a trading journal

A trading journal is a vital bit of kit, it is basically where you write down everything that you do when it comes to trading, the trades you made as well as the ones you did not. You also include the reasons why you made it or didn’t, how long it was kept open, the profits, the losses, and more, pretty much everything. This gives you the perfect document to review when things have gone well as well as when they have not. It can tell you of your trading habits, making it easier to find the bad ones and get out of them, it can also tell you whether you are sticking to your trading rules, all very valuable information when looking to improve.

Step 10: Learn some more

We said that step one was going to be ongoing and so it is here at the end too. You will never stop learning, as soon as you think that you know everything you will be in trouble. Always consider yourself as available for learning, do not be afraid of things that you do not know, embrace them, and take on the new knowledge.

So those are out 10 steps to start forex trading. There are, of course, other things that you should be doing, but those will become apparent as you go along. Follow the steps above and you’ll get off on the right foot for when you decide to start your trading career.

Categories
Beginners Forex Education Forex Basics

Setting Up Your Trading Environment

As with any job in life, the place that you are going to be working, or in this scenario, the place where you are going to be trading, needs to be set up in a particular way. We can’t tell you exactly how it should be done as it will be different for everyone, but […]

As with any job in life, the place that you are going to be working, or in this scenario, the place where you are going to be trading, needs to be set up in a particular way. We can’t tell you exactly how it should be done as it will be different for everyone, but […]

As with any job in life, the place that you are going to be working, or in this scenario, the place where you are going to be trading, needs to be set up in a particular way. We can’t tell you exactly how it should be done as it will be different for everyone, but there are some considerations that you should take into account no matter who you are and no matter how experienced you are at trading.

So while Bob may want to have the world’s most high tech office, all the latest gadgets and equipment, Sarah may want a simple pen and paper and a nice potted plant in the corner of the room. Each person will have different preferences, so if yours is looking different to someone else’s, then there is no need to fret, just remember that your room is right for you and theirs is right for them.

So what are the sorts of things that you need to think about? We are going to be looking at what you need to consider before you set up your trading office and workstation.

Separated Space

This may not be possible for everyone, but being able to separate your workstation and trading area from the rest of your hour and personal spaces can be a regal benefit Not only does it help you to separate your work and home life, but it also helps to remove some of the distractions that could potentially take your focus away from your trading. This also helps you to get into trading or work mode as soon as you step into the office, rather than having to be constantly reminding yourself that you are working and not simply using the computer at home.

Keep Things Simple

This one can come down to personal preference, for the majority, keeping things simple is vital. Do you need 3 screens if you are only needing one? Do you need that extra pad of paper, or that rather distracting little ornament or picture on the wall? Start with what you need, and only what you need. As you begging to become more successful you can start to add little things to help with your trading or as a reminder of what you have achieved, but when starting out, you only need to have what you actually need to trade, keep things simple to keep the distractions away, especially when you are just starting out.

Remove Distractions

We touched on this earlier, but being able to remove distractions from your trading environment and workstation is vital, especially during the early stages of your trading career. Anything that could cause a distraction should be removed. This does not just could for your environment, think about your actual computer too, there is nothing more distracting than looking for a trade, doing the analysis, and in the middle, you get a Facebook notification that is designed to grab our attention so you lose all focus on your trading. Use a clean and fresh computer, only for trading so it does not have any distractions on it.

In terms of your environment, there is no point in trying to trade with the tv on in the background, something will inevitably come up that will take your attention away, this goes for anything that has the potential to grab your attention, bright and abrasive pictures should be removed, little toys, if you have children, their toys should not be there either. Remember, this is a workplace, not a playroom, keep the distractions for your personal life, not your working one.

Invest in What Matters

We mentioned that you should be keeping things to a minimum, to begin with, but this does not mean that you cannot invest in having some decent equipment or things that will benefit you, what we meant is that you do not go out spending your money on things that will simply clutter up the room. There are certain things that are vital, a good strong desk, a supporting chair, and a decent computer for trading, those are some of the most vital things that you should be worried about spending a little bit of cash on.

There are other things that could be worth the money, things like a subscription to a high-quality forex or trading journal, pen, and paper, anything that could help to give you an edge over the markets. Remember, having a clean and simple trading environment does not mean that it needs to be empty, it just means that the things in it need to be relevant to what you are doing and not just there for the sake of being there.

Declutter Your Trading Terminal

Something that we often see which baffles us a bit is the amount of clutter that people have on their trading terminal. We aren’t talking about the games or social media on the computers that are being used, but the actual trading terminal. When you first load up a chart, it is often nice and clean and clear, then you add an indicator to it, it’s a little less clean now, then another and then another. At some point, the chart can get very busy, so busy that it can actually be quite hard to see what it is that you are actually looking at.

How are you meant to trade like this? The simple answer is that you can’t. You need to be able to keep your charts and your terminal clear. Look at the indicators that you have, which ones are actually relevant to your strategy, if you require more than 3 or 4, then your strategy is probably far more complicated than it needs to be. Try to keep 3 or 4 indicators maximum, this way there is plenty of information on the charts, but it is never overly complicated and does not distract you from your actual analysis and trading.

A Clean Computer

This goes in line with the above point about the trading terminal, so you have cleared up your terminal, but what of the actual computer. We mentioned the games and social media on the computer, are they relevant to your trading? Do they actually serve a purpose? Probably not the only notifications that you should have coming up should be related to your trading notifications or from your mentor or tutor, you should not have any other. We do not need to mention why it is not a good idea to have games installed, they will only be a distraction and should not be on the computer at al.

A Trading Schedule

Setting yourself a proper schedule is also important, this is not just for you but for the people who live with you too. There needs to be an understanding that between certain hours it is your trading and working time, not a time for someone to come in and start making conversation with you. Get one set up and stick it on your office door, this way people will know whether they should be coming in or not. It also helps you to plan your day, so you aren’t halfway through another task before you trade which will only lead you to think of that instead. When you are in your trading time, you know what you are meant to be concentrating on your trading.

So those are some of the things that you can do to help stop your trading environment ready to trade. It will be different for everyone, some people will need some things that others may not and some will have far more space than others. What is important is that you are able to get things set up the best you can with the resources and tools that you have available for you Once it is all set up correctly, your trading productivity and ultimately results will see the benefit.

Categories
Beginners Forex Education Forex Basics

A Quick Introduction to Forex Trading

Forex trading has a lot of appeal – you get to work from home, set your own hours, and be your own boss. There’s a lot of information on the internet about trading, from the mechanics behind it to trading strategies, tips and tricks, and warnings about what not to do. All of this can […]

Forex trading has a lot of appeal – you get to work from home, set your own hours, and be your own boss. There’s a lot of information on the internet about trading, from the mechanics behind it to trading strategies, tips and tricks, and warnings about what not to do. All of this can […]

Forex trading has a lot of appeal – you get to work from home, set your own hours, and be your own boss. There’s a lot of information on the internet about trading, from the mechanics behind it to trading strategies, tips and tricks, and warnings about what not to do. All of this can certainly be overwhelming for beginners that would like to get involved with trading but don’t know where to start. 

One of the first questions you might ask yourself is “what exactly is forex trading?” or “what makes forex trading unique?” Forex is short for “Foreign Exchange” and it revolves around trading currencies against each other. The US dollar is one of the major currency pairs you’ll see traded against other currencies like the British Pound (GBP), Canadian Dollar (CAD), Australian Dollar (AUD), or others. Traders must decide whether the price will go up or down and the goal is to profit from the difference.  

One of the main reasons so many people choose to trade forex is because it is very liquid. Liquidity means that there is a lot of price movement that provides traders with many opportunities to buy or sell. People also get involved with forex trading because the market doesn’t close, and they can set their own hours. You get to be your own boss, don’t have to worry about government tax cuts, and you can essentially work from anywhere if you have a laptop, phone, or tablet. 

To get started trading, you need to find a broker and open a trading account. The broker gives you access to the market through a trading platform so that you can trade. MT4 is the most common platform and it can be accessed through your web browser, mobile apps, or with a desktop application. Before you open an account with a broker, be sure to do thorough research about the company and read through their terms and conditions. Opening an account that comes with high trading costs and fees can quickly become a costly mistake. 

Although the benefits of trading are attractive, there are some cons as well. First, profit is never guaranteed. It is always possible that you will lose your investment. You must have a good education in forex trading before you get started, but many beginners simply don’t understand how much time you will need to put into learning. They open a live account too soon and become overwhelmed. Figuring out when to make trades can also get complicated. There’s a lot that goes into those decisions, including fundamental analysis, which involves making decisions based on the news, and technical analysis, which is based on data and charts that can be analyzed. Then you should consider a trading strategy, risk-management precautions to minimize your losses, and so on. 

Making an initial investment is another factor that turns many hopeful beginners away. Many of us don’t have thousands of dollars sitting in the bank, and if we do, the thought of investing that money with the potential to lose it all can be sickening. There is a compromise here in that many brokers will allow you to open an account with somewhere between $5 and $100, so you aren’t risking your life savings. However, the downside to making a smaller investment is that you will never make the same amount of profits as someone that has invested around $30,000 or more. Investing $5 will not be enough to keep you afloat and it certainly wouldn’t be able to support someone that preferred to quit their job in favor of becoming a forex trader. Of course, you could always start small to see if you’re good at it and then make larger investments later. 

If you’re looking to start forex trading, you’re off to a good start – reading articles like this one and doing research online is the first step. Things can go into much more detail than our introduction, however, so be sure to keep doing research online to find out more. Start with forex beginner information and later move on to more complicated categories like strategies and psychology. Hopefully, our article has helped to outline what forex trading is and to help one decide if trading is something they would be interested in. 

Categories
Forex Psychology

Forex Trading Psychology 101

A lot of trading comes down to your mind, you can have the perfect trade setup, but if you are not in the right frame of mind then you can still get it wrong. There are a lot of different psychological pulls when trading including stress, anxiety, excitement, and overconfidence. Some are good and some […]

A lot of trading comes down to your mind, you can have the perfect trade setup, but if you are not in the right frame of mind then you can still get it wrong. There are a lot of different psychological pulls when trading including stress, anxiety, excitement, and overconfidence. Some are good and some […]

A lot of trading comes down to your mind, you can have the perfect trade setup, but if you are not in the right frame of mind then you can still get it wrong. There are a lot of different psychological pulls when trading including stress, anxiety, excitement, and overconfidence. Some are good and some are not so good for you. There are hundreds of different things that we could talk about when it comes to psychology, too many for us to list in just one article, so we are going to be looking at some of the more prevalent psychological issues that could arise as well as different ways that you can mentally prepare yourself for the hardships and ecstasy that is trading and forex.

Taking the Trade

It is fantastic that you are using a number of different aspects and elements of the markets to analyse your trades, the problem is that there are hundreds and thousands of different things that you could be looking at. As soon as you start to look at too many, the trade may well have gone, sometimes you need to look at a few and then take the trade. The more that you look at the more time it will take and also there will be a much higher chance that you could start to question your initial thoughts, resulting in no trade being put on at all.

You can never look at everything and you can never prepare for all potential outcomes. As long as you have done your basics and you have some of your rules in place that you are following then the trade should be good to go. Do not fall into the habit of over-analyzing everything before you do it and even over analysing it once it is on, this can result in not trades and also the closing of trades early which is generally something that you want to avoid doing as much as you can. Do not be afraid to skip a trade or two if things don’t seem right, but if they do, do not then go out there looking for things that could be wrong, just take the trade.

Not Every Trade Must Be Perfect

This kind of goes against a lot of the advice that is often given out, in fact, we have done some articles which say differently to what we are about to say, but not every trade needs to be perfect. If you are always looking for the perfect trade then you will be putting on very few trades if any at all. A perfect trade will potentially only last a few minutes, the markets will be constantly changing and you will need to adapt with it, part of doing that will be taking trades that are not 100% perfect, it may have been at one point but not anymore, this does not mean that you do not need to take it at all, you can still take the trade and it can still be a good one.

Remember that a lot of your job is to simply manage risk, there is no way to completely remove it, this sometimes involves making trades that do not fit your strategy completely, but with proper risk management, they can still be successful and profitable trades. Do not be afraid to revisit some of the trade ideas that you made or that you have had in your head, you can always alter the take profit and stop loss levels, doing so allows you to take not so perfect trades but then make them good.

Avoid Biases

There is such a thing known as recency bias and it is one of the most common problems that traders come across. To put it simply, this is basically where traders will place a lot more weight on recent events, so making them seem more important than they actually are. They then allow these beliefs to have an effect on the future trades that they are making. This can have quite severe effects on trading, a bad trade can make you not want to place any more trades due to fear of another loss, while a win can cause someone to become overconfident which can lead to bad trades being made due to the idea that they are great at trading and that their opinion is most likely correct.

If we look at an example, Bob has a perfect trade setup but he hesitated at making the trade because his last trade with the same pair an hour ago lost. This is sitting in the back of his mind and this delay in putting the trade on has meant that the opportunity has passed and the trade is no longer valid. It can be hard to take recent results out of your mind, but it is important that you are able to treat each trade as an individual and not as part of a sequence.

Don’t Panic Over Stats

People often seem to focus on the stats which indicate the past results of a trade, while they can give some fantastic insight into your trading and your habits, they do not and should not indicate what you believe the results will be like in the future. Do not get us wrong, you should be keeping track of these stars and should certainly be recording them, however, do not rely on them and do not focus on them when you are looking for your next trades. Use them as an analysis tool when you have a bit of downtime, not when you are actively trading, it will only influence your trades which is not something that you want to do. So your stats and past results can be useful but do not use them to guide your future and current trades.

Allow for Market Volatility

You can set up your trades perfectly but then as soon as things jump about, the markets are unpredictable and so you need to take account of any potential volatility that could arise. Certain current pairs and instruments are a lot more volatile than others and so you may need to make wider stop losses for those pairs. If you keep things completely rigid and have no room for adapting then things can go wrong. Ensure that you take these potential volatility spikes into account with your trades and this will help to reduce the risk of trades being stopped out too soon and also helps you to be more relaxed with your trading.

So those are some of the basic psychological aspects of trading that you should keep in mind when trading. There Are of course a lot more, and we mean a lot more things to do with psychology, but the majority of them have probably been told to you a hundred times already, so we tried to look at some of the slightly less frequently mentioned ones. Either way, keeping yourself flexible and eager to always learn will set you off on the right foot for becoming a successful and profitable trader.

Categories
Beginners Forex Education Forex Basics

Overcoming the Challenges of Trading at Home

Trading from home, or just working from home, in general, can have its issues and it is something that a lot of people seem to struggle with. It is becoming easier and easier to trade at home, there are hundreds if not thousands of online brokers accepting retail clients, giving anyone with a computer, tablet […]

Trading from home, or just working from home, in general, can have its issues and it is something that a lot of people seem to struggle with. It is becoming easier and easier to trade at home, there are hundreds if not thousands of online brokers accepting retail clients, giving anyone with a computer, tablet […]

Trading from home, or just working from home, in general, can have its issues and it is something that a lot of people seem to struggle with. It is becoming easier and easier to trade at home, there are hundreds if not thousands of online brokers accepting retail clients, giving anyone with a computer, tablet or phone the opportunity to trade in the forex markets.

While it is fantastic that it is becoming so accessible, being able to trade from home does come with some downsides, both to you as an individual, your bank accounts and also your ability to focus on the job at hand. So we are going to be looking at some of the issues and challenges that people face with the ability and procedures of trading from home.

Access to Your Money

Trading from home rather than in an office has the downside that you are in your own space and anything that you are going to be trading will feel a lot more personal, due to this, it is often harder to differentiate between your own money and the money that you are using for your trading. It is very easy to get sucked into the idea that adding some of your own money could help you increase your profits. This is a dangerous game to go down, you need to be able to treat trading like a business, even when at home, this way you can protect your own money and will help you stop yourself from adding any of it to your trading funds.

Create an Office Space

When working or trading from home, it is paramount that you create a working space, an office space. It may sound like it defeats the point of working from home, but having that dedicated office space is important for a number of different reasons.

Having that dedicated space will allow you to differentiate between home life and work, it will allow you to remove a lot of the distractions that would otherwise be there if you decided to trade in the front room in front of the TV. Ensure that the office area has all your reading materials and everything that you need to keep you going and to get you started. Do not include things that could distract you, that would not be beneficial to your trading abilities. Remember, you are at home, but you are also working (or trading in this case).

Get Rid of Distractions

Working in an office is perfect for doing work, it has been designed in such a way that the number of potential distractions is kept to a minimum and they are able to completely remove some of them. When trading at home, you, unfortunately, are not in such an environment and so there may well be plenty of distractions still around. You can get rid of some of them by using our above tip of creating a dedicated office space, this will enable you to have an area of your house which is much more like an office environment.

Things like TV, people, and others are all there and available for you when at home, some of it will take a bit of self-discipline to stay away from, in terms of people though, make sure to inform them that you will be working during certain hours and so they should not come in and distract you. Give yourself set working times and set break times, use those break times to get on with whatever distractions that you are interested in, once your break is over, back to work until you allotted breaks or end time.

Take Breaks to Socialize

When you are at home you are probably socializing with those that live with you or over the internet, however, when working and trading at home we have already described how you need to cut that out during your working hours. So when you do have breaks, either before, during or after work, you should certainly use these times to socialize, it will keep your mind healthy and stop you from going mad from loneliness, so use those opportunities to socialize as much as possible.

Set a Schedule

Working and trading at home is fantastic, you can trade at whatever time you want, take a break whenever you want and if you feel like it, not trade at all. Wrong! If you want to trade and home and still be successful, you need to be able to treat it like a job, you need to set yourself some fixed trading and working tikes and then stick with them. Set a time that you will start in the morning, when your brakes will be and when you can finish in the evening and then tick to it. Of course, there may be things here and there that you need to leave the desk for, such as someone at the front door, but apart from that stick to these times.

This will teach you to stay disciplined and dedicated to trading, it will also help you adjust if you ever go back to the office. If you start to do it less and less, your dedication and motivation levels will drop.

Do Not Work or Trade Too Much

One thing that a lot of people struggle with is managing their time. When you are trading from home, it is very easy to get sucked into working longer hours or even loading up the charts in the middle of the night. This is something that you are going to need to train yourself not to do. It is not healthy to spend every waking minute on the charts and it is not healthy to wake up in the middle of the night to check out the charts. You need to be able to separate your social and home life to that of your working life. As soon as you clock out, that should be it for the day, it can be very tempting to want to just jump on for 10 minutes here and there, but that 10 minutes could very easily lead to hours. Once you have finished for the day, you are finished, there is no other way of keeping that healthy home and work balance.

Go Outside

For a lot of people, the majority of the time that they go out are part of their commute to and from work, when you work at home, you are missing out on that commute and that opportunity to go outside. Due to this, it is important that you are able to force yourself to go outside, even if it is just a 10-minute walk or to go shopping, getting out will really benefit your health and it will also help clear your mind of work. It is a way to completely disconnect from the work that you may not be able to do should you just walk from your office space to your living room.

If You are Sick, You are Sick

One thing that a lot of people seem to forget is that you are still working and still trading, even if it’s just for yourself. If you are not feeling well, then you need to take a sick day, the markets won’t be going anywhere, so if you do not well do not force yourself to trade. You are far more prone to making mistakes or taking shortcuts with your trading because you do not feel great or you are feeling too tired. If you are sick, take the day off, take the time to recover, when you come back you can then fully focus instead of trying to trade through the sickness and making mistakes.

Maintain Discipline

Staying disciplined is vital to working at home, this is not in regards to simply avoiding distractions and working. If you work for someone else, you will most likely have some targets that you are required to meet. What happens if you do not meet them? There is probably some sort of performance review if you do really well there may be some kind of reward. You need to keep this mentality when at home too. If you feel that you are not doing well, evaluate what you are doing, and look at how you can improve. If you are doing well, give yourself a reward, a little time off, or a new pair of shoes, something that you would be looking forward to. What is important is that you are constantly evaluating what it is that you are doing so you can keep your productivity and performance levels up.

So those are some of the things that you are able to do that can help you to cope with the change to working from home. It can be a very difficult change for some and a change that can take a long time to adapt to. You need to show a lot of self-discipline in order to be successful with it and strong-willed in order to stick with it. For many, it would be a dream come true, but just take it seriously, plan your days and work times and working from home can give you a lot of freedom that so many people look for.

Categories
Forex Risk Management

The Overlooked Risks Of FX Trading

There are some very obvious risks when it comes to trading, things like the loss of your account, the stresses that it can put your body under, and unfortunately, the death of a dream to becoming a full-time trader. Along with those more obvious risks, there are some more little hidden risks to both your […]

There are some very obvious risks when it comes to trading, things like the loss of your account, the stresses that it can put your body under, and unfortunately, the death of a dream to becoming a full-time trader. Along with those more obvious risks, there are some more little hidden risks to both your […]

There are some very obvious risks when it comes to trading, things like the loss of your account, the stresses that it can put your body under, and unfortunately, the death of a dream to becoming a full-time trader. Along with those more obvious risks, there are some more little hidden risks to both your trading and your overall health, we are going to take a little look at what they could be.

The Risk of Isolation

It is very easy to get yourself wrapped up in both the excitement of trading and also the feeling and need to do better. Trading is a long process and takes a lot of time to learn properly, putting too much time into it could cause you to begin to isolate yourself from those around you. Becoming obsessed with doing better will take up most of your time, taking it away from your job, my family, and your friends. You need to remember to make time for them too, do not spend every waking minute looking at the markets, set time aside to trade, there are other important if not more important things in your life to trading, be sure to give them enough attention too.

The Risk of Boredom

Sat in front of the computer for hours on end is not for everyone, some people can do it no problem and won’t get bored at all, but for most people, it will begin to cause boredom, and boredom can be very detrimental to your trading. When you become bored your concentration levels drop, and so does your motivation. These drops can cause you to stop looking at things in as much detail and can also lead to you making trades that you otherwise would never have made, just based on the fact that you no longer want to be doing that.

The Risk of Overconfidence

Being confident is a good thing, but being overconfident is not. It is easy to get to this stage if you have just had a large number of wins in a row. This can make you feel invincible and unfortunately, you are not. People in this frame of mind will often start putting on additional trades or at a higher trade size increasing the risk to hit the account, they may also stop using all of the criteria that were set out in their trading plan, again, increasing the risk to the account. In the end, this sort of thinking will only lead to an increased number of losses.

The Risk of Sequential Results

By this we simply mean that you can go on runs of wins or losses, both can have negative effects on both your mood and your account balance. We briefly mention in the section above about becoming overconfident when we have a large number of wins in a row and the difficulties that come with that. When you have a string of losses in a row it can have the opposite effect. It can make you start to doubt your own abilities or the strategy that you have created, this can give you a fear of putting on more trades and can make you miss out on some perfectly good trading opportunities.

These sequences can actually occur with both wins and losses, win one, lose one, win one, lose one, and so on. Extended times of these alternating results can put you off as you are not seeing any gains overall, but that is just how the markets are, every trader will experience the sections of their trading careers, it is just about sticking with your plan and getting through them.

So those are a few of the more hidden risks to both yourself and your account when trading, there are more, in fact there re probably hundreds of hidden risks, if you feel that you are doing something or having an emotion that may be putting yourself or your account at risk, simply step away, take a break, refresh your mind and then come back with an open mind ready to move on from whatever was causing the risk.

Categories
Beginners Forex Education Forex Basics

The Seven Worst Ways To Trade Forex

There are good strategies and there are bad strategies, there are smart ways to trade and there is, unfortunately, the not so smart way to trade. When you started out on your trading journey, you were probably told of a few things to avoid, this doesn’t, however, stop everyone, in fact, it is quite commonplace […]

There are good strategies and there are bad strategies, there are smart ways to trade and there is, unfortunately, the not so smart way to trade. When you started out on your trading journey, you were probably told of a few things to avoid, this doesn’t, however, stop everyone, in fact, it is quite commonplace […]

There are good strategies and there are bad strategies, there are smart ways to trade and there is, unfortunately, the not so smart way to trade. When you started out on your trading journey, you were probably told of a few things to avoid, this doesn’t, however, stop everyone, in fact, it is quite commonplace to see people doing things that any experienced trader or anyone with any sort of understanding of risk knows that you should not do.

So we are going to be looking at some of the more silly and certainly more risky ways of trading, they aren’t necessarily attached to a specific strategy, more of a mindset. So let’s look at some of the things that you should definitely try and avoid doing.

Trying to Pick the Tops and Bottoms

If it was possible to warm out where the top of a climb is or the bottom of a dip, then we would all be millionaires, then again, there wouldn’t be as many tops or bottoms around. It is never a good idea to wait until what you think is the top and bottom, the majority of the time you won’t be close. Instead, you need to get into the markets when your strategy tells you to. As soon as you try to guess the tops and bottoms, you will miss your entry, and the trade will no longer be a good one.

If you genuinely feel that it is the top or bottom, it can cause you to put on trades larger than your risk management plan details, this can put your account in danger and this form of overconfidence is never beneficial to an account. So stick to your strategy and don’t try to predict the tops and bottoms of the markets.

Trading Without a Plan

Something that a lot of newer traders do, or those that are simply too lazy to learn or develop their own trading strategies. This is one of the cardinal sins of trading, you need to have a plan, as soon as you trade without one you are on a slippery slope to gambling and ultimately lost accounts. Always have a plan, its best to have your own plan, but if you really can’t make one, at least take one from someone else, while you may not fully understand it and may not be able to adapt it to the changing markets, it will at least give you something to work on and not everything that you do will be complete guesswork.

Adding to Losing Trades

Have you been in a situation where you are in a trade, unfortunately, it has started to go the wrong way? If you have ever traded then you would have, but what is important is what you decided to do next. Did you:

A: Leave it.
B: Close it:
C: Add another position in the hope it turns around.

If you chose C then you made the mistake that we are looking at. If the trade started going the wrong way, it should be closing at your stop loss, adding to the position will just potentially increase your drawdown further, many people who add to positions will continue to add to it, as soon as you start doing that, it will continue to grow at an exponential rate and will eventually blow your account if there is an extended trend (which is more common than you may think.

This is such a dangerous way of trading and is known as either a martingale or grid strategy, it is something that you should be warned off very early into your trading career if you are thinking of doing this, don’t. Reevaluate your plan and work out where you are going wrong instead of just adding more trades to a losing position and hoping for the turnaround that may never actually come.

Guessing or Gambling

A lot of people like a good gamble, but you should stick to sports or the casino, forex, and trading really is not the place that you should be making those bets. If you are only interested in throwing your money at a certain outcome without any regard for anything else going on, then it would be better to avoid trading altogether. Trading is all about working out the probabilities and then seeing which side has the most and so which way the markets are more likely to move. Just randomly choosing a direction without knowing them is the same randomly betting on a football team while not knowing the players. The moral of the story is to simply not gamble, do not trade in this way, it will only lead to losing your account,

Blindly Following Others

If a random person walked up to you on the street and told you that the EURUSD market will move up, are you going to hear that and then suddenly trade it? Probably not, so why would you listen to some random person on the internet? If you blindly follow the suggestion from someone else, then you will literally have no idea why they are telling you to trade that way. What if things go wrong? What are you going to do? You do not know what the decisions behind entering this trade were, so you have no way of knowing how you should adjust it should the markets begin to change.

The other thing you need to think about is the fact that you do not know what the credentials are of the person making the trade. Have they been trading for a long time or is this literally their first week of reading? You have no idea, so it is a really risky thing to follow others without knowing anything about them or the trades that they are making.

Sending Money for Others to Trade

This is such a bad way to trade that it isn’t even classed as actual trading, however, it is something that a lot of people do. You have seen adverts all over the web, people asking for you to invest so they can trade your money, the only advice that there is would be to avoid giving any money to anyone, the moment you do it is lost, are they even real? Do they actually trade? You do not know so do not give your money to the, instead learn to trade yourself and you will at least know what your money is doing and what the strategy behind the trades are.

Increasing Lot Sizes

There are a few different strategies that actually revolve around this such as the martingale strategy, you have most likely heard about it before and have also probably been warned off of it too, and for good reason. As soon as you start to add additional lots sizes and trade sizes to each trade, you are increasing the danger to the account, each trade puts the account in danger and can potentially make you lose it all. Basic risk management will dictate that your trade sizes should not be increasing with every trade, instead, it will keep things steady, if that is good risk management then clearly constantly increasing the lot sizes is not good risk management, so it would be best to avoid this at all costs.

So those are some of the ways that you really should not be trading, if you find yourself doing them, reevaluate what it is that you are doing, step back and start again, you need to work via a strategy and not just trading whatever it is and however you feel, that will only lead to disaster.

Categories
Beginners Forex Education Forex Basics

What You Can Expect to Learn During Your First Year of Trading

When you are just starting out, you don’t really know too much about trading, after a year, we would hope that you know a little bit more. There are a number of things that you only really learn by actually trading, reading and studying the markets is a fantastic way to start, but there really […]

When you are just starting out, you don’t really know too much about trading, after a year, we would hope that you know a little bit more. There are a number of things that you only really learn by actually trading, reading and studying the markets is a fantastic way to start, but there really […]

When you are just starting out, you don’t really know too much about trading, after a year, we would hope that you know a little bit more. There are a number of things that you only really learn by actually trading, reading and studying the markets is a fantastic way to start, but there really is no substitute to the experience and learning that you get from actually trading.

So now we are looking at a few different things that you only really learn from trading and hopefully things that you would have learned within the first year of your trading experience.

Sticking to Your Trading Plan

This was most likely drilled into your mind before you actually started trading, but as you actually trade and as you make mistakes, this should have been cemented in there. Every single mistake that you made, and you would have probably made a lot of them, would have reminded you that you should be sticking to the plan that you created.

Your guidelines and rules are there for the reason of keeping you on track, ensuring that you remain profitable even with losing trades. After a year, you will know exactly how it feels to lose and how it feels to win, you would have experienced what happens when you break one of your trading rules and you will know what it feels like to win. Sticking to your plan is how you remain profitable and win in the long run, after a year of trading you know this and so find it a lot easier to stick to that plan.

Of course, with the year of experience, your plan will be at a much better stage than it was when you started, as you trade you would have continued to adapted it, continuing to change things for the better so that the overall results that it produces are of a much higher standard. Something that only comes with experience and actual trading.

Being More Patient and Having Discipline

One of the hardest things to learn when trading is the discipline and patience that you need in order to trade successfully. When you first started out, you could have had all the excitement and enthusiasm that comes with starting something new, especially when it could potentially make you some money. When you are in these early stages it would have been quite hard to keep yourself in check, to prevent yourself from putting on additional trades through either excitement, greed, or overconfidence.

After a year of trading, you should have learned how to better control those emotions. You are far more disciplined, able to restrain yourself, and not put on any trades that you should otherwise not be putting on. You have a much better understanding that trading is a marathon and not a sprint, so you are able to wait out the markets for the correct conditions to be met, this is such a vital skill and it should have developed nicely after a year of active trading.

Better Risk Management

When you first start trading, you understand what risk management is, but you don’t necessarily know how to implement it properly. A year of trading would have helped you to work it out, mainly through mistakes and learning from getting things wrong. You should now have a really good understanding of how it works and the different methods available to you for keeping your account safe. The fact that your account is still running after a year shows that you have a decent grasp of what risk management is and how it works. You would have worked out the optimum stop loss positions as well as take profit levels for your strategy and also the best trade sizes for your balance. Your overall risk management would have improved and so your account should be a lot safer compared to a year ago when you first started out.

Listening to Others

When you first start out, it is easy to listen to those that you perceive to have more experience than you, however, after a while of listening to people and seeing that their predictions aren’t quite as magical as they initially seemed to be, you will begin to become a little wearier of listening to others. Instead after a year, you are far more confident in your own abilities to analyze the markets and to trust in your own judgment. Listening to others only leads to muddled analysis or bad trading signals, and after a year you will know this first hand and trust your own abilities over those of others.

Treating Trading Like a Business

As a new trader, you would have started your journey full of excitement and willingness to both learn and earn. At that stage of your trading career, you would have been excited, and thus a little bit too eager to put in your money and place some trades. Over the past year of trading, you would have matured in your trading and your outlook. Now you will be treating trading much more like a business. You will be looking deeper into each trade, taking more time to plan your trades and the risk management that goes with it and will be a lot warier of the potential risks of each trade. You will now be looking at trading as a business for your future, rather than a quick way to make a little extra money.

Additional (and More Complex) Strategies

When starting, you would have been concentrating on a single strategy, ensuring that you have an understanding of how it works., The issue with this is that it will only work with specific trading conditions. Now that you have been trading for a year, you would have picked up some knowledge of a number of different strategies that will allow you to trade in multiple different market conditions. This will give you a lot more flexibility and the ability to be profitable at more times during the day, week, month, and year.

So those are a few different things that you may well have learned from your first year of trading. You would have been through a lot of things, learned a lot of new techniques, and had the chance to develop your own understanding and methods for trading. Hopefully, you should be able to see the progress that you have made and can use that as an encouragement to continue to improve and learn over the next coming year.

Categories
Beginners Forex Education Forex Basics

The Importance of Being Consistent While Trading Forex

Just like with many things in life, being consistent in what you do can pay off, and deviating from your standard routine and style can leade to disaster. While it may be valid for most things in life, achieving it within the forex trading markets is far easier said than done. When starting out, you […]

Just like with many things in life, being consistent in what you do can pay off, and deviating from your standard routine and style can leade to disaster. While it may be valid for most things in life, achieving it within the forex trading markets is far easier said than done. When starting out, you […]

Just like with many things in life, being consistent in what you do can pay off, and deviating from your standard routine and style can leade to disaster. While it may be valid for most things in life, achieving it within the forex trading markets is far easier said than done.

When starting out, you will often be told that you need to find your own strategy, you need to stick to your plan and that you should not trade outside of it. These are all fantastic tips for staying consistent, but they do not really help you to do it, as the temptation to deviate can get the best of us into trouble within the choppy waters of the forex markets.

So why is it so important to stay consistent?

To put it simply, it helps you to maintain your strategy, your confidence, and your results. Let’s imagine that you have just spent the last six months perfecting your very own strategy, you use a number of entry criteria and a number of different exit criteria which are all based on certain patterns or values within the markets. You put it into practice and have now started making small, but consistent profit, for the sake of this example, let’s say £100 per week.

You are using a fixed lot size of 0.1 lots for each trade, and risk a maximum of 2% of your account per trade. You have now been making £100 per week for about two months, which is fantastic, but you want to scale up. How would you do this? Many would simply increase their lot sizes. However, you need to consider how this affects your risk to reward ratio, remember that your strategy only risks 2% of your account if you double the lot sizes to 0.2 lots, this increases the risk percentage, or the stop losses become shorter, wither way, your strategy has changed. So now your stop losses are shorter, trades have started to close in losses.

You have very set entry requirements, there are four or five that need to be met, they have been very accurate and very profitable, but the markets have not been optimal for your strategy, there have not been any trades for a few trading days. Would you stick to your plan and wait, or has the idea of making more profit got the better of you? You change your strategy slightly and get into some trades, but something did not match your criteria, now some trades are going up and some down, you broke your plan, and things aren’t going how you are used to, this can negatively affect your own psychology.

Even when sticking to your plan, there will be losses, it is important that you do not let this change the way you are trading, five profitable trades and a loss is still fantastic going, far better than many would do, so a few losses are simply the markets telling you not to get too confident, but rest assured that your plan is working.

Should you decide to change something, test it out on a demo account first, when you are sure the changes are effective, change them for all future trades, not just one or two, being consistent in your changes is also important.

Having these rules of trading is set by yourself and no one else, often these rules are created from mistakes, and as we all know, a mistake is the best learning tool. So when starting out, experiment, do things a little differently to find those rules, but once you have them, stick to them, you will thank yourself, and your account balance will thank you too.

The moral of the story is to simply stick to your plan, be consistent, and do not change things just because you want more or you are bored.

Categories
Beginners Forex Education Forex Basics

Why Am I Not Reaching My Trading Goals? Here’s Why…

The first thing that I want to ask you is whether or not you actually have any trading aims? You would be surprised at how many people have not actually made any when we start out trading, there is often an overall target that we want to achieve. For some, it will be to be […]

The first thing that I want to ask you is whether or not you actually have any trading aims? You would be surprised at how many people have not actually made any when we start out trading, there is often an overall target that we want to achieve. For some, it will be to be […]

The first thing that I want to ask you is whether or not you actually have any trading aims? You would be surprised at how many people have not actually made any when we start out trading, there is often an overall target that we want to achieve. For some, it will be to be able to quit their job. For others, it may be to make $1,000,000 overnight, some will be far more modest than others, just to make an extra $100 a month as spending money. Some will be far more realistic than others, but what is important is that you have one and that you have defined them.

It is important to ensure that you have defined your aims and goals properly, these should be set out in a way that makes them easy to understand and that they are achievable. There is no point putting down that you want to be a millionaire when you are starting from $100. It could be your overall aim, but you need to have stages along the way, make your first $100, the first $10,000, become risk-free (remove initial money) and so forth, these are what you will be doing at different milestones and these are what you will be aiming for rather than the overall millionaire status.

So this leads us to the first reason why you may not be achieving your aim, they are simply too big and too ambitious. As we mentioned above, there is no point setting your only aim as $10,000,000 profit, it may happen one day but that won’t be for a long time, if you set things too high they will not be achievable in a sensible timeframe. Set your aims lower, at least the initial ones, they need to be achievable, even if it may seem pretty low and potentially easy compared to your overall aim.

The next thing that you need to consider is whether or not you have a trading plan that goes along with the aims that you want to achieve. There is no point in having a goal to create a trading plan if you are just going to copy other people’s trades. Whatever your aim is, you need to be able to set out a plan which will detail how you are going to achieve it, this should contain the steps that you need to take and by what time you are wanting to achieve them. Ensure that the plan and the aims within it are achievable, have a timed deadline and that they are relevant to what you want to achieve.

Leading on from the previous point, you need to be able to show some dedication and commitment to the trading plan and the aims that you have created. Sometimes it can be pretty hard to keep doing something especially if it is not going the way that you want it to. Q lot of traders will quit after a number of losses in a row, or completely change their trading plan and style. It is important that you are able to stick with it, through both the good and the bad times, and there will be bad times. Being able to remain on track and following your plan will allow you to get through those hard times and your results will be much more in line with the expected results that you detailed when creating the plan in the first place. Sticking to the plan will make your aims and targets much more achievable and much more realistic to reach them.

How about distractions, are you easily distracted? We are not thinking about the TV or the person sitting next to you, they can of course put you off your trading game, but we are talking about distractions from your trading aims. You have them set, but you are on your way to achieving one and suddenly you think of something else, you want to alter those goals to something else,l but everything has been set up to achieve this, so do not let these new thoughts get in the way of your trading and to get in the way of the achieving those aims. Once you have made your goals, set your sights on them, and do not let anything make you doubt or change them. You set them for a reason, remember that reason and remember those goals, do not change them partway through as it can completely throw your trading game out of sync.

It is important to take breaks when trading, to move away from the markets in order to clear your mind, but what it is not ok to do is to take breaks from your aims and your trading plan. Every trade that you make should be with your trading plan in mind, you should be making each one in order to get a little closer to achieving that target. Do not take a break from this and make trades that are nothing to do with then, based on a gamble, a thought, or simply for fun. This will only take you further from achieving your target and will put your account in additional risk. Stick to your plan, stick to your aims, and keep your trades focused on them.

Something else that can really make you lose track of your targets and certainly make them harder to achieve is if you are not tracking them. Tracking your aims and your progress towards them can give you a lot of motivation. In fact, it can help push you to follow them and push yourself to achieve them. Where the issue comes from is when you are not tracking them, how will you know how close you are to the target if you are not marking down each result or where you are in relation to it? This can cause you to lose focus and also a lot of motivation for it. Regularly revisiting your results and your progress towards your aims are paramount to actually achieving them.

The last thing that we wanted to look into is the fact that some people look at their target as a quick thing, where in reality, your targets should be a marathon and not a sprint. Take your time to achieve your targets, as soon as you begin to try and rush them, mistakes will be made which will only take you further and further away from achieving the goals. Be sure that you take your time, one step at a time and you’ll be in a much better position and mindset for achieving your targets.

So those are a few of the things that could be causing you to miss out on this target, remember to set them in a way that they can actually be achieved and that they are measurable. Stay focused on them, do not get distracted and you will be in a fantastic position to achieve them or at least to be on the right track to achieve them down the line.

Categories
Beginners Forex Education Forex Basics

What Forex Trading Offers (In Addition to Money)

For many, the idea of trading is about just one thing, the money, it can help to make us financially free, it can help us to pay our bills and for some, they hope that it can make them rich. Of course, this is all true, there is a lot of money available to be […]

For many, the idea of trading is about just one thing, the money, it can help to make us financially free, it can help us to pay our bills and for some, they hope that it can make them rich. Of course, this is all true, there is a lot of money available to be […]

For many, the idea of trading is about just one thing, the money, it can help to make us financially free, it can help us to pay our bills and for some, they hope that it can make them rich. Of course, this is all true, there is a lot of money available to be made with trading, but have you ever thought about the other things that it gets you? There is far more to trading and it can offer you a lot more than just the money.

There is one thing that everyone will agree with when it comes to trading, this is that it is hard to be consistently profitable, so if it is so hard to make money, why do so many people do it? The truth is that there are other benefits to it too, there are a lot of psychological benefits to trading that we will look at. So let’s take a look at what some of the other benefits are that you can get from trading.

The first skill that trading can teach you is patience, this is a virtue that will benefit you in pretty much everything that you do in life. Patience allows you to get through those boring stages in life, this is taught to us during our trading life as our trading plans have very specific requirements for each trade, when they aren’t being met, we need to wait, we need to be able to wait for the correct setups as trading without them is what we know as a bad trade. This patience that we build up allows us to do many other things in life without the usual irritation that we would have otherwise had, waiting in line at the post office or waiting for a bus to arrive, it will make these experiences a lot more bearable for you.

Trading can also teach us about dedication and determination, it can take a long time to become profitable and so we need to be able to keep at it, to keep learning and developing ourselves as traders. This can teach us ways that we can do this with things that aren’t to do with trading also, things like getting fit, one of the things that people struggle with the most when it comes to getting healthy is being able to stick with it, having the determination to stay with it and to keep on pushing until they reach their goals.

This leads us into self-motivation, you will most likely be trading alone and by yourself, so it is vital that you develop and learn how to self-motivate yourself. This is you telling yourself about why you are getting up each day to trade. This is particularly powerful when things are not currently going the right way. When things are wrong and things are hard, it takes a lot of strength to motivate yourself to work and to continue working. This can then be used in the world outside of trading too, motivating yourself to work or to achieve something that you have always wanted to do, self-motivation is incredibly powerful and is a fantastic tool to have in your arsenal.

The final skill or virtue that we will be looking at is your risk tolerance, you often see people come into trading hating risk, not wanting anything to do with it, ell if they want to become a successful trader they are going to need to develop a slightly more tolerant stance on risk. Trading is all about risk, so the more you do it, the more used to taking that risk you will be, this can then be taken into the world. Maybe you will now take part in more dangerous activities that you would otherwise have said no to and avoided. Being more tolerant of risk can open up a lot of very exciting does for you.

So those are some of the skills that you can make from trading and use in your everyday life, some will be easier to develop than others, but what is important is that you are able to transfer the skills.

Categories
Beginners Forex Education Forex Basics

Trading Outside Your Comfort Zone

Humans are things of habit, they will create their safe space, a place where they feel comfortable, they are happy with what they have, and stepping out of can cause extra work and stress, so why would we want to get out of it? This applies to the forex trading world too, once you have […]

Humans are things of habit, they will create their safe space, a place where they feel comfortable, they are happy with what they have, and stepping out of can cause extra work and stress, so why would we want to get out of it? This applies to the forex trading world too, once you have […]

Humans are things of habit, they will create their safe space, a place where they feel comfortable, they are happy with what they have, and stepping out of can cause extra work and stress, so why would we want to get out of it?

This applies to the forex trading world too, once you have created that strategy that works, you want to stick by it, and that is good advice, but if you never make changes, never step away from the strategy you will be stuck with it for life, and you cannot guarantee that it will always work when the market conditions change.

When you talk about getting out of your comfort zone, a lot of people will be thinking of jumping out with both feet, you don’t need to double up your lot sizes or jump into an entirely new strategy, instead, it is best to ease your way, one toe at a time out of your comfort zone and into something new, not only will it allow you to expand your arsenal, but it will also help to increase your knowledge of different strategies and the markets as a whole.

Stepping out of that zone though, no matter how small will cause you to stress, it will bring you into contact with things that you do not know how to deal with, this is perfectly normal, but there are aways to help prepare yourself and to get out of that zone in a more steady and less stressful way.

One way to lower the stress levels is the old true and tested demo account, using the demo account will allow you to try out that new strategy, or change to your current strategy without having any actual risk, this takes out the stress part of the change, this isn’t revolutionary as I am sure you have been told plenty of times that you should be using a demo account to test things out, and that is for a good reason, it allows you to look at the changes without any added emotion giving you a much clearer view of what has gone wrong, but also what has gone right.

Take a slow step out of that comfort zone rather than jumping, we know that some people do not want to wait for change, you are excited about trying something new and the possibilities that it could bring but don’t jump out with both feet. Take a small step, increase that lot size by a small amount instead of doubling it, change just one aspect at a time to ensure it still works rather than changing the strategy entirely, this enables you to keep risks low, but also to learn about how each individual change actually affects your trading.

If your change isn’t successful, do not let this put you off, a loss is often the best lesson you can have, use the experience of loosing as a way to learn about why it didn’t win, why your trades lost and what you could do differently to help adapt it to win. Part of stepping out of your comfort zone is losing, its not the best part, but it is the best way to work out exactly what you need to do to expand that safe bubble you have.

So do not be afraid to get out of that comfort zone, those that are hugely successful have done it hundreds of time, if you don’t you will begin to stagnate and your trading won’t go anywhere else, so taker that first step and start learning more about your own trading and the forex trading world around you.

Categories
Beginners Forex Education Forex Basics

Overlooked Techniques That Can Help You Be a Better Trader

When we think about all the things that we do or professional traders do to be successful, it is normally based around reading. Things like creating their strategies, following certain rules, and controlling their emotions. Those things are vital, but there are also things that we need to do which actually have nothing to do with trading, they are things that can benefit our life, which can then subsequently benefit our trading. Here, we are going to be looking at some of the stranger things that traders do that can help with your trading.

When we think about all the things that we do or professional traders do to be successful, it is normally based around reading. Things like creating their strategies, following certain rules, and controlling their emotions. Those things are vital, but there are also things that we need to do which actually have nothing to do with trading, they are things that can benefit our life, which can then subsequently benefit our trading. Here, we are going to be looking at some of the stranger things that traders do that can help with your trading.

When we think about all the things that we do or professional traders do to be successful, it is normally based around reading. Things like creating their strategies, following certain rules, and controlling their emotions. Those things are vital, but there are also things that we need to do which actually have nothing to do with trading, they are things that can benefit our life, which can then subsequently benefit our trading. Here, we are going to be looking at some of the stranger things that traders do that can help with your trading.

Eating Healthy

This is an easy one for us, eating, we love eating, most people love eating. What we do not mean though is eating just anything you want, you need to be eating the right stuff, you need to be eating for your success. So why is eating so important? A large percentage (around 20%) of the calories that you use on a daily basis is used by your brain, what you eat is what fuels your brain and you then use that brain for your trading. It is important that we are able to keep our brain healthy and functioning properly, not just for trading, but for our overall living. Eating better does not only help your brain, but it also helps your body, losing weight, building muscle, all of these things help you overall well being and can subsequently give you more energy for trading.

It should be obvious that there are some foods that you want to eat more of and some foods that you want to eat less of, we have broken them down below, it is, of course, a non-exhaustive list and you do not need to restrict yourself to just these foods.

Good: Those lovely green leafy vegetables, lots of good fats such as eggs, nuts, and some fish. French fruits that have not been processed and preferably organic.

Bad: High sugar content drinks or those with high levels of fructose corn syrup. Refined carbs, alcohol, high levels of trans-fat, and highly processed foods.

Waking Up Early

This is not going to be the most popular thing that traders do, but getting up early can have a number of different benefits for your trading performance. Many people can struggle to get up for 9a, so if we were to recommend getting up at 5 am it would probably make you laugh, well that is exactly what we are suggesting that you do.

Teaching yourself to regularly get up at the same time, especially at a time that you do not like is an incredibly powerful way or touching yourself with high levels of discipline, a trait that is vital for becoming a profitable trader. If you look at those that are extremely successful, do you think they lie in until 10 am or 11 am? Probably not because they are up early, going through hair routines ready to make more money.

It is a good idea to start your day with a routine, this builds up your discipline but it also helps you develop your own understanding of things, you often learn best in the mornings, creating a routine to help your own growth is vital and a perfect way to start the day.

Do not think of getting up early as a punishment, think of it as a push towards your success. If you feel that getting up in the morning is too hard work, then you will certainly find that keeping your composure and discipline when trading will be even harder.

Meditation

This will seem weird to some, but not so much to others, meditation is a fantastic way to clear your mind, in fact, it can completely clear it which can help you to come back with a fresh mind. Stress is a natural feeling when trading, as is frustration. Being able to meditate and clear that mind will enable you to clear yourself of those stresses and frustrations and allow you to better analyse the markets without any of the previous results or stresses still in the back of your mind.

Medication can also work as a way of focusing your mind, it can allow you to focus on specific issues and to work out exactly how to resolve them, it also helps to free other parts of your mind to explore new ideas and horizons which can create new opportunities for you in the markets.

It does not need to take up a lot of your day, but if you start to feel that you are becoming stressed and frustrated, step away for just 30 minutes, try to clear your mind, and then come back and take another look at the markets with a fresh look.

Exercise

This sort of goes hand in hand with your eating habits, exercise is fantastic not just for your body but your mind as well. What do you feel once you have finished a workout or the next day, apart from the aches and pains, you probably find that you have a lot more energy, not to mention that you probably sleep a lot better.

Exercise helps blood flow, the thing that your brain needs. There have been a lot of studies that have looked at the correlation between exercise and brain function, it can increase the function of the brain by up to 30%. Having that extra 30% to help with your trading could be of a real benefit, making you sharper and more likely to spot small deviations.

Consistent training and exercise, doing it regularly, and doing it at the same time each morning will help you to build up your discipline, a skill that is vital for trading.

Reading

Reading is a fantastic thing to do and has been proven to help increase the motor functions of the brain, it does not have to be trading related reading, just reading something would be enough to stimulate your mind. Of course, reading anything is good, but reading books related to what you are doing, in this case, it would be trading, can both stimulate your mind and give you new ideas that you can implement into your own trading.

A lot of us may not like reading, but if you understand that it is now a part of trading, you should be trying to get yourself into the mindset that you are reading to improve your trading and that it will help your overall profitability.

Beware of Too Much Multi-Tasking

A lot of things in life require you to be able to multitask, it allows you to complete more and at a quicker pace, however, when it comes to trading it doesn’t really help you too much. The majority of very successful traders will focus on a single task. At a high level of trading, you are not able to focus on so many different things at once, in fact, it will be hard to focus on more than one. When you are analysing the markets, you can only analyse one at a time, as soon as you start to look at more than one, it will begin to smudge your analysis and they will begin to bend into one.

You need to be able to focus fully on just one, you need to focus all of your energy onto a single asset or currency pair so that you can fully analyse it, not try to analyse multiple things at once. Instead of trying to multitask, simply work for 45 minutes every hour, fully on one element, then take a break, come back and work on the next thing, doing it all at once will confuse you and then make you take a longer period of time to complete all required tasks.

So those are some of the things that traders do that actually have very little to do with trading or are things that you may not have thought about. It is important that when you set yourself a routine, that you stick to it to build up your discipline. Are there things that you do that others may think it is strange, probably, but there are a lot of strange things that people do that really do work and really do improve your trading performance.

Categories
Beginners Forex Education Forex Basics

FX Trading Skills That Are Used In Everyday Life

While Forex and trading there ultimately make money, and that is, of course, a huge benefit of it, there are a few other things that you pick up along the way that can then be transferred into your everyday life. These are skills that you can, of course, pick up in other ways, some people […]

While Forex and trading there ultimately make money, and that is, of course, a huge benefit of it, there are a few other things that you pick up along the way that can then be transferred into your everyday life. These are skills that you can, of course, pick up in other ways, some people […]

While Forex and trading there ultimately make money, and that is, of course, a huge benefit of it, there are a few other things that you pick up along the way that can then be transferred into your everyday life. These are skills that you can, of course, pick up in other ways, some people also naturally have them., but traders are often forced to improve them and they can be very beneficial in your everyday life.

Discipline

Probably the most obvious skill that you will pick up is discipline. Trading and Forex are both very long processes, yes people come into it wanting to get rich quick, but those people are very quickly removed from the pool as they blow their accounts. Instead, the ones that are left are the ones that are able to wait, they are able to show great levels of patience. When you start out, you will create a trading plan, you will then be required to stick to that plan, even when things are very quiet, there will be times with no trades at all, even possibly days without any. Staying patient and preventing yourself from forcing trades that you shouldn’t put on is a fantastic skill to have.

You can then take that skill out into the real world, it will make you far more tolerable of a lot of things that are happening around you. People walking slowly, the bus taking a long time to come, or your food at a restaurant is still not here. Having developed these strong skills and discipline will allow you to cope with these everyday situations in a much calmer and much more sustainable way.

Controlling Emotions

There are a number of very strong emotions that you will experience when reading in the markets, the majority of them can actually have a negative effect on both your trading and your own mental health. When things are going well, it can cause a feeling of overconfidence, this emotion can cause you to start placing additional trades or increasing risks to your account, overconfidence can also take place in your everyday life, causing you to take additional risks in the things that you are doing.

Another strong emotion is greed, we all want more, but being able to control that emotion will do a fantastic job both in trading and within your own life. Wanting more than you have and throwing rules out the window is not a good direction to go in, we learn to avoid this by using rules within our trading plans, the same can be done in real life, learning to work with what you have rather than what you want can help to keep this in check.

When you let your emotions get the better of you, you often end up making some bad decisions, in anything you do, when you let your emotions take control, you won’t be thinking about the consequences of your action and so bad decisions are made, this is true for both trading and everyday life, so learning to control them is paramount.

Getting Out of Your Comfort Zone

Homans like to feel safe, we like to do things that we are comfortable with and when we need to leave that area of safety, it can create feelings of stress and anxiety. Trading forces you to leave that comfort zone, either by taking risks with your money or learning new things. Being able to do it regularly within the trading world will teach you how to weigh up the risks and rewards of doing so. You can then take that same mentality out into the real world.

Being able to push yourself to try new things will enable you to experience a lot of things in life that you otherwise would have missed out on, new foods, new activities, all these things that you are now able to experience.

So those are just a few skills and traits that you could learn from trading that you can take out into the world, there are of course many more, trading can teach you a lot of things about yourself which can benefit you out there too. So do not take the skills that you are learning for granted, they may be helping you far more than you think.

Categories
Beginners Forex Education Forex Basics

Trade Your Way Forward: Your Personal Path to Profit

Trading is a huge industry and there are thousands of different ways to get involved and ways to actually trade. It is a never-ending educational process and it has a never-ending learning curve. It takes a lot of dedication and practice, however, it is something that you need to be able to develop your own […]

Trading is a huge industry and there are thousands of different ways to get involved and ways to actually trade. It is a never-ending educational process and it has a never-ending learning curve. It takes a lot of dedication and practice, however, it is something that you need to be able to develop your own […]

Trading is a huge industry and there are thousands of different ways to get involved and ways to actually trade. It is a never-ending educational process and it has a never-ending learning curve. It takes a lot of dedication and practice, however, it is something that you need to be able to develop your own style and your own way of learning.

“But Bob has a good system, I can use that one!” You can indeed use that strategy, but do you actually understand it, what would you do if things do a little wrong, do you know how to get out of those trades successfully, do you know what the risk management of that system is and would you be able to properly and accurately explain it to someone should they need you to?

If the answer is no to any one of those questions then you should not be using that strategy, for the simple reason that you do not truly understand how it works to how to use it. Bob has probably spent the last six months learning and honing this strategy, he has an in-depth knowledge of it and knows exactly how it works.

So now you need to learn and develop things your way, the first thing you need to do in order to do this is to work out exactly how you prefer to learn, how do you best learn? Some people learn best by writing while others learn best by doing, you can incorporate either of these ways into your learning and development, but it is important to recognize this as if you do not learn well by just reading, then just reading will kill all motivation and may put you off trading altogether.

While there is nothing wrong with listening to others and seeing how they went on their learning journey, it is important that you don’t try to follow them step by step, for the simple reason that they are learning the way that they need to learn, and this won’t suit the majority of other people. Taking tips is fine, these can lead you in the right direction or get an understanding of what you need to learn, but how you learn it should be entirely up to you and should suit your own individual style.

So why is it important to make your own style and strategy, this is pretty simple too, if you create something from scratch, you have a full understanding of how it works, you know the methods behind it, you know how the risk management works and just as importantly, you know what to do if something goes wrong. We have seen thousands of traders lose their accounts because theta re trying to mimic another trader with a strategy that they just do not understand, creating one yourself gives you the knowledge that you need., Of course, you can take aspects from other strategies, but if you do that, learn what it is that you are taking, do not just blindly add it to your strategy.

One final tip we would also add, is that you need to be creating and learning on a demo account, we have seen a lot of new traders who are copying others jump straight in with a live account and they always end up blowing that account, the amount of value that you get from using a demo account is well worth the time that you put in, you can tweak, try out and develop things with no actual risk and in conditions that are similar (not exactly like) to the live trading environments, use the demo accounts as much as you can, especially when learning and developing your own strategy.

The moral of the story is to simply be yourself, and learn the way you need to learn, take ideas from others, but develop them into things yourself instead of just copying or trying to follow the footsteps of someone that has done it before. Just remember that just because it works for someone else, doesn’t mean it will work for you.

Categories
Beginners Forex Education Forex Basics

What is the Number One Forex Trading Mistake?

Are you eager to become a successful forex trader? Many people read stories about successful traders online and begin to daydream about quitting their desk job in favor of being their own boss. Others might come into a deal of money and look to invest it for more profits. Or maybe you’ve read a trading […]

Are you eager to become a successful forex trader? Many people read stories about successful traders online and begin to daydream about quitting their desk job in favor of being their own boss. Others might come into a deal of money and look to invest it for more profits. Or maybe you’ve read a trading […]

Are you eager to become a successful forex trader? Many people read stories about successful traders online and begin to daydream about quitting their desk job in favor of being their own boss. Others might come into a deal of money and look to invest it for more profits. Or maybe you’ve read a trading article that makes it seem like starting your trading career is easy. Regardless of the reasons why you want to get started trading, the top mistake you can make is opening a trading account without a proper trading education.

You can’t learn everything you need to know overnight. Many beginners spend a little bit of time reading articles or conducting research, but they jump into trading too quickly. If you don’t use the proper risk management and a good trading strategy, you’ll never make money. Being well-educated in this field will help to set you up for success.

Forex traders need to be able to analyze technical and fundamental data. Traders should be able to tell how the news might affect the market, interpret the data on charts, understand different trading strategies, and so on. You’ll also need to understand trading mechanics like how to place orders, exit positions, etc. There’s a lot that goes into perfecting a trading strategy and making accurate trading decisions. It’s impossible to do this without any background knowledge.

Those that are in a hurry to get started are also prime targets for scammers. If you don’t understand what types of fees and things you’re looking for, how can you know that you’re opening an account with a reputable forex broker? Many scammers offer flashy promises or guarantees of profits to lure in traders that don’t really know what they’re doing. Those traders lose their entire investment quickly.

We do have good news for traders that are willing to put in the effort. The internet is filled with free information about trading, like forex articles, webinars and seminars, eBooks, and other resources. Many brokerages even offer educational resources to their future clients directly, free of charge. Try searching Google or another search engine for this information:

–Forex basics: terminology, principles, theories, and calculations.

-Forex Trading Mechanics: how to place an order, exit a position, change your leverage, operate a trading platform, etc.

–Forex analysis: look at technical and fundamental analysis

–Forex Strategies: there’s a lot of them, like scalping, day trading, news trading, etc.

-Risk-management: look at ways to minimize your losses, such as setting a stop loss

Reading articles like this one that revolve around trading mistakes and trading psychology can be helpful as well. When you think you’re ready, you can even practice on a demo account before opening a real account. This can give one an excellent idea of where they stand and if they are truly ready to make an investment.

Learning forex trading requires time and determination, it isn’t something that can be done quickly. Rushing to open a trading account without a proper education is the number one trading mistake that most beginners make. If you read something online that gets you excited about forex trading, then that’s great – you should keep that enthusiasm while understanding that there is no ‘get rich quick scheme’ or shortcut to becoming a successful trader.

Even if you have the money to invest right now, do yourself a favor and get a solid education before you open a live account. If you’ve already opened one and don’t know what you’re doing, try switching to a demo account and take a break from live trading until you’re ready. Your brokerage should hold your funds for you but be sure to check for any inactivity fees. Some brokers charge these fees after a month or more with no trading activity.

Categories
Beginners Forex Education Forex Basics

Top 7 Tips for First-Time Forex Traders

Forex trading can be a profitable endeavor, but it tends to be so primarily for those who invest time in education before diving into the markets. Time and time again we see that the best traders are the most educated traders. With this in mind, check out the following tips for first-time traders looking to […]

Forex trading can be a profitable endeavor, but it tends to be so primarily for those who invest time in education before diving into the markets. Time and time again we see that the best traders are the most educated traders. With this in mind, check out the following tips for first-time traders looking to […]

Forex trading can be a profitable endeavor, but it tends to be so primarily for those who invest time in education before diving into the markets. Time and time again we see that the best traders are the most educated traders. With this in mind, check out the following tips for first-time traders looking to enter the amazing world of Forex trading.

Tip #1 – Know the Markets

Forex traders need to know what makes the markets move in order to make more informed decisions about when and how to trade. For example, a country’s economic standing is the main driving force behind that currency pair’s price. If big economic news is expected to hit, then the market is likely to become volatile. Successful forex traders always stay up to date on the news and are aware of the factors that can affect prices or when they might need to hold off on trading if volatility is on the horizon.

Tip #2 – Have a Plan

Creating your trading plan is one of the first tasks that any new trader should have on their list. Your plan includes your trading strategy, which is very important, but it also deals with who you are as a trader and what goals you have, your evaluation criteria for making trades, how much you want to risk, and your methodology. Without this plan, your trades will likely seem erratic and might not make much sense.

Tip #3 – Practice First!

Have you ever practiced on a demo account before? If you already have a trading account and you haven’t, then you skipped a very important step to beginning the trading process. These accounts are offered by most forex brokers and are completely free, so there’s no excuse not to use one. Demo accounts don’t only allow one to practice without risking real money, but they can also be used to figure out the MT4/MT5 platform, gauge your understanding of how to trade, and whether you’re ready to open a live account, test strategies and indicators, and more.

Tip #4 – Only Risk what you Can Afford to Lose

While we hope that each investment you make into your trading account is a profitable one, this is rarely the case in the world of forex trading. There will be some losses along the way, as this is a fact that even billionaire traders have learned. This is why it’s important to only risk funds that you can afford to lose. If you risk money that you needed to pay bills with or to live off of, then you must think of the ramifications if those funds are lost.

Tip #5 – Research Trading Psychology

You’ve likely heard of the ways that emotions can affect your trades. If not, just think of the ways that anxiety, fear, and stress could negatively affect one’s trades. When you’re feeling these emotions, your head can get cloudy and you don’t make the best decisions, which can result in a loss of money. Even happier emotions like confidence or excitement can cause you to make mistakes when it comes to trading. We could spend all day talking about the psychology behind trading, so you should spend more time researching this topic so that you’ll know if it starts to affect you.

Tip #6 – Stay Consistent

Once you’ve created your trading plan, it is important to stay consistent. Remember that you will have good and bad days when trading, as this is simply part of it. You shouldn’t erratically switch plans every time you lose money, otherwise, you won’t be able to perfect your strategy. Instead, consider keeping a trading journal so that you can see the bigger picture of how your strategy is working along with anything that might need to be changed.

Tip #7 – Choose the Right Broker

With so many forex brokers out there, it’s easy to want to simply choose one and be done with it. Much like with the way that we need to compare car insurance or cable services to get the best deal, we also need to compare multiple brokers as well. This is even more important than the other examples as you are hopefully choosing a broker that you will spend years or decades working with and that will help you make a ton of money. If you don’t put much thought into the process, you could wind up losing way too much money in fees, dealing with poor customer service, or facing other problems down the road.

Categories
Beginners Forex Education Forex Basics

Top 7 Reasons Why Forex Traders Quit Trading for Good

The sad truth about trading and forex is that the majority of traders give up, there are many reasons why they may be giving up, some from lack of funds, other from lack of time, but there is a wide range of these reasons which we will be looking at today. Some reasons will be […]

The sad truth about trading and forex is that the majority of traders give up, there are many reasons why they may be giving up, some from lack of funds, other from lack of time, but there is a wide range of these reasons which we will be looking at today. Some reasons will be […]

The sad truth about trading and forex is that the majority of traders give up, there are many reasons why they may be giving up, some from lack of funds, other from lack of time, but there is a wide range of these reasons which we will be looking at today. Some reasons will be unavoidable, others completely out of choice, so let’s jump straight in and take a look at some of the reasons why some people stop trading.

Lack of Funds

Let’s be completely honest, trading forex can be an expensive business, the problem is, that it has been made so accessible with accounts being able to be opened from as low as $10. The problem with this is that $10 is just not enough money to trade with. It’s fantastic that it is so accessible, allowing those to trade who never would have been able to 10 years ago, but what they do not tell you about these low deposits is that it just is not enough to trade safely with. Even with leverage of 1:500 which is what a lot of people go for these days, you will be able to put on just one or two trades before being margin called, it just is not worth it and it is a sure-fire way to lose that account. The other problem is that those coming in with $10 deposits are those that do not have a lot of money, so as soon as that money blows, that is everything that they had available to trade gone.

In order to have a safer account, you need to have a deposit of at least a few hundred dollars, otherwise, you cannot use proper risk management, so while trading is looking more and more accessible, in order to do it successfully and for a longer period of time, you will certainly need more than the minimums that a lot of brokers are suggesting. Without money, you cannot trade, so one of the main reasons why people stop trading is a simple lack of money and funds.

Boredom

Trading is a long process, a very long process, in fact, there aren’t many things out there that take longer to either learn or perform. So it takes a long time to learn and to trade which will already put a lot of people off who jumped into trading in order to get rich quickly. You have probably seen a lot of adverts and people posting about how they have gotten rich overnight or within a week, people come into trading expecting this, but it just is not going to happen, and so they get bored of the fact that they are actually required to learn things and to put in both time and effort in order to make any money. They often decide to simply quit once they realise just how long it is going to take to actually make some money.

The other reason people can quit due to boredom is the fact that on occasion it can take hours or even days for a proper trade setup to show up. Trading was promised to us as being exciting, so why are we just sitting in front of the computer for days at a time with no trades being placed? Sometimes people even try to force some trades in order to build up a little bit of excitement, not something that you should be doing as this will only lead to losses which will put you off trading even more. People do not come into trading realising that it is a marathon and not a sprint. If you are bored, then do something else for a few hours, there is no need to sit in front of the computer for all this time, but people just want to trade, so they do and they then become bored and often this is enough for someone to give up entirely.

Overconfidence or a Lack of Confidence

To many being overconfident or having a lack of confidence may sound like completely different things, while they are on the opposite side of the spectrum to each other, they also have a lot in common and are both reasons for why someone may actually quit trading. Let’s start with the obvious one, having a lack of confidence is common when it comes to trading. This is especially prevalent when we look at people who have just started out. You have the excitement to begin, but do you really know what you are doing? When you have not done something before you often lack the confidence to do it, you can also lose any confidence that you did have when you experience a few losses in a row. If that confidence drops enough then you may even find it hard to put on any trades at all, second-guessing your analysis and trade ideas to the extent where you go days or even weeks without a trade being put on. When you are in this situation it is hard to build up your confidence as you are not trading and this can lead to someone quitting completely.

So the opposite of that is overconfidence, not something that you would normally consider something that would make someone quit doing something. You will normally gain the trait of being overconfident once you have had a few successful and profitable trades in a row. Confidence is a good thing, but when you get overconfidence it can start to cause issues. When you have this much confidence you start to think that you are invincible or that anything that you do will work. This can cause you to become sloppy, to start taking trades that you think will work rather than the ones that your strategy states that you should be taking. These out of strategy trades will eventually lead to losses that will then go against you. Either dragging down your confidence levels or making you think about running with whatever profits you currently have, for more serious cases, overconfidence can make you trade so much that you completely blow your account.

Too Many Distractions

It takes a lot of effort and concentration in order to trade successfully. If you are not able to concentrate on what you are doing then mistakes are going to be made and you will inevitably end up losing some money. So if you are the sort of person that is easily distracted, then you may need to reevaluate what it is that you are doing and the environment that you are trading in. If your computer is full of notifications from Facebook or Reddit then you may need to remove them, if you can hear the TV in the background then you may want to turn it off or remove it entirely from the room. If you are distracted, you will make losses, not something that you want to happen. These distractions lead to a loss of focus which can completely take away your excitement and motivation to trade, if whatever is on the TV is of more interest to you than the markets are, then maybe trading just isn’t for you.

Tiredness and Fatigue

If you have been trading for a long time, multiple hours in a row then you can begin to feel a little tired, this can make you quit for the day but it certainly won’t make you quit trading entirely. Fatigue, on the other hand, can, is where you are constantly tired of trading, you will wake up and not really fancy trading due to being tired of it. When people begin to feel this over a longer period of time, it can be one of the catalysts for them to quit. Think back to the last time you had a hobby, are you still doing it now? Probably not, either from boredom, lack of interest or you got tired from doing it too much. When you do something over and over again, it can become tiresome and can cause you to fatigue. So it is often suggested that you should take regular breaks, to help prevent you from burning out.

Blown Brokerage Account

One of the more obvious reasons to quit trading, a blown account is as low as you can get, it is the thing that all traders dread. Unfortunately, it is far more common than you may think. In fact, the majority of traders manage to blow their account and one time or another, if you haven’t so far, then congratulations, you are doing far better than a lot of other people have. When we do manage to blow an account, it can cause a complete loss of confidence, motivation and willingness to trade. This is the point where people often give up, especially if they put all their available money into that account. Those that stick with it can use this loss of an account has a huge learning opportunity, as long as you do not use all your money at once, understand that you can learn from it and have the motivation to continue to learn, you can get passed a blown account as a better trader, just make sure you don’t try to win that money back too quickly, that will only lead to another blown account.

Lack of Time

Trading can take a lot of time, a lot of it, to learn, to trade, to do pretty much anything. When you start a journey as big as trading, from the outside it may look pretty simple. As soon as you get into it though, you soon begin to realise just how much there is to learn and how long it may take for you to do it. This can instantly put a lot of people off, especially as it is simple stuff. People these days do not want to sit down and take time to learn, they want things to work quickly and straight away, when it doesn’t they give up and move on to something else that they think will be a quick process instead. Trading takes a lot of time, people often want to do it after work, coming home tired and then getting into something so complicated can often make people give up from not having the time to learn it all after work. It is more than possible to learn part-time, many do, but it will take up most of your free time.

So those are just some of the things that can cause people to quit trading. There are of course many more, each trader is different in their goals, their abilities and their willingness to put in the effort. If you want to be successful, you need to be able to guard yourself against some of the reasons why people quit and you also indeed to be able to push yourself through them, as at some time in your trading career you will experience them, the important bit is getting through time and then pushing on to be a successful trader.

Categories
Forex Education Forex Risk Management

Forex Risk Management Guide for Beginners

One of the most important elements of the trade is certainly risk management, even though it can be a neglected point. The traders need to learn as much as possible about the risk management to gain profit. This specific subject will guide you on how the risks could be avoided and implement the strategy to […]

One of the most important elements of the trade is certainly risk management, even though it can be a neglected point. The traders need to learn as much as possible about the risk management to gain profit. This specific subject will guide you on how the risks could be avoided and implement the strategy to […]

One of the most important elements of the trade is certainly risk management, even though it can be a neglected point. The traders need to learn as much as possible about the risk management to gain profit. This specific subject will guide you on how the risks could be avoided and implement the strategy to achieve projected goals and profit.

Lots of researches have shown that risk management might be the crucial aspect of any day trader. Sometimes, traders can see 80% of their trades are profitable, while 20% show as a net loss. This is an example that shows incorrect risk management. That is why the good planning and learning about the ways to get your trades protected are so important.

When we mention the strategy we always think of something that is based on the long term. The same goes for the Forex market, where even if the traders can be affected by the loss, it doesn’t mean that they cannot end up in making some profit. That’s why good strategy and planning are so important. Something that the professional traders always emphasize is, “Plan the trade and trade the plan”.

First of all, we should all be aware of the possible risks that can come along with the trades. The majority of the foreign exchange trades consist of foreign exchange swaps, currency swaps, options, futures, spot transactions. Since there is leverage, the risk with forex trades can be big and can cause a certain loss. Those losses could be even bigger than estimated.

Depending on how the leverage is created, the small payment can cause a serious amount of loss. Various issues can also affect the financial markets such as political situations, time differences, etc. Even though the Forex trade market seems to be the most active and frequent, there are always risks that can lead to serious losses. In further writing, we will show some of the most common risk points to understand how they could affect the trader and the market.

We can start with Interest rate risks. There is something that the macroeconomics study shows and that’s how the country’s exchange rates are affected by the interest rates. Proportionally, having an increase in the country’s interest rate is going to make the currency more stable, due to the inflow of investments in the country’s wealth. So, when we have a stronger currency, the higher return is expected. On the other hand, when the interest rate dips, the currency gets weaker since the investors start to pull back their investments. Also, Forex prices can be significantly changed by the difference between the currencies, due to the type of the interest rate and its unavoidable impact on the exchange rates.

Another risk element is known as Leverage risk. It is important to highlight that people join the Forex market because it provides them with higher leverage, which is different from other financial instruments. To even participate in the notable foreign currency trades, you will have to create an account for margin with your broker and it’s something that is strictly required by the leverage in the Forex trade market. When we have a case of the small price swing, it means that the investor needs to put the deposit further cash to cover the losses that may occur. When the trader begins to use the leverage extensively in the situation when the market is inconstant, it will eventually show as a big loss for the trader. The forex prices could be significantly changed with the interest difference between the currencies.

We also need to mention and elaborate on the transaction risks. The definition of the transaction risks is explained as an unbalanced exchange rate from the beginning of the contract until its completion. Something that happens most of the time in the Forex market is the fluctuation of the exchange rate before the contract gets finalized. On trading days we are all aware that the Forex works hours. Therefore, the same currency can be purchased and sold for different prices at different times. In that case, if we have a huge time gap between the beginning of a contract and its closure, the more risk in the transaction we need to take. If we have the change of the rate of exchange caused by the different timezone, the expense of the transaction can be pretty high.

When it comes to the risks we should talk about Counterparty risks. It presents the list of non-payment risks generated by the supplier. It is mainly related to the brokers or suppliers of benefits to investors. We need to mention the two types of contracts regarding this topic. Forex market differentiates spot and forward contracts. Spot contract handles the spot currencies and the risk is always determined by the brokers or market makers. If the situation in the market is not improving, the contract could be broken by the counterparty. The forward contract can be defined when two parties decide to purchase or sell an asset at a determined time in the future by the price that is agreed upon by the finalization of the contract. That price is usually called the future price.

The last on this list but not the least important and its Country risk. When you start to plan your investments, mostly in currencies, please check the strength and standard of the country that is using them. The most of the countries in the world that have just started to develop their economy or countries that still haven’t started to develop it, rely on the currencies of the economically strong countries such as US Dollar or Euro. That is why the central bank has to come up with a set of systematic measures to keep fixed exchange rates. In the case when the currency is undervalued, it negatively reflects on the Forex market. We also have to mention the term of currency devaluation. It starts with there is repeated balance of a deficit in payment, when the country has a higher import than the export rate. It is also important to mention the investments. Mostly, they are rather built on the idea than facts and researchers.

In that case, the investor will take back the assets if he estimates that the currency value will dip. It will seriously affect the currency which will get even lower. Also, it will be hard to get the assets pulled and exchanged. In the Forex market, when the currency crisis occurs, it means that the currency will continue to devalue, credit risk will be higher, and it will be very hard to sell the assets.

Here is what you can use right away as a base for Risk Management in your trading system. One of the most efficient indicators for reading and predicting the changes in this fluctuating market is the ATR. This acronym stands for Average True Range. Most of the professionals reckon that this tool is one of the most reliable to avoid risks and possible loss. It describes how many pips from the top to the bottom, a currency pairs fluctuate on average. The best possible number of pips that you can have as risk is 1.5 times of ATR value (pip value), according to some research for trend following strategies on the daily timeframe.

So what does it mean? It means that the stop loss has to be 1.5 times the ATR away from the current price. The ATR can be very helpful to find the Pip value. You can use the 2% of your current account as your possible risk. Then you divide your risk with the 1.5 ATR and it will show your 1 Pip value in $ if your account is in USD. For example, use your current account and multiply it with 2%, which equals 0.02. This result will present your total risk amount. When you want to calculate your stop loss you will have to pull up the ATR and multiply it with 1.5.

To avoid any stop loss, you will have to find the most suitable indicator that will pull you away from the bad trades. There are a few tips that some of the most proficient traders suggest. The first one would be avoiding the trade more than the one with the 2% risk. In some cases, you can just find the first trade entry and should easily go with the flow. Even better, if you get the long signal for EUR/AUD and the EUR/JPY you can try to split the risk ( 1% and 1% per pair).

Also, you can use the 1% on the one trade, and leave the other trade open for later, where you have half-risk. The first tip is the most common and the most reliable. To gain some profit and to path your way to be a successful trader, you should never fear the risk, but on the other hand, be cautious. Learn as much as possible to even get into risk. Learn how to calculate your risk and try to recognize your exit indicator. In the end, don’t get trapped by the over-leveraging.

Categories
Beginners Forex Education Forex Basics

The Importance of Remaining Flexible While Trading Forex

Don’t you hate it when you are trying to get something done but need a bit of help, so you ask your colleague for a hand but they won’t help because they are doing something else, they don’t know how to do it and they are not willing to try. This lack of flexibility can […]

Don’t you hate it when you are trying to get something done but need a bit of help, so you ask your colleague for a hand but they won’t help because they are doing something else, they don’t know how to do it and they are not willing to try. This lack of flexibility can […]

Don’t you hate it when you are trying to get something done but need a bit of help, so you ask your colleague for a hand but they won’t help because they are doing something else, they don’t know how to do it and they are not willing to try. This lack of flexibility can cause issues in life, and it can also cause issues within the trading world.

This can most clearly be seen in people’s strategies, often a newer trader will create a new or adapt someone else strategy in order to successfully trade, they manage to get it to a stage where it is being profitable, whether it is slightly or majorly profitable it doesn’t matter. The problem is that the markets change, they are constantly changing, so a strategy that worked yesterday may not work today? The new trader does not want to change anything because it has worked in the past. While the professional trader that the new trader based their strategy off has adapted it to the new market conditions. The experienced trader is being flexible changing things as needed, trying out new techniques, while the newer trader is not being flexible and the trades are starting to move against them.

Being able to change your own bias, such as the direction that you think the markets will move is paramount to being able to trade successfully. Constantly analyzing the markets and changing your stance and approach is what can make you profitable. If you choose one direction and just stick with it, there is no saving your account once things start to move against you.

Flexibility is what allows certain animals and plants to survive while others die out, it is also what allows certain traders to be successful while others blow their accounts. Having a short term memory can often be a bad thing in life, but when it comes to trading it is actually perfect, the short term memory will mean that you are looking at the current trade from a fresh perspective, each trade is it’s own and so your bias towards previous trades is reduced and it is far easier to adapt and be flexible towards any new market conditions that may have come up between now and the last trade you made.

If things have started going against you, or the outlook of the markets has changed, there is no harm in changing part of your strategy, or if your strategy will no longer work, there is no harm or shame starting from scratch, create an entirely new strategy that is adapted to the current market conditions. Don’t forget that old strategy though, you will need to continue being flexible as the markets continue to change, so having that previous strategy that worked, it could either be used again or adapted to yet another new market conditions.

So have a think, do you consider yourself to be a flexible trader, or do you get stuck in your ways and find it hard to adapt to changes?

Categories
Forex Basics

Avoiding the Price Action Prediction Trap

Price action is a vital part of trading forex. It can be an extremely powerful ally or a devastating enemy depending on how you have approached it. Unfortunately, a trap that a lot of traders fall into is the thought that they are able to predict the price action within the markets, you may have […]

Price action is a vital part of trading forex. It can be an extremely powerful ally or a devastating enemy depending on how you have approached it. Unfortunately, a trap that a lot of traders fall into is the thought that they are able to predict the price action within the markets, you may have […]

Price action is a vital part of trading forex. It can be an extremely powerful ally or a devastating enemy depending on how you have approached it. Unfortunately, a trap that a lot of traders fall into is the thought that they are able to predict the price action within the markets, you may have been trading for the past few months to a year, on occasion you have stated that it will move one way and it has, this can give you confirmation biases towards your own abilities to predict the movement.

If you have ever watched a football (soccer) match on TV and predicted a goal, or a penalty, or anything like that and you are right. The next game you watch you predict it again and it is right again. The third game comes along and once again, your prediction is right. So you decide on the 4th match to put down some money, you are confident because every other prediction you had was right, well not this time, it goes against you and you lose.

This is exactly the same mentality that a lot of traders get when it comes to predicting price action within the markets. It is possible to gauge and see small price movements, we won’t deny that, but the overall trend and changes in that trend require far more analysis and knowledge than just looking at previous and current charts can give you.

Predicting without analysis is gambling, that is the simplest way to put it. When you analyze something you are looking at the various probabilities that are available, stacking them on one side, eventually you have enough probabilities to work out exactly which way the markets will move. Making that choice gives you an advantage over the other side, however, this does not mean that it will always go your way.

Many newer traders actually need this experience, a boost in their confidence and then a loss based on their precision, it is a humbling experience that can help to cement the idea that further analysis is actually needed and that predicting price action is not easy, ultimately bringing them back down to earth and allowing them to start learning how to analyze rather than predict.

There is the catchphrase saying of, “Say what you see”, so in Forex, it is important to trade what you see, and not what you think. Getting that I know better mentality out of the way is vital if you wish to become a successful trader. Remember that it is the markets that are in charge and not you, so it doesn’t matter where you think it will go. That may seem harsh, but it is a lesson that a lot of newer traders need to learn.

Categories
Forex Basics

Five Unfortunate Truths About Forex Trading

Trading and forex from the outside can seem like a fantastic way to make money. In fact, those without a lot of money often see it as a way that they will be able to make a little bit extra on the side, or for some, the dream to become rich. Unfortunately, things aren’t quite […]

Trading and forex from the outside can seem like a fantastic way to make money. In fact, those without a lot of money often see it as a way that they will be able to make a little bit extra on the side, or for some, the dream to become rich. Unfortunately, things aren’t quite […]

Trading and forex from the outside can seem like a fantastic way to make money. In fact, those without a lot of money often see it as a way that they will be able to make a little bit extra on the side, or for some, the dream to become rich. Unfortunately, things aren’t quite as rosy once you get in and there are some hidden truths that you only really discover once you have a better understanding of what Forex trading actually is.

So let’s take a little look at some of the unfortunate truths about trading and what they actually mean.

There is No Single Best Strategy

When you look at the markets from the outside, they either go up or down, easy to predict right? Well no, there are thousands of factors that affect them, some far more obvious than others. This is why there are so many strategies out there. With there being so many, it makes it clear that there isn’t a single strategy that works for everyone or for every market condition, due to this there is so much that is needed to be learned. If you try to stick with a single strategy, it may work for a while, but eventually, the markets will go against you and you will suffer some losses.

You should note though, that just because there is not a single strategy that always works, it does not mean that you cannot be profitable, instead, you need to manage your risk and to learn elements of various other strategies, this way you can adapt and also protect your account from market changes.

You Need Money to Make Money

Many come into trading with a small amount, while it is possible to be profitable with a small amount, it will be a very slow process and there is a far greater risk that you could blow your account and lose your initial deposit. Like many things in life, you need money in order to make more money. The more that you have the more likely and also the easier it will be for you to make money. With a larger amount, you can use far better risk management techniques, and also each trade will ultimately bring in more profits.

You should also note that by having smaller amounts, it can cause other issues such as greed or may cause you to make additional mistakes in the pursuit of growing the small account as far as possible, this is more likely when focusing on the profit and loss on the account. You certainly can be successful off a small amount, but if you are depositing $10 and expecting to become rich, you may be disappointed.

You Will be Wrong at Times

We mentioned that there won’t be a single strategy that will work all the time, even the most successful ones. Due to this, it should be clear that you won’t actually be right all the time. In fact, there is a good chance, especially when starting out that you may be wrong far more than you are right. The good news is that you do not need to be if you are using proper risk management, then depending on your strategy, you can still be profitable with a win rate under 50% and even under 40% with many strategies. Due to this, it is important that you do not focus on winning, you need to focus on learning the markets and also making sure that you stick to your trading plan, this is the only way to be profitable in the long run.

You also need to be able to identify changes in the markets, when something changes, you also need to adjust your own strategy and plan in order to adapt to the changes, this is the only way that you will be profitable, but remember, you do not need to chase wins, stick to the plan and even with more losses than wins, you can still be profitable.

You Will Miss Out on Opportunities

The markets are a 24-hour opportunity, unfortunately, you are not. There will be a lot of times when there are some big movements in the markets that are perfect for your strategy, the only problem is that you are at work or asleep. It is important to understand that you won’t be able to get on every opportunity, it is important that you do not look at the things that you missed, they have already gone, you need to continue to focus on what is coming up. If you have just missed something, do not jump in anyway, the opportunity has gone so let it go, there will be plenty more for you to trade. If you are up and trading during the busier London or New York sessions then you will be able to sharpen your skills a lot quicker as the markets are often moving at a much faster pace.

It May Not be Suitable for You

Trading just is not for everyone, in fact, the majority of people will end up hating it, you need to be able to take in a lot of information, you also need a lot of time and dedication which can make it a lonely job to do. If you are not able to put in the time, effort, or have the patience to learn, then you will be on route to a loss. Many people just do not have the mindset for trading, which is absolutely fine, there are other things that would much better suit your style.

So those are a few of the things that people on the outside don’t necessarily see about the Forex and trading market, if Forex is for you then you will do great, but remember, it takes a lot of time, effort and patience, as well as money to become successful in the markets.

Categories
Forex Basic Strategies

Four Simple Ways To Improve Your Forex Trading

We are always on the lookout for new ways to improve our trading, this is only natural and something that you should be aiming for throughout your entire trading life. While there are obviously things that they can do to improve your abilities, but sometimes there are other things like being consistent that can help […]

We are always on the lookout for new ways to improve our trading, this is only natural and something that you should be aiming for throughout your entire trading life. While there are obviously things that they can do to improve your abilities, but sometimes there are other things like being consistent that can help […]

We are always on the lookout for new ways to improve our trading, this is only natural and something that you should be aiming for throughout your entire trading life. While there are obviously things that they can do to improve your abilities, but sometimes there are other things like being consistent that can help too, so let’s look at what a few of them are.

Review Your Trades

A simple one this, but it is something that a lot of people ignore, it is important to review your trades, both the winning and losing trades. By looking at the trades and what happened is the best way of learning more about them, did you miss anything? Did you deviate from your plan? All of these things enable you to better understand what sort of level you are at and how different changes to the plan or things that you do may affect the outcome and profitabilities of the trades and your overall strategy.

Keep Doing what Works

This may seem obvious, but you would be surprised how many people decide to change something that is already working. If it is still working, why change it? Some people will argue to make it better, which has its merits, however, how do you know that changing it will, in fact, improve it? If it is working stick with it. There are also those that seem to get bored with the trading that they are doing, they change things up because they are bored with the current strategy, this often results in less fortunate results and can lead to a strategy not working at all.

Discover New Skills

Finding new skills takes time and effort, but ultimately it will help to improve your overall trading abilities. However, a new skill when looking at trading could be quite simple, it could be a new currency pair or a new commodity, it could be simply understanding how the markets work on another timeframe. While they are only very small things, each one of these things that you learn will increase your overall understanding and will also help you to adapt to any unforeseen conditions in the future that you otherwise may not have been able to cope with.

Learn Multiple Strategies

While you may only want to use one strategy and if it works then that is perfectly fine, you may still want to look and learn some others, why? The simple fact is that having a broader understanding of different strategies will allow you to be a lot more adaptable in the future. A strategy will never work forever, things change within the markets and so will your strategy, however having an understanding of multiple may allow you to stick to your original strategy but to implement features of another one, this way adapting your own strategy to keep it running longer and more successfully.

So learning skills takes time, it can be a lot of effort, but as with anything in life, if you put the effort in you will ultimately start to benefit from it, especially in the long run.

Categories
Beginners Forex Education Forex Basics

Is it Dangerous to Have Goals and Projections in Forex Trading?

How many times we heard: “These are the results I’ve got trading forex in the past year so I can logically expect to get at least the same results this year”? Sentences like, “I pulled 10% out of a dead market in 2019 therefore, I should reasonably be able to get 15% this year”, or […]

How many times we heard: “These are the results I’ve got trading forex in the past year so I can logically expect to get at least the same results this year”? Sentences like, “I pulled 10% out of a dead market in 2019 therefore, I should reasonably be able to get 15% this year”, or […]

How many times we heard: “These are the results I’ve got trading forex in the past year so I can logically expect to get at least the same results this year”? Sentences like, “I pulled 10% out of a dead market in 2019 therefore, I should reasonably be able to get 15% this year”, or “I just got a 75% yearly return in my back-testing, then I should probably get 75% when I forward-test too which it seems logical, right?” If we had a good day or good week trading forex and we think that we can replicate that, what an awesome lifestyle that would be?

Well, it would, if we can somehow make accurate predictions and if nothing ever changes. What some people had a chance to experience may seem to them like a constant path of winnings. It is not going to be the same every single week, not to account for the weeks where we are actually going to lose money. When euphoria kicks in, we all easily become overly-optimistic and then reality tends to hit us in the face. We all know trading forex is a highly inconsistent business.

The word we are going to focus on for a second and that might be beneficial for us is the word ‘Build’. A lot of traders have already built a great trading system that they are using right now with pretty good results. The thing is that we need to constantly build this. We should never-ever stop improving our system and developing our account. We mustn’t get comfortable around these things even if we are using great indicators. If we found some of the indicators that we liked and think that we don’t have to go and find something else which works better, that might be deceptive for us.

Traders should keep improving, keep testing, and never stop. We trade with indicators, we have algorithms, we can try to cut and paste certain algorithm to other markets and then just adjust it as we need to. We might try to make those adjustments in indices and the metals and two lesser degrees in crypto. We should always build up around what we have and slowly make pieces in place so we can start filling those pieces in. After all, everybody should have at least two or three ideas at the end of the day. All smart traders must constantly have extra safety layers underneath if their trading system completely goes south. So this is one of the many things that we can do to make our account less fragile, rather than project what kind of lifestyle we are going to have which we are all naturally predisposed to do. That slowly gets us back to our topic. Sometimes is better to just let the chips fall where they fall.

We need to be very careful about projecting how much money we are going to make in the next three or four years because we might pay dearly based on those foolish projections. No matter what we do, we are going to have losing weeks or losing months. Maybe there are out there some experienced traders who can set a goal to shoot for, but most of us don’t have an experience that they have. Simply, It can be safer not to set goals. Here we want to point out how relaxing it could be if we don’t set goals and not make projections. Just build. Improvement, discipline, and patience are what we need to put together and just watch how the results come organically.

It’s a hard thing to do, we all want to project. Projections are what we tend to do when our emotions start to get in a way, projections are not logical because we know that every year is going to be different than the one before. How can we make any projections for it while wild inconsistency is all around? What we can do? If we take proper steps and if we build the right way, we could be naturally immune to downswings and maybe be able to take full advantage of the upswings.

So when the year is over with we might still look back and say: “That was a successful year”. What we are trying to improve here is our trading psychology. That is why we need to build, we need to build now. It is not a quick process, It is not always an enjoyable process but it is a necessary process if we no longer want to be like 99% of people who are super frustrated with their jobs and don’t have a way out. This is something we should always keep on our minds and work relentlessly on our trading skills.

Categories
Forex Basics

Forex Trade Journaling Do’s and Don’ts

When we try to get better, we learn. Learning is a process where we consume relevant information and use it for our goal. Forex is no different, and journaling is one element in this process. Now, what happens when we have too much information or when we have bad ones? Well, it is worse than […]

When we try to get better, we learn. Learning is a process where we consume relevant information and use it for our goal. Forex is no different, and journaling is one element in this process. Now, what happens when we have too much information or when we have bad ones? Well, it is worse than […]

When we try to get better, we learn. Learning is a process where we consume relevant information and use it for our goal. Forex is no different, and journaling is one element in this process. Now, what happens when we have too much information or when we have bad ones? Well, it is worse than not knowing anything about a topic, we will also need an open mind to accept what we know might not be true. Objectivity is common to scientists, but this mindset is extremely helpful to forex traders too. When we have an open mind to accept what is producing better results, only success awaits us on the forex. Journaling is the keeper of what we are doing, what works, what not, what is better. It is not a debate if you should have one if you plan to become top among the 1% who make it in this game.

According to many professional prop traders, and other professionals, most of the information is redundant when you start learning. You will need to synthesize what is good and what is bad. This is not easy to do when you do not have experience. To pick up good things for you is even harder with so many forex trading indicators, strategies, tools, and robots. Even if they are good in practice, they might not work for your personality, needs, setup, etc. The right way to journal your activity when trading is also obscured with too much redundant information out there. This is the point where this article tries to help, there are so many sources about journaling that do not give you the good stuff, at least not right away. You will have to dig it, and know where to dig.

Professional traders keep it simple, not just about trading, but journaling too. If you have spent some time reading about forex, maybe you have stumbled upon the phrase “Keep It Simple Stupid” – KISS. Keep that one in your mind, it also applies to journaling. Now, when we take a look at one of the “best” places where to learn forex, babypips.com, and regarding their Journaling 5 most important things article, you will notice a lot of theories before you get 5 bullets what you should have. So all that information above is just to fill up the webpage. According to prop traders, you do not even need the first four.

The point is all about getting the mistakes out. Mistakes are easy to find out, the biggest losses are the result of those mistake trades. The nature of the mistake could be technical, your indicators are not suitable for that timeframe, for example. It may be psychological, moving Stop Loss levels. It also could be inadequate Risk Management, but you should first define an optimal plan about this before any trading. For every mistake you have ironed out, know that you have added (approx.) 1% to your account. It has the same effect as finding that “perfect” confirmation indicator you have spent months searching.

Of course, some traders do not journal, some do. If you would have to pick one to invest in if they are equal in all other points, who would you choose? Not a hard choice, by some statistics, the ones that have a journal are way better performers. Is it because of the mindset or is it the mistakes ironed out from journaling? It is both, one implies the other. Here is how to put it together, the easy way.

For starters, you need a spreadsheet. You can use Google Sheets or Microsoft Excel, it is the same. Once you become advanced you may use specialized products for journaling but for now, you do not need them. You need only 5 columns. You should already have your Risk Plan set up, it should be constant in percentage terms per position for multiple assets> so you do not need to enter the position sizing, it is always 1% of your account, for example. Then, if you go to the daily timeframe – the best timeframe that is suggested by some trend-following prop traders, you can also scratch that column out too. To make it even simpler, you do not need to enter your entry times! More about this later. So by making it simpler, it takes a second to fill it and not overwhelm with the information you do not need.

The first column you need is the currency pair. That GBP/JPY might be running nicely for you but it is a matter of time when it will start to consolidate, but the column is just for reference. In the second column is the Short or Long trade direction. Also for reference. The third column is the number of pips you have gained or lost from a trade. Do not enter the dollar amount here. Note that if you have a complex scaling in and out position management then the result of the final pips needs to reflect it correctly. Depending on how complex it is, you may need some averaging and IF formulas.

The column four is a bit different than the usual journaling. It should contain a screenshot link of a trade. You can sign up with a service for this where you upload your images. You may need to draw a line when you have entered and exited. Note that the MT4 also has the drag and drop feature for this. Open a Journal tab and just drag and drop the position entry from the list onto a chart window, you will see a dashed line that represents the entry and closure of that trade. This way you can see if you have exited at the right time, where was your Stop Loss, was all this a good idea, etc. This is a much better alternative than to enter your entry and exit time stamps.

Column no 5 is your comments area. All normal trades like your Take Profit was hit, you exited, everything is fine, do not need a comment. There is no mistake here. If you have a losing trade but just because the trade did not go your way, it is still not for comment. Do not try to win every trade, try to trade as the system says. Now, have you made exceptions to your system and let a trade go farther? That was not the system, that was your emotions and gut feeling and these are catastrophic to your account. Also, you may see a resistance line coming up and took that trade off before the exit signal. If this is not a part of your system or plan, then this is a mistake. So write these mistakes down.

These mistakes are now nicely visible. Do they repeat? If the answer is yes, half of the problem is solved, you know what is bringing your account down. The other part is of course the solving process. Most of the mistakes made are not accidental mouse clicks, they are psychological. You are on the way to make your trading system work. Now, the power of the journal cannot iron these out but it will give you pointers of your weak spots. Eliminating weak spots can be done in various ways, depending on nature, as described in another article. Journaling may expose you in a way you will not like. It is something you do not like to see in front of a mirror, so most will be ignorant. It is a form of self-criticism and revealing what is not good about you when it comes to decision making but also in life.

In forex, journaling is a must for top traders. You may wonder why your system and Money Management does not give you results at one point, and the reason will be the lack of journaling. This is the element that separates the best from those who fail. The best put in the work. There is no quick way to getting to the top where you can consistently make money out of forex. This article has shown you a simple way to make one, cutting all the redundancy, and get the most important out of journaling – to find your mistakes. People who have put in the work do not have to wait for the effects to reflect on their account, it is instant! Do it right and, as it is usually said about forex, the sky is the limit.

Categories
Beginners Forex Education Forex Basics

The Best Place to Learn Forex Trading

Last May I visited New York just for fun but out of nowhere, I met a guy who is a professional Forex trader. The guy has slightly over ten years of a carrier in trading and we had a very enthusiastic conversation, together with his friend trader, about how to chose the right path to educate yourself about this type of trading. So, the question is, what is the best source to learn Forex trading?

Last May I visited New York just for fun but out of nowhere, I met a guy who is a professional Forex trader. The guy has slightly over ten years of a carrier in trading and we had a very enthusiastic conversation, together with his friend trader, about how to chose the right path to educate yourself about this type of trading. So, the question is, what is the best source to learn Forex trading?

Last May I visited New York just for fun but out of nowhere, I met a guy who is a professional Forex trader. The guy has slightly over ten years of a carrier in trading and we had a very enthusiastic conversation, together with his friend trader, about how to chose the right path to educate yourself about this type of trading. So, the question is, what is the best source to learn Forex trading?

There is no typical answer about where we can start mainly because there is so much stuff around us when it comes to Forex trading. People are usually agile to reach for a profit, with a basic gambling impulse that is whispering in their ears: ‘You just jump from the cliff and you’ll see that you have a pair of wings’, therefore they don’t tend to educate themself properly because that’s a process and it takes time to do that. Although there’s always the easier way to do certain things, Forex trading is of course much more complex. The fact is that most of the people are losing money off of it. So I said to the guys that I’m super interested in Forex and that I want to learn to trade but there are a lot of places to do that and do they have a one to recommend.

The first thing they said to me was that it is completely unnecessary to invest in any kind of online course to learn to trade or to pay somebody to learn how to trade Forex. You people don’t need any of that, save your money. Maybe one of the best options where we can start with Forex fundamentals is a website called babypips.com. It is important to mention that a significant portion of knowledge about Forex is going to lead you down the wrong path, you guys are going to lose a lot of money before you ever learn how to get it right. The only way to make a benefit is to understand which fragments of Forex education are actually worth something and which ones are going to take you in the opposite direction where we don’t want to end up. Website babypips.com has a section ‘The school’ where everything is organized to take you through a kindergarten level up to college.

Like in a real-life order your knowledge is raising, so it is vital that one not skip their classes or levels in this particular case. Maybe some more experienced traders in trading stock would think that they already know some things and feel like a jump forward and skip certain things. We don’t recommend that kind of approach simply because every lesson kinda builds on itself. Go in order, follow the procedure, and take notes. After you finish with this course, review your notes, and then you can open up your demo account and get used to the trading platform. At this point, you will be more appointed than 80% of people out there that learned how to trade. Later on, traders explained to me that they were losing a lot of money until they learned to trade the right way and that people are still trying to trade the same way they trade stocks, which is completely wrong. Eventually, most of them start giving up, and because they couldn’t do it, they think you can’t do it either. But hey, don’t despair, you are going to do it right, and it starts at that school.

In the conclusion, traders told me: ‘Most of the things you are going to learn in ‘BabyPips School’ is absolute garbage, especially when it comes to technical analysis part and tools they are going to show you how to use. Be careful with that, it might ruin your trading account.’ Well, that was a twist! Why is it important for us to try to learn all the things anyway? The main goal for us is to be literate when it comes to Forex. There are going to be little nuggets, hidden gems, things that specifically apply to Forex that you don’t want to miss, things that are going to be applicable at some point. 99.9% of traders don’t get where they want to get to, so it is crucial to be dedicated, embrace knowledge, and try to develop your style of trading. Plus, it’s fun and cool to learn new things. Pay real close attention and do your research.

Categories
Forex Psychology

Four Ways to Boost your Confidence while Trading

Similarly to when opening up a new business, trading requires a certain level of confidence in oneself to succeed. Confidence is the pillar of any successful trading journey and many new traders end up not having enough courage to handle the risky endeavors that successful trading needs to bring in profits. Here we will go […]

Similarly to when opening up a new business, trading requires a certain level of confidence in oneself to succeed. Confidence is the pillar of any successful trading journey and many new traders end up not having enough courage to handle the risky endeavors that successful trading needs to bring in profits. Here we will go […]

Similarly to when opening up a new business, trading requires a certain level of confidence in oneself to succeed. Confidence is the pillar of any successful trading journey and many new traders end up not having enough courage to handle the risky endeavors that successful trading needs to bring in profits. Here we will go through four simple, yet essentials ways how you can boost your confidence whilst trading.

Learn your trade.

The best way to boost your confidence in anything you set your mind too is to challenge yourself to learn all that you can about the subject. Subjects such as trading might be overwhelming at first, with so many trading styles, techniques, approaches, and terminology to learn, however, daily trading will set you on the right track to becoming knowledgeable and clearer in your daily trading decisions. Even when you feel like you cannot learn more about the subject, you will realize that although you have prepared yourself well, markets will remain highly unpredictable. Because of this, traders often find themselves feeling like they never know whether their trades will be successful or a waste of time. This is why shifting your focus onto your trading plan rather than your losses and profits, will help you become consistent, disciplined, and eventually profitable in your trading.

In today’s world, finding authentic and unbiased information online about trading techniques and plans might be a bit of a challenge, however sourcing out other traders like yourself through online forums or groups, is a great way to share and learn through other traders’ experiences.

Be confident enough to walk away.

Working with such an ever-changing environment, which is what trading is all about, can make it easy for you to fall into the trap of constantly sitting at your computer/device monitoring your trades. This can be detrimental both to your trades as well as your general wellbeing. Confidence comes with time and experience, however in the beginning, even though you might not feel confident enough to do so, you need to make yourself believe enough in your trading plan and be able to walk away from your trades, even if this comes at the risk of losing your trades. Even if you do lose out on your trades, remember every loss is a great opportunity to learn and develop your trading strategies.

Use your winnings and losses to become better.

Being successful at trading, especially for a long period, might make it easy for traders to become overly confident. A great way to keep your confidence within the ‘safe zone’ is to analytically reflect on your losses, to learn from those mistakes, but also to analyze your wins. Trading with small amounts that you can afford will help to make your losses feel more like learning curves rather than personal disasters. Some traders go on to say that your losses might be your most fruitful mentors. It is best to keep in mind that in trading, there are no winners without losers, so prepare yourself for many losing trades and learn how to extract the important information from each loss you will inevitably encounter.

Set your rules and follow them.

If you’ve attended trading training or if you’ve done your research online, you’ve heard of strategies, how to identify them, when to apply them and how to manage them once they’ve been applied. Strategies are nothing but a list of rules that help you to recognize and apply your methods for making a trade profitable.

Making your list of rules that accompany the trading strategy you’ve opted for, is a great way to keep yourself focused and motivated for your current and more importantly, your future trading. Many beginner traders, unfortunately, give up after the first few losing trades, however that moment when you feel like this might not be the best for you, is the moment when you learn the most.

Making yourself a clear list of rules, writing them down, and sticking them up where you trade, will make it easier for you to be disciplined. Set up rules such as – When will I trade, how much risk am I going to carry daily/weekly/monthly, what markets am I going to focus on, etc.

Your list of rules will change and develop as you learn more about who you are and where you stand as a trader. Consistency and discipline are the two main ingredients you need to have to help yourself develop the necessary confidence traders need to become successful. Do not expect to make massive profits on your first few trades, because the probability is, you won’t. Learn the basics, make your rules, stick to them, and believe in your choices. Happy trading!

Categories
Beginners Forex Education Forex Basics

What Equipment Do I Need to Trade Forex?

So, you want to start trading on Forex, but don’t know what equipment you need? Scared that you might start something and then realize you are missing a part? What do we need before we start trading on Forex? Firstly, we need to know what or how “long” are we going to trade on Forex, […]

So, you want to start trading on Forex, but don’t know what equipment you need? Scared that you might start something and then realize you are missing a part? What do we need before we start trading on Forex? Firstly, we need to know what or how “long” are we going to trade on Forex, […]

So, you want to start trading on Forex, but don’t know what equipment you need? Scared that you might start something and then realize you are missing a part? What do we need before we start trading on Forex? Firstly, we need to know what or how “long” are we going to trade on Forex, meaning, we might be trading 15 minutes a day, or are we going to be a day trader.

Perception of stock trading, as you see in the movies, rows of monitors attached to a supercooled computer, is really not necessary – unless you are a day trader, who are forced to have that hardware because they need to monitor a lot of market and a lot of trades. And that’s a harsh way to make a living, as they are always stressed with large amounts of data. That stress transfers to their lifestyle, family, and it is mentally unbearable. But for a novice, that perception has that wow factor, makes you imagine yourself like a captain of a starship.

Imagine rows of monitors with currency pairs and news on CNBC and Bloomberg to stay informed…everything beeping and humming, but not all that shines is gold. For the amount of money needed to buy such hardware, you would probably have to be in some other kind of business first. Once you get on trading you will see it’s not necessary, and all that money spent on all that equipment you could not get back for at least 3 years of initial trading. What we would even recommend is buying used computers, because on the hardware side, luckily, we don’t need much. It’s a workhorse, it doesn’t need to be flashy. One laptop, or even a tablet, and a good internet connection is all that we need to trade on Forex.

The minimum requirements for the MetaTrader 4 or 5 platform are what most average grade old computers can easily handle. Note that once you become open for many other markets and indicators, the load on opened charts could become quite evident, so you might need to wait 30 seconds to a minute for all 28 currency pair charts. Of course, this is not necessary and depends on how you use the platform.

The network connection stability is a priority here. If you have an unstable connection you will experience a lag in order executions, feedback, and some EAs will not be able to work optimally. If you try scalping strategy EAs know they will not give you positive results in this environment even if they might be performing well otherwise.

Smartphones are a potential solution too, but given that their screens are small(ish) and are power reduced devices, using them may be awkward and uncomfortable. For example, you can have MT4 on your phone but can’t use custom indicators. Phones have yet to be developed to support this, or MetaQuotes might find some solution for their platform. The advantage of having MT4 or MT5 on your phone is of course mobility so you can manage positions on the go, but know that advanced technical analysis with indicators not included in the platform is not possible. So the best way to use it for alerts, emergency adjustments, and monitoring. Some traders even say that having forex in your pocket is not always a good idea especially if you become too attached to trading.

So, what we need to know is that you are not trying to impress anyone with your setup, you don’t need high power, flashy desktops with a bunch of charts on the wall made of monitors. People of less developed countries can have a go on Forex trading too, they just have to have a laptop. The beauty of Forex is that it is not bound to one place, you just need a laptop, you can be anywhere in the world and it will work. How many professions can be attributed to that? Freedom from desk, monitors, and keyboards, office cubical… To summarize, most of you are already equipped enough.

Categories
Forex Assets

Exploring The GBP/ILS Forex Exotic Currency Pair

Understanding GBP/ILS

Understanding GBP/ILS

Understanding GBP/ILS

GBP/ILS is the abbreviation for the Pound sterling against the Israeli Shekel. In currency pairs, the first currency GBP here is the base currency and the second currency ILS is the quote currency. In Forex currency pairs, if the value of, let’s say, the base currency goes up, the quote currency’s value will go down and vice versa.

Also, when we buy a currency pair, we buy the base currency and implicitly sell the quote currency. The market value of GBP/ILS determines the strength of ILS against the GBP that can be understood as 1 Pound is equal to how much ILS. So if the conversion rate for the pair GBP/ILS is 4.4725, it means to buy 1 GBP, we need 4.4725 ILS.

Spread

We know that the “bid” is the price at which we sell the currency, and “ask” is the price is at which we can BUY the currency. The arithmetic difference between the ask and bid price is known as the spread. The spread is how most of the brokers make money. There are also brokers who charge a separate fee instead of making profits in the form of spread. Below are the ECN and STP spreads for the GBP/ILS Forex pair.

ECN: 54 pips | STP: 56 pips

Fees

Every time we place a trade, some commission must be paid to the brokers, and that is known as a fee. This fee varies from broker to broker. For instance, there is no fee charged on STP account models, but ECN brokers do charge some fee.

Slippage

The arithmetic difference between the expected price of a trader and the price at which the trade is executed is known as slippage. It can occur mostly when the market is volatile & fast-moving. Another reason when the slippage may occur is when we place a huge number of orders at the same time.

Trading Range in GBP/ILS

The trading range here is to measure the volatility of the GBP/ILS pair. Whether we make a profit or loss in a given time period depends on the movement of a currency pair that can be assessed using the trading range table. It is a representation of the min, avg, & max pip movement in a currency pair.

Procedure to assess Pip Ranges

  1. Add the Average True Range indicator to your price chart
  2. Make sure to set the period to one
  3. Then add a 200-period Simple Moving Average to ATR
  4. Shrink the chart in order to assess a significant period
  5. Select the timeframe of your choice
  6. Floor level must be measured and set that value as the min
  7. 200-period SMA must be measured and set that value as average
  8. Finally, measure the peak levels and consider this as Max values.

GBP/ILS Cost as a Percent of Trading Range

The cost of trade depends on the broker and mostly varies based on the market’s volatility. The below tables represent the cost variation in terms of percentages.

ECN Model Account

Spread = 54 | Slippage = 3 |Trading fee = 5

Total cost = Slippage + Spread + Trading Fee = 3 + 54 + 5 = 62

 

STP Model Account

Spread = 56| Slippage = 3 | Trading fee = 0

Total cost = Slippage + Spread + Trading Fee = 3 + 56 + 0 = 59

Trading the GBP/ILS

The GBP/ILS is an exotic-cross currency pair and is a trending market. We consider the market to be trending when the price generally moves in one direction, either downwards or upwards. As seen in the Range table, the average pip movement on the 1-hour time frame is 112. This clearly shows that the pip movements are normal, and this currency pair is tradable.

Note that the higher the volatility, the lower is the cost of the trade. However, this is not an advantage as it is risky to trade highly volatile markets. Let’s take, for example, in the 1M time frame, the Maximum pip range value is 3469, and the minimum is 1080. When we compare the fees for both the pip movements, we find that for 1080pip movement fess is 5.74%, and for 3469pip movement, fess is only 1.79%.

So, we can confirm that the prices are higher for low volatile markets and low for highly volatile markets. It is recommended to trade when the market volatility is around the average values, but experienced traders who strictly follow money management can trade in a volatile market. The volatility here is moderate, and the costs are a little high compared to the maximum values. But, if our priority is towards reducing costs, we may trade when the volatility of the market is around the maximum values.

Categories
Forex Course

96. Trading Breakouts using Pivot Points

-Introduction

-Introduction

-Introduction

We know that pivot points are no different from the typical support and resistance levels. We also saw how these levels were respected when trading a ranging market. But, could it used to trade breakouts? Let’s find out in this lesson.

Just like your normal Support and Resistance, the pivot levels don’t hold forever. At one point or the other, the price breaks out from these levels. In our range strategy, we always hit buy at the support and sell at the resistance. But there are times the market breaks from these levels and stops us out. When such things happen, we can develop another plan ready for the same and take advantage of it.

In the trading community, there are two types of traders: aggressive traders and conservative traders. And the approach to trade breakouts is different for both. So, we made two strategies to benefit the aggressive as well as the conservative traders.

The Pivot Points Breakout Strategy

Doing it the Aggressive way

The aggressive approach to trade breakouts is very simple. The strategy for such traders is to trigger the trade when the price breaks above resistance or below the support. The logic to this is that the resistance/support which was supposed to hold is now not being respected. It means that the opposite party is showing more strength. Hence, we will also be following the stronger side.

Aggressive traders are the ones to catch the initial move of the breakout. But there is high risk involved in these types of entries.

Trade Example

Below is the chart of GBP/CHF on the 15min timeframe. The pivot points are marked as shown. Initially, we can see that the price broke below S1 support. Here, aggressive traders can get in for a sell after the close of the candle. Later, the price continued to fall down and ended up breaking the S2 support as well. This could be another entry for the aggressive breakout traders.

Placements

As aggressive traders, it is important to have good risk management on the trades. The most basic necessity is the placement of stop-loss and take-profit orders. For the above trades, traders can keep the stop-loss just above the level they entered the trade. However, it would be better to place the stop-loss much higher than that level because we can stay safe from spikes. And a typical TP would be the next Support level. Refer to the above chart to get better clarity on it.

Doing it the Conservative way

The conservative approach is more of a safe approach to trade breakouts. According to this strategy, look to enter the trade when the price retests the level after breaking through that level. In trading terms, this is called the ‘role reversal’ concept. This concept simply means the turning of ‘support into resistance’ and ‘resistance into support.’ For example, when the price breaks below the support level, it is not a ‘support’ anymore; but is now ‘resistance.’ Now, let’s put this into action.

Consider the same chart shown above. We shall be looking if there are opportunities for conservative traders in the same market. In the below chart, we can see that the market broke below the S1. So, now we treat S1 as the resistance and prepare to sell when the price retraces to the S1 level. Similarly, we can enter for a sell when the price breaks below S2 and retests back to S2.

When it comes to the placement of stop-loss and take-profit, one can follow the same approach, as explained in the aggressive traders’ placement.

This brings us to the end of this lesson. Note that the above strategy is only to get an understanding of how to trade breakouts using pivot points. It is highly recommended to apply other technical tools to have more odds in your favor. Cheers.

[wp_quiz id=”69720″]
Categories
Forex Course

83. Learning To Trade The Donchain Channel Indicator

Introduction

Introduction

Introduction

The Donchain channel indicator is one of the quite popular technical indicators in the market. It is developed by Richard Donchian in the mid-twentieth century. This indicator consists of three moving average lines calculated by the highest high and lowest low of the last ‘n’ period. The upper Donchian band marks the highest price of the security over the ‘n’ period of time, whereas the lower band of the indicator marks the lowest price of a security over the “n” period of time. The area between the upper and lower band represents the Donchian channel.

If the price action is stable, the Donchian channel stays in a narrow range, and in volatile market conditions, the Donchian channel indicator will be wider. In this way, the Donchian channel is a wonderful indicator to assess the volatility of the market. The upper Donchian band indicates the extent of bullish energy, highlighting the price action achieved a new high in a particular period. Whereas the centerline of the indicator identifies the mean reversion price for a particular period. The bottom line identifies the extent of bearish energy, highlighting the lowest price achieved by the sellers in a fight with the buyers.

Below is how the price chart looks once the Donchain Channel indicator is plotted on to it.

Trading Strategies Using The Donchain Channel Indicator

Scalping Strategy

This strategy is made for traders who prefer to make quick bucks from the market. By following this strategy, we can get a couple of trades in a single trading session. The idea is to go long when the price action hits the lower band and go short when the price hit the upper band. The preferred time frame will be a 5- or 3-minute chart.

The image above represents a couple of buying and selling trading opportunities. Scalping is the easiest way to make quick bucks from the market. When we take a buy or sell trade, and if the price action goes five pip against your entry, we suggest you close the trade and wait for the price action to give another trading opportunity. Book the profit when price action hits the opposite band of the indicator.

Donchain Channel To Trade The Trending Market

If the market is in an uptrend, it is advisable to go only for the buy trades, and if it is in a downtrend, only go for sell trades. In this way, we can filter out false trading opportunities, and by following the trend, we can easily hold our position for longer targets.

Buy Trade

The below image represents two buying opportunities that we have identified in the EUR/NZD pair. We can see that the trend was up, and if we take any of those small sell trades, we will end up on the losing side. So on a higher timeframe, it is advisable to trade with the trend. We have captured the whole buying movement in this Forex pair. This is the easiest and safest way to trade the market using this indicator

Sell Trade

The below image represents a couple of selling opportunities in the CAD/JPY Forex pair. We can scale our positions when the market gives an opportunity to do so. Or, we can close our positions when the opposite signal is triggered. Always wait for the desired signal with patience to trade the market.

The advantage of trading with the trend is that whenever the market gives us the trading opportunity, we can easily hit the trade without worrying much. Another advantage of trading with the trend is that we can go with a smaller stop-loss as the price action spikes very less in a trending market.

These are only a few applications of the Donchain Channel Indicator. You can follow our strategy section to learn many advanced applications of this indicator. Stay tuned to learn many more technical indicators. Cheers!

[wp_quiz id=”67024″]
Categories
Forex Course

72. Understanding Exponential Moving Average

Introduction

Introduction

Introduction

In the previous course lesson, we understood the first type of Moving Average, which is SMA. We also saw how spikes could distort the SMA. The solution to this distortion is the Exponential Moving Average (EMA); so, let’s discuss this type of MA in our lesson today.

The EMA gives more weightage to the recent change in prices and does not give much importance to previous data. Learning how to calculate and plot EMA on the chart will provide us with a clear understanding of which Moving Average should be used at different times of the market.

We shall take an example to explain the definition of EMA. This example will also show how the EMA overcomes a significant limitation of the SMA. In the below figure, we have plotted a 10-period SMA on the daily chart of a currency pair. Here we have chosen the USD/CHF currency pair as an example.

Since we are calculating the 10 ‘period’ SMA, we need first to note down the closing prices of the last ten periods days. The prices are as follows:

0.97806,0.97986,0.97528,0.97336,0.97536,0.97461,0.97536,0.97829,0.98156,0.97636.

The next step is to add the above-given numbers together and then divide the result by 10. This equals to 9.76804 / 10 = 0.97680. Therefore, the SMA for the last 10 days is 0.97680. The end of the orange SMA line in the above chart points exactly to the price 0.97860.

Now let us consider a case where, on the sixth day, dollar drops drastically due to a news event that was bad for the US economy. If the sixth candle drops to a price around 0.97000 (closing of all other remaining the same) due to the news release, the new SMA will now be calculated as follows:

(0.97806 + 0.97986 + 0.97528 + 0.97336 + 0.97536 + 0.97000 + 0.97536 + 0.97829 + 
0.98156 + 0.97636) / 10 = 0.97654

The resultant SMA is lower than the SMA we had obtained in the previous step. This means when the price dropped on Day 6, it created a notion that the trend is going to reverse, but in reality, it was just a one-time event that was caused by news. We need a mechanism that will filter out these spikes so that we don’t get the wrong idea. This is where EMA comes to our help.

Taking the above example, EMA gives more stress on the recent price movements, such as the closing prices of the last four candles. This means the spike that happened on the sixth day will be of less value and wouldn’t have much effect on the moving average. It is always a smart and better idea to focus on what traders are doing recently rather than what happened long ago. Always remember that the past data is of less significance to us.

The below chart shows the difference between the two moving averages when they are plotted simultaneously.

Notice that the purple line (10-period EMA) appears to be closer to the candles than the orange line (10-period SMA). This means the EMA is more accurate in representing the recent price action, and now we know why. So, the bottom line is to pay attention to the last few candles rather than candles of last week or last month.

Conclusion

That’s about the two types moving averages with their own advantages. The EMA is a better option to use when you are swing trading as it gives precise analysis than SMA due to the reasons mentioned above. EMA, too cannot be used standalone and should be paired with a trading strategy. In the next article, we will discuss the pros and cons of using SMA and EMA.

[wp_quiz id=”65573″]
Categories
Forex Course Forex Daily Topic

Introduction To Forex Course 3.0

Hola Readers! We have successfully completed the first two courses and received an amazing response for both of them. We can’t thank you enough for that. Also, we hope these first two courses have helped you in understanding the most fundamentals basics of the Forex market. It is very important to know these basics in order to succeed in the Forex market. We have made a quick navigation guide for both the courses just for you to access the articles easily.

Hola Readers! We have successfully completed the first two courses and received an amazing response for both of them. We can’t thank you enough for that. Also, we hope these first two courses have helped you in understanding the most fundamentals basics of the Forex market. It is very important to know these basics in order to succeed in the Forex market. We have made a quick navigation guide for both the courses just for you to access the articles easily.

Hola Readers! We have successfully completed the first two courses and received an amazing response for both of them. We can’t thank you enough for that. Also, we hope these first two courses have helped you in understanding the most fundamentals basics of the Forex market. It is very important to know these basics in order to succeed in the Forex market. We have made a quick navigation guide for both the courses just for you to access the articles easily.

You can find them here the guides for – Course 1.0 | Course 2.0

With all these basics in mind, we will be moving on to our new course, which is a bit different than the other two courses. We are saying this because the first two courses are more inclined towards information and theory. But Course 3.0 is all about Technical Analysis. Hence most part of it deals with the practical applications that are involved rather than just theory. The quizzes and everything remain as is, but a lot more effort from your side is required to ace the knowledge that we are going to provide in the lessons.

Having said that, Technical Analysis has the most logical approach to the prediction of price movement than the Fundamental & Sentimental Analysis. There are a lot of components within the technical analysis, and some of them include Price-Action trading, technical tools such as Indicators & Oscillators, Volume based trading, etc. In this course, we will be going through all of them in detail.

Topics that will be covered in this course 

✫ Everything About Candlesticks

✫ Support & Resistance Levels

✫ Moving Averages

✫ Popular Indicators & Oscillators

✫ Fibonacci Trading

In each of the topics, there will be about 7 – 10 article lessons where complete information is provided related to the topics. Quizzes will be available for each of the articles like before.

We are proud to present this course to you as it is prepared by some of the top technical traders with great expertise in this field. Aren’t you excited? We wish you all the best in studying and learning the concepts with at most interest. Cheers!

Categories
Forex Basic Strategies

How To Trade The ‘Three Black Crows’ Pattern Like A Professional Forex Trader

Introduction

Introduction

Introduction

Three Black Crows is a bearish candlestick pattern that consists of three consecutive red candles. This is a visual pattern and can be identified easily on the price action charts. The Three Black Crows pattern essentially indicates a shift in control from bulls to bears. In the book known as ‘Candlestick Trading Technique,’ Steve Nison says that this pattern is one of the most useful ones for longer-term trades.

⭐ In an uptrend, this pattern consists of three consecutive bear candles that have large bodies of roughly the same size. The Three Crows pattern confirms the strength of the sellers.

⭐ Each candle should be open and close lower than the previous candle.

⭐ Each candle should mark a successive decline in price action and should not have long shadows or wicks. Using this trading pattern in conjunction with other technical indicators will enhance the probability of winning the trade.

Trading Strategies With Three Black Crows Pattern

TBC Pattern + Bollinger Bands

In this strategy, we have paired the Three Black Crows pattern with the Bollinger Bands to identify accurate trading signals. The Bollinger Bands indicator is developed by the technical trader John Bollinger. It consists of a centerline and two bands above and below the price chart. The bands of the indicator contract and expand according to the different market conditions. In a volatile market, the bands of the indicator expand and in a dying market condition the bands’ contract.

Step 1 – First of all, find the Three Black Crows Pattern in an uptrend.

Step 2 – Take a sell-entry when the Three Black Crows pattern hit the upper band of the Bollinger Bands Indicator.

In the above chart of the NZD/USD forex chart, we can see that the pair was in an overall uptrend. Around the 4th of November, price action prints Three Black Crows, which is an initial clue to go short. Furthermore, price action also respects the Bollinger upper band, which is a sign to go short on this pair.

Step 3 – Stop-loss & Take Profit

Placing accurate Stop loss is one of the most critical aspects of successful trading. Some of the novice traders never use stop loss, and it is the biggest mistake they do. We always suggest the traders use the stop-loss order in every trade they take. If you have the fear that your trade might hit the stop loss, then use a deeper stop loss and expect only 1R trades. If you are an aggressive trader, then stop loss above the Bollinger bands is the safest idea.

The basic idea most of the traders have is to exit their positions when price action hits the lower band of the Bollinger band indicator. If you follow this strategy, there will be fewer chances of you making money. Because price action moves in cycles, and prices often hit the upper and lower bands. We suggest you always use the higher timeframe major support area for booking your profits. You can also close your position when the market prints the Three White Soldiers pattern, which is quite the opposite of the Three Black Crows pattern.

In the above example, we have closed our full position when the market reached a previous major support area. Most of the time, price action always reacts from a significant support area. In our case, when we closed our position (yellow dotted line), price action immediately changed its direction.

TBC Pattern + MACD Indicator

In this strategy, let’s learn how to trade the Three Black Crows pattern by combining it with the MACD indicator to identify reliable trading signals. MACD is a trend following indicator, and it stands for Moving Average Convergence and Divergence. This indicator consists of a histogram, moving averages, and a centerline. Traders use the MACD moving average crossovers to identify the trading signals. When the moving averages of the indicator go above the zero-line, it indicates a buy signal. Likewise, when it goes below the zero-line, it indicates the sell signal.

Step 1 – First of all, find the Three Black Crows Pattern in an uptrend.

Step 2 – The strategy is this – when market prints the Three Black Crows pattern, see if there is a crossover happening on the MACD indicator at the overbought area. If there is a crossover, it is a clear sign to go short in any underlying currency pair and vice-versa to go long.

In the image below, GBP/CAD was in an overall uptrend. When price action prints the Three Black Crows pattern, it indicates the ongoing trend reversal in the near future. Furthermore, when crossover happened on MACD, it’s a clear signal that the GBP/CAD is ready to start a downtrend afresh. After our entry, price held for a bit at the support area and dropped to print a brand new lower low.

Step 3 – Stop-loss & Take Profit

Put the stop loss above the first candle of the Three Black Crows pattern and close your whole position when price action reached a significant support area.

As you can see in the image below, we closed our full position at the major support area. Overall it was not a smooth ride, but our position didn’t go into loss even for a single time. Traders can also close their positions according to market situations, or according to their trading style.

Bottom Line

Three Black Crows pattern is one of the most famous and popular trading patterns out there. This pattern can be used to identify the trend reversals in an upward market. Whenever you find a Three Black Crows pattern on the price chart, we suggest you sit up straight and understand if this pattern has the potential to reverse the market or not. It is always advisable to pair this pattern with other trading tools to confirm the indication. Traders can also use this pattern to enter or exit a trade. Some traders use this pattern with the combination of other trading tools in order to close their full position. The end goal is to use this pattern to identify trading opportunities and trend reversals more accurately. Cheers!

Categories
Forex Course

47. Which is the best way to analyze the market?

Introduction

Introduction

Introduction

Now with the knowledge of three type analysis, let us determine the best type of analysis suitable for you.

Before that, let’s brush up through the previous lessons.

✨ Fundamental Analysis – This is a technique to analyze the market by considering the factors which affect the supply and demand of security (currency). Some of the fundamental indicators include interest rates, inflation, GDP, money supply, manufacturing PMI, etc.

✨ Technical Analysis – It is the analysis of the market by understanding the historical price movements of the currency. In other words, it is the study of price movements using technical tools like candlestick patterns and indicators.

✨ Sentimental Analysis – This type of analysis involves understanding the real essence of trading. Here, we get into the shoes of the bug players and determine if they’re buying or selling.

Out of these three, which do you think can help you find success in trading? Well, as a matter of fact, once can succeed in trading only if they have the knowledge of all these three types of analysis. Let us understand with an example of the hurdles that can come your way if you focus only on one type of analysis.

Let’s say a trader named Tim trade only on technical analysis, and he found a good buying opportunity on EUR/USD. But, after he hits the buy, he sees the market falling straight down 100 pips against him due to some news he wasn’t unaware of. This situation brings in emotions in him by which he ends up closing the trade. However, later in the day, he observes that the market ends up going in the direction he predicted.

Here, though his analysis was right, the obstacles like news and emotions took over the technical analysis and put him in a loss. Hence, from this, we can conclude that technical analysis, fundamental analysis, and sentimental analysis are interdependent on each other.

How to structure your analysis?

Above, we have discussed how crucial and dependent all three types of analysis are. However, there are traders in the industry who have expertise only in a kind of analysis but still manage to grow their accounts significantly. Below are some of the tips on how one must structure their analysis, considering they specialize in technical analysis.

  • Before you begin to analyze the market, determine if there is any upcoming news on the currency, you’re looking to trade. And it is recommended to stay away from the currency pairs which have fundamental news coming in.
  • Once you determine the currency pair you’re going to trade, you can begin your technical analysis on that pair.
  • And most importantly, before you place the trade, you must have a complete plan on all the situations that can possibly occur when you’re in the trade, including position sizing, stop-loss levels, and profit-taking levels.  Because, once you enter the trade, emotions take over technical analysis which can make you take incorrect trading decisions.

Therefore, following these three simple steps can drastically bring a change in the way you analyze the markets. Cheers.

[wp_quiz id=”57535″]