We all hope that one day we can be considered an expert trader. Being an expert will mean that we know exactly what we’re doing, we know how to profit and we know how to remain safe as a trader. We all want to get there but it doesn’t happen overnight, it takes time and […]
We all hope that one day we can be considered an expert trader. Being an expert will mean that we know exactly what we’re doing, we know how to profit and we know how to remain safe as a trader. We all want to get there but it doesn’t happen overnight, it takes time and […]
We all hope that one day we can be considered an expert trader. Being an expert will mean that we know exactly what we’re doing, we know how to profit and we know how to remain safe as a trader. We all want to get there but it doesn’t happen overnight, it takes time and we will slowly start to see signs that we are on the right track and that we are slowly becoming expert traders. So let’s take a look at some of the signs that we may see that will show us that we are becoming expert forex traders.
Profits are not your main priority: When new traders start, there is normally just one thing on their mind, how much money they can make and how they are going to make it. Money is the main driving force behind their desire to trade and it is what will motivate them to learn and trade. For an expert, that priority will begin to shift, you will start to focus on securing and protecting what you already have over making more profits. You will understand that it is more important to stay in the game than to make profits, and you will focus on keeping what you have and adding to it rather than placing too many risks.
You are naturally looking at the news: Looking at the various news sites and economic calendars is not really something that newer traders do, yet when you are becoming an expert trader this should be something that comes very naturally to you. The start of each day, the evening before, anytime is a good time to check the news and the economic calendars. It can provide you with a lot of information. Eventually, you will do it naturally without even thinking about it.
You follow your rules perfectly: The trading plan that you have created will have a number of different rules setup, these rules are what tells you what you should be trading and when. When we are new we will still get some of them wrong, meaning that we will be placing bad trades. But as we grow as traders and move more towards the title of an expert trader, we will begin to reduce the number of times that we go against them, when we no longer make mistakes surrounding the rules, we can consider that part of our training to be at an expert level.
You maximise the profits on each trade:Sometimes it is not about placing more trades, for many newer traders we see the profits and so close the trades for that profit, only for the market to continue in the same direction. An expert trader will capitalise on this, if a take profit level is set, based on further analysis this can be moved further, you can also use things like trailing stop losses that can help you to maximise profits a little bit more. You will now be trying to squeeze out more from each trade rather than placing more trades.
You no longer blindly follow others: When we start out trading, we don’t really know what we are doing, due to this, we often take the words of others with a little more attention, often we will simply place trades because someone that we think is an expert has placed them without really knowing why they have been placed in the first place. Instead, we no longer blindly follow others now, instead, we make our own trades, or if we do take another’s trading idea, we know why they are trading it and have a full understanding of the trade before we place it.
You find your exit point before placing a trade: When we start all we really think about is the entry, how do we get in, we will then think about getting out once we are in profit or loss. This is simply not what an expert would do, instead, we can sense that we are on our way to becoming an expert when we start to think about the exit point before the trade is made, sometimes before the entry point is even decided. The exit point is what will make our profit, but also to protect the account, so it is vital that we know where this will be before we place the trade.
You no longer dwell on negative days: We all hate bad days, we all hate negative trades. What we often do is find it hard to move on, those negative days or trades stay in the back of our mind, maybe we go to sleep thinking about it and wake up with it fresh in our minds, this can then influence our next day’s trading. An expert trader will not do this, they will accept that the losses were there and that they happen. You now need to move onto the next trade without thinking about the loss anymore, this way an expert trader will not be influenced by their previous losses.
You understand that not having a trade can be a good thing: You do not always need to trade, for a new trader you want to be trading all the time as that is how you make money, what they do not seem to understand is that not having a position is still a position. If there are no good opportunities for a trade, you should not try to force one, instead, you need to be patient. Not having a trade is keeping your account safe from losses, so as an expert you understand this and are happy to sit and wait for the right opportunity to arrive.
You still understand that there is still a lot to learn: You can never know everything, in fact, you can never know a lot, new traders may get the basics and then stop learning, but an expert will do the opposite. An expert will know that there is always more to learn, so much so that they spend a lot of their time still learning. New strategies, new assets or currencies, pretty much every aspect of trading has an unbelievable amount of information that is constantly evolving… So a sign of becoming an expert is the fact that you are able to continue to learn and still have the drive to continue to learn.
You never trade without a stop loss: Stop losses are there to protect your account, you should be using them with every trade. New traders don’t always use them but if you want to be considered as an expert trader, then you need to use them with every single trade, it is as simple as that.
You no longer dream about your trades: A weird one no doubt, but when we first start out we dream about our trading, we dwell on our losses and they often affect our dreams, or we dream of placing that one amazing trade that makes us rich. As an expert, you don’t really have these same dreams, your trading stays with your trading, when you step away from the trading terminal, your thoughts of trading do not come with you and so when you dream, you no longer dream of your trading.
So those are just some of the signs that will help to show that you are becoming an expert trader. There are of course other things and we have to ask ourselves how we would actually define an expert trader. You can never be perfect, but you can certainly start to do things a little more naturally that are in line with your strategy, that protect your account and keep you updated, as long as you are trading well, you can be considered an expert trader.
How to take some risk out of currency trading – Beginners
Thank you for joining this Forex academy educational video.
One of the challenges for new traders, especially in the forex market, is the sheer volatility concerned with the most popular currency pairs, which typically tend to be the major pairs.
Very briefly, these are currencies such as the British pound, the Australian and New Zealand dollar, the euro, the Swiss franc, the Canadian dollar, and the Japanese yen, which are all traded against the United States dollar and commonly known as the major currency pairs. These currencies are associated with the biggest economies in the world and are the most widely traded in terms of volume, and this factor means that quite often you will see extreme volatility in the pairs, and this is where new traders find it difficult to get in and out of a trade successfully.
This is a 1-hour chart of one of the major pairs, the USD Japanese yen. We have highlighted two significant moves, one was a bullish breakout at position A of 200 pips, and the other relating to the overall move covered by the arrow at position B, was a bearish trend lower of 150 pips, thus giving back most of the previous move.
The issue here for new traders is that the move at position A was associated with a risk reversal event pertaining to covid vaccine developments, and the subsequent move at position B was the Japanese yen being bought because of its safe-haven status. This makes this currency pair difficult to trade and subject to volatility. These volatile moves can be large, as we can see, and happen without warning. These types of moves are usually detrimental to new traders.
Here is a one hour chart of the British pound and US dollar over a 10 day trading period. The moves on the chart have been subject to rumours and speculation with regard to the ongoing future trade negotiation between the United Kingdom and the European Union. The tunes have been trying to best position themselves regarding any potential outcome that those negotiations might have and where they are currently at a critical stage with time running out.
The total amount of moves in pips from the five trends, as shown in the diagram, equals 700 pips. This is an extreme amount of volatility, and where price action can change unexpectedly, often after unscheduled news pertaining to the negotiations, and where rumours abound and affect the price action. This is not for the faint-hearted, and again this can catch out new traders as they try to gauge where to go long and short.
This could potentially be a solution for new traders who want to dip their toe in the water and trade currencies for the first time I’m without the risk of the major volatile currencies. This is a one-hour chance of the Australian and New Zealand dollar pair. This is not a major currency pair, yeah, because the dollar is not included, in which case it is classified as a cross-currency pair.
Because the Australian and New Zealand economies are extremely similar, and where the countries are in close proximity, and where both export largely to China, and because neither of these currencies is used as a safe-haven asset, such as the United States dollar, Japanese yen, or Swiss franc, for example, we tend to find smaller and less aggressive moves in this pair.
Here we can see one price action move to the downside at position A, gaining 100 pips, and at position B, a period of consolidation, followed by a further move lower at position C, of 80 pips. These moves are enough to make a living, yet not usually aggressive enough to catch traders out, especially during times when both countries are not active, i.e., during the European and US sessions, and where all the related economic data has been released to the market, and in times where no key policymaker speeches are due.
Let’s take a closer look at the consolidation period from the previous chart. We have a confirmed sideways price consolidation trend, as confirmed by two areas reversing lower from a clear line, which becomes a line of resistance, and where there are two reversals in price action from another straight line, such as shown on the chart, which becomes an area of support.
Any subsequent reversals from either the support or resistance line are good opportunities to go long or short, such as those as indicated on the chart. Incidentally, at these points, price-action has also spiked outside of the Bollinger bands, and when price action moves inside them, this is also an indication of a potential price action reversal.
In conclusion, if you are a new trader and adverse to market volatility and want to trade a less volatile pair, this will highly likely suit you.
The trading plans, strategies, and goals of successful traders can differ widely, but those that are considered successful do share some important characteristics that help to further their trading career. Do you think you have what it takes to join their ranks? Take a look at our list of necessary characteristics below to form your […]
The trading plans, strategies, and goals of successful traders can differ widely, but those that are considered successful do share some important characteristics that help to further their trading career. Do you think you have what it takes to join their ranks? Take a look at our list of necessary characteristics below to form your […]
The trading plans, strategies, and goals of successful traders can differ widely, but those that are considered successful do share some important characteristics that help to further their trading career. Do you think you have what it takes to join their ranks? Take a look at our list of necessary characteristics below to form your own opinion.
Here’s a quick summary of the most important characteristics that a forex trader should possess:
Discipline
Mental Toughness
Independence
Being well-educated
Patience
Discipline
Discipline is the first characteristic on our list because it is probably the most important trait that a currency trader should have. An undisciplined trader is prone to these mistakes:
Trading when the timing isn’t right
Risking too much on a single trade
Investing more money than they should
Overtrading
The idea here is that there are thousands of positions one could enter on any given day, but they shouldn’t. A disciplined trader watches the market and only enters trades when the timing is right, even if it means sitting on their hands for a significant amount of time each day waiting for another opportunity. Enter trades just to be trading is a bad habit that is bound to lead to the loss of your hard-earned funds.
Mental Toughness
Traders need to know that losses are an inevitable part of trading. If you act like a sore loser and sulk over every loss, you’re going to make yourself miserable. In fact, most day traders experience losing trades each day. What matters is that you make more than you lose, and if you do, then you should consider yourself a winner. The best traders pick themselves back up after experiencing losing streaks and try to learn from their mistakes if the losses are on their side. If those losses were unavoidable, then those traders move on without obsessing over it.
Independence
Most traders start out by reading articles, watching videos, and simply relying on the word of other traders. There’s nothing wrong with picking up some tips here and there, especially in the beginning. However, the best traders learn to stand on their own two feet and don’t need to rely on others once they get further into their careers. You might want to incorporate some advice from different sources together once you realize what does and doesn’t work for you.
Being Well-Educated
In order to be a successful currency trader, you obviously need to know what you’re doing. The amount of knowledge one needs exceeds far beyond basic concepts and covers a lot more territory. Smart traders understand the analytical side of things, what moves the markets, trading psychology, they know a lot about different strategies, and so on. Fortunately, anyone can learn this online because free resources are readily available if one simply applies themselves to learning in-depth. Mathematical concepts are important here too, as traders need to understand percentages, calculate risks and rewards, and do some simple math calculations quickly.
Patience
Some might begin trading with high expectations about how quickly they will make money. This is a bad start for any trader. It takes time to become successful, especially for those that start out with a small investment. The best traders are not only patient when it comes to waiting for success and watching profits build slowly, they are also able to watch the markets to wait for the right time to enter a trade without feeling overly anxious or rushed.
We often hear about the habits of successful Forex traders and study what these individuals do on a daily basis. Have you ever wondered what they don’t do? Here, we’ll take a look at some of the keys to success from the perspective of what successful traders actually don’t do. #1: Forget to Set a […]
We often hear about the habits of successful Forex traders and study what these individuals do on a daily basis. Have you ever wondered what they don’t do? Here, we’ll take a look at some of the keys to success from the perspective of what successful traders actually don’t do. #1: Forget to Set a […]
We often hear about the habits of successful Forex traders and study what these individuals do on a daily basis. Have you ever wondered what they don’t do? Here, we’ll take a look at some of the keys to success from the perspective of what successful traders actually don’t do.
#1: Forget to Set a Stop-Loss
Using a stop-loss is one of the best risk-management tools in the arsenal of a forex trader. It helps limit your losses so that you don’t lose too much money if things don’t go the way you had hoped. Some traders might choose not to use a stop-loss because they are confident about the direction that the market will go, however, nothing is ever certain when it comes to the foreign exchange market. This is why the best traders set a stop-loss and take other measures to limit their risks.
#2: Fail to Learn Something New
Those that have been trading for a while sometimes feel so confident that they think they know everything they need to know about trading already. The truth is that there is always more information out there about strategies and other insightful information that can add to one’s overall knowledge. Successful traders invest time into their education, even after becoming more established.
#3: Worry About Other Opinions
There’s no “right” way to trade forex. With so many strategies, trading plans, and different ways of doing it, it really comes down to what works for the individual. Successful traders find a plan that works, perfect their strategy, and stick with it instead of chasing trends and trying different suggestions because someone else says they know better.
#4: Become Overly Emotional
Emotions can run high when money is on the line, especially with the rollercoaster ride of ups and downs that come with forex trading. Feelings of grief, anger, disappointment, greed, excitement, overconfidence, and a whole host of other emotions can wreak havoc on the way that we trade. The best traders understand the psychology behind the way that these emotions interfere and have enough discipline to keep themselves calm and levelheaded or to take a break if things start to get too intense.
#5: Risk too Much
When we speak about risking too much, the amount can vary from person to person. Still, a good idea of how much you should risk on a single trade is around 1% – 5% if you listen to the experts. If you go risking 10% here, 20% there, and things go wrong, then you could quickly blow your balance. This is especially true for successful traders that have a large investment sitting in their account.
#6: Use too Much Leverage
The leverage you use is another matter that comes down to personal preference, and you also might be limited depending on the broker you’ve chosen. Traders should still be aware that using too much leverage can cause you to lose a lot of money at once, therefore, many professionals choose to stick with a leverage option of around 1:100 even if their broker offers options that are much higher.
#7: Set Unrealistic Expectations
One might assume that a forex trader has one goal and one goal only: to make money. However, a person really needs to focus on self-improvement once they start trading forex. It isn’t a good idea to only have one large goal or to set detailed goals about exactly how much money you will make within a certain timeframe. Successful traders set short-term and long-term goals and focus on bettering themselves so that they will make more money in the long run, rather than only thinking of dollar signs the whole way through.
Forex trading can be a lucrative investment with knowledge and dedication, however, it’s no secret that you actually have to invest time into learning and trading if you want to make money doing it. For many of us working 9-5 jobs, taking care of children, or dealing with other responsibilities, it might seem like we’d […]
Forex trading can be a lucrative investment with knowledge and dedication, however, it’s no secret that you actually have to invest time into learning and trading if you want to make money doing it. For many of us working 9-5 jobs, taking care of children, or dealing with other responsibilities, it might seem like we’d […]
Forex trading can be a lucrative investment with knowledge and dedication, however, it’s no secret that you actually have to invest time into learning and trading if you want to make money doing it. For many of us working 9-5 jobs, taking care of children, or dealing with other responsibilities, it might seem like we’d never really find the time. This keeps a lot of people from even trying to trade because they have already decided that they wouldn’t be able to keep up. Fortunately, there is a possible solution for those that don’t have the time, or who may not want to spend hours trading every day. The solution would be trading part-time, rather than full-time.
The great thing about forex trading is that you can set your own schedule, so there’s no reason why you couldn’t check your account in the morning, during a lunch break, or even in the evening after work. Even if you don’t work or attend school on an average 9-5 schedule, it’s possible to work trading around your daily agenda. This is the best solution for those that want to make a smart investment without quitting their regular jobs. After all, it takes a lot of experience and a significant investment to make enough money trading that you could quit your job. Part-time trading is like a middle-ground, where you can continue to bring in your guaranteed income while adding to it.
To take up forex trading, you’ll need to model your trading plan around the amount of time you have to trade and choose a strategy that doesn’t require constant attention. Swing trading is a good example of a low-maintenance strategy because traders typically place a medium or large trade and leave it open for days or even weeks to accumulate. One plus to using this type of strategy is that it fits in with the “less is more” mindset that many experts bring up about trading. It’s been said that trading less often is less dangerous and can actually make you more money in the long run.
Those that are interested in part-time trading do need to understand ahead of time that it may take longer to actually get started if you have less time to invest in your education. Opening a trading account without being well-educated about trading is actually one of the top mistakes that beginners make. If you can, try to devote time on the weekends or spend more time in the evenings learning until you’re ready to open your trading account and make that first investment. Devising your trading plan and strategy will also take some time, but you shouldn’t let this dissuade you from trading. Once you’ve completed these tasks, you won’t have to devote as much time to trading and you’ll be able to sit back more and collect the profits from your efforts.
In conclusion, those that are interested in part-time trading should take up the opportunity. It does require some time invested in learning beforehand, however, part-time traders can really take advantage of the flexible schedule that forex trading offers. This is one of the best ways to invest your money and to receive quick returns on that investment. We’ve often said that beginners shouldn’t rush to quit their day jobs to take up trading full-time, but part-time trading is a great middle-ground that allows you to keep your life the same while making money. Who could argue with that!
If you Google “top forex traders” or anything close to the phrase, Bill Lipschutz is bound to be on the list. This professional trader was born in Farmingdale, New York, and began his trading career while attending Cornell University. He earned a bachelor’s degree in Fine Arts while simultaneously enrolled in business classes and also […]
If you Google “top forex traders” or anything close to the phrase, Bill Lipschutz is bound to be on the list. This professional trader was born in Farmingdale, New York, and began his trading career while attending Cornell University. He earned a bachelor’s degree in Fine Arts while simultaneously enrolled in business classes and also […]
If you Google “top forex traders” or anything close to the phrase, Bill Lipschutz is bound to be on the list. This professional trader was born in Farmingdale, New York, and began his trading career while attending Cornell University. He earned a bachelor’s degree in Fine Arts while simultaneously enrolled in business classes and also walked away with an MBA in finance back in 1982. Bill’s strong background education undoubtedly contributed to his success with trading forex. Lipschutz is one of many professional traders that can serve to inspire us all; however, this big-league trader learned a very important lesson early on in his career.
Everything began when Bill inherited $12,000 worth of stock after his grandmother died. It’s true that many others might not be lucky enough to inherit a large sum of money, but it is still possible to follow in this traders footsteps by starting small, saving up, or waiting until you receive a larger sum of money from taxes or other events so don’t feel discouraged by his large start-up fund. Remember that you can open a trading account with as little as $5.
Eventually, Lipschutz managed to turn his inheritance into $250,000 after spending countless hours researching the stock market in his free time. While we’d hope for a happy ending, things didn’t go so well from there. Bill lost his entire portfolio balance on a single bad decision when the market turned on him. A failure to use appropriate risk-management precautions contributed to this large loss when it could have been reduced to a less devastating blow. After countless hours working to build his investment, everything was gone. This is the point where many traders would give up, closeout their accounts, and turn away from trading for good.
Fortunately, Bill Lipschutz only became more interested in trading after learning this huge lesson from his early mistake. He went on the work for the newly formed Foreign Exchange department through Salomon Brothers with a plan to learn about currency trading. In 1995, he formed his own company named Hathersage Capital Management with some of his previous classmates. Today, he is regarded as one of the top 5 forex traders with an unknown net worth, although he was once making $300 million per year.
In a nutshell, this story is quite inspiring with a lesson behind it. A college-educated person receives an inheritance, decides to invest it into the stock market, and increases his investment by more than $238,000. Then, one bad decision wiped out everything in a move that would have caused most to give up on trading for good. Instead of walking away, Bill Lipschutz became more inspired, continued investing, went on to make $300 million per year for the company he was working on, and later went on to create his very own investment company. We can learn the following lessons from this millionaire’s success story:
Don’t give up on forex trading, even if you make a bad trade and lose a significant amount of money! Even if you’re feeling frustrated, you should try to learn from your mistakes and continue to search for inspiration. Perhaps a loss is a sign that you simply didn’t do something right, or you might need to take a break and focus on becoming more educated. Either way, this doesn’t have to be a career-ending mistake.
Know that Bill Lipschutz lost his entire portfolio because he did not use appropriate risk-management precautions. This is the difference between blowing $250,000 in one trade or only losing about $2,500 for a balance of this magnitude. You typically want to risk about 1% on each trade, so about $1 would be lost per $100 for traders that have smaller balances.
Bill Lipschutz teaches us a good example of how determination can pay off when it comes to trading forex. Even if you get off to a rough start, it doesn’t mean that you can’t be one of the best traders out there someday. Learning this valuable lesson in risk-management and motivation should be an inspiration to us all, so remember to think of Bill Lipschutz anytime things don’t go in your favor.
Whenever you think of the most successful traders in the world, who comes to mind? Here are a few quick examples of noteworthy traders with a lot of experience: Carl Icahn is the richest trader in the world with a net worth of $14.3 billion. He runs an investment firm and previously advised Donald Trump […]
Whenever you think of the most successful traders in the world, who comes to mind? Here are a few quick examples of noteworthy traders with a lot of experience: Carl Icahn is the richest trader in the world with a net worth of $14.3 billion. He runs an investment firm and previously advised Donald Trump […]
Whenever you think of the most successful traders in the world, who comes to mind? Here are a few quick examples of noteworthy traders with a lot of experience:
Carl Icahn is the richest trader in the world with a net worth of $14.3 billion. He runs an investment firm and previously advised Donald Trump on regulatory overhaul.
George Soros has a net worth of $8.3 billion and is in charge of a hedge fund worth billions of dollars. He has been nicknamed “the man who broke the bank of England”.
Ray Dalio rules over the world’s biggest hedge fund firm Bridgewater Associates, worth around $140 billion in assets.
There’s a lot we can learn from these expert traders and others that have put a lot of time and effort into perfecting their trading strategies. If you want to find yourself in their place one day, then you’ll need to understand how they think and what not to do. Below, we will detail four of the best trading behaviors you should copy if you want to think like these billionaire investors.
Be Confident, but Not Overly Confident
In order to be a successful trader, you need to believe in yourself and feel confident in your strategy. It’s important to maintain one’s belief in themselves even when their trading strategy fails and they have some losing trades, rather than second-guessing everything. Unfortunately, too much confidence can lead a trader to feel arrogant or as though they are invincible. Overly confident traders take more risks and don’t always analyze all of the data that they need to. This usually leads one to lose everything that they gained in the end. This is why successful traders need to be confident in their abilities and strategy while remaining humble by remembering that they aren’t invincible.
Many traders experience anxiety and make distorted decisions after experiencing one or several losses when trading. It is important to understand that you can’t win every single time. Being a good trader is about having more winning trades than losing ones, not having a 100%-win rate. This is why professionals learn from their mistakes without beating themselves up over them. If there was something you could have done differently, remember that next time. Or maybe you made what looked like a good move and the market did something unexpected. Either way, you need to brush yourself on and move on when you make a bad trade.
Know When to Do Nothing
Have you ever anxiously watched a trade and pulled out before hitting your stop loss or take profit level, only to wish you hadn’t soon after? Good traders set their stop loss and take profit levels and then sit back and do nothing. Patience is important here. It isn’t always smart to make a trade, for example, when the market is highly volatile. Good traders sit back and only enter the market when they know they should. They aren’t addicted to trading and understand that some days they will need to sit out. If you want to be like one of the greatest traders out there, you’ll need to practice patience and self-discipline so that you don’t enter the market at bad times or allow anxiety to change your decisions.
Never Stop Learning
Traders should never stop pursuing knowledge about trading. Even if you become a professional, there’s always something new to discover. You need to be able to act logically when the pressure is on and may need to do some psychological work to improve the way you act in stressful trading situations. Or perhaps reading about an unknown strategy or another’s point of view on something could help you to improve your own strategy or be of some use. The best traders don’t assume that they know everything that there is to know about trading.
The Bottom Line
Successful traders have the right amount of confidence without being arrogant. They understand that they could lose but have invested enough effort into their trading strategies that they know most of their trades are going to be winners. In order to be like one of the greatest traders out there, you need to learn a lot about self-discipline and how to behave under pressure so that you don’t allow your emotions to cloud your judgment. Professionals don’t beat themselves up over their mistakes, they dust themselves off and move on. If you plan to be a noteworthy trader in the future, you’re going to need to learn to behave like one. Try following our list and reading about some of the greatest traders out there to master having a professional attitude.
If you are a complete beginner considering a forex trading career, a skilled individual experienced in trading stocks, commodities, or other equities, or a dissatisfied forex trader wishing to start all over again, you are probably wondering how to embark on this journey of exploring the abundant forex market with the best possible tools and […]
If you are a complete beginner considering a forex trading career, a skilled individual experienced in trading stocks, commodities, or other equities, or a dissatisfied forex trader wishing to start all over again, you are probably wondering how to embark on this journey of exploring the abundant forex market with the best possible tools and […]
If you are a complete beginner considering a forex trading career, a skilled individual experienced in trading stocks, commodities, or other equities, or a dissatisfied forex trader wishing to start all over again, you are probably wondering how to embark on this journey of exploring the abundant forex market with the best possible tools and advice. Naturally, any developed market, such as the one you desire to enter, has its own set of rules and needs, and it is your task to absorb whatever available material you can get by. As you may have already noticed, forex has been extensively researched and the age of technology has made this topic only more susceptible to misinterpretation, often causing confusion and concern among the interested parties.
Sometimes any such misperception originates from inexperienced authors sharing their faulty thinking while, in other cases, the level of clarity and precision is jeopardized because of traders trying to copy the same practices they used in some other market. As the number of individuals wondering how to set off or jump-start their forex trading careers keeps growing, this article will clearly and directly provide the basics for you to start assessing the prospects of having and growing a career as a forex trader. Most importantly, you will learn about how to choose the approach to trading currencies that have not only proven to be successful in real trading but vouched for by professional traders around the globe as well.
Some experienced traders state that they required a minimum of five years to reach the professional level of trading in this market, during which they invested not only in learning but also in testing their strategies and tools of choice. Although trading at a high level, the trading elite still made mistakes and endured periods of tough learning of how to avoid some common mistakes. These learning stages sometimes involved completely destroying traders’ accounts, endangering their finances, but also the determination to differentiate between the good and bad approach, understanding that devoting time and effort will gradually give results.
Testing thousands of indicators and applying various pieces of advice allowed them to discover fine nuances that eventually pushed them right to the top. On this path of discovery, these traders made numerous adjustments to indicators’ settings and learned how to make necessary calculations to keep their trading in line. What is more, they also learned how not to get involved too deeply in their trades and take emotions out of the equation. Owing to the variety of these steps and the extent of their willingness and eagerness to learn and grow, professional traders managed to develop their own trading systems and commit to following their plan religiously.
With the increased number of free and unrestricted material nowadays, you can rest assured that the odds of becoming a successful trader of currencies are higher than ever before. Nonetheless, to reach this stage and to really give yourself the chance to prosper, you will ultimately need to incorporate mindset, plan, and strategy as the key concepts which inevitably determine the level of any trader’s future success. The quantity of material you have come across so far may seem to be truly overwhelming, and not knowing how to integrate the vastness of data may hinder your development as well as increase the risk of failure. Moreover, the inability to discriminate between accurate and incorrect resources can additionally hamper your attempts to be good at trading. And, last but not least, the degree of willingness and openness to being further molded by the market will either facilitate or impede your psychological growth on your path to adopting the right mindset that trading requires. So as to help you take in and absorb as much relevant information as possible, without compromising quality, each relevant piece of information in this article is going to be disclosed in a simple and linear fashion.
Firstly, the approach that this article advocates for is inclined towards the use of indicators, as opposed to price action or naked chart trading. People’s choice of indicators will undoubtedly determine the quality of their trading experience, and the financial reward as well, which is why a portion of traders who did not choose well in the past vehemently objects to the use of these tools. Some of the most prosperous participants in this market developed highly successful systems based on the use of indicators, which further proves the point that your selection of indicators requires special attention due to which it will lead to lucrative outcomes. Any good approach to trading in this market should heavily address the topic of trading psychology that should embody the essence of every endeavor to trade in this market.
It is so vitally important that traders grasp which traits and abilities constitute a good forex trader because the more recognition you give to this matter, the healthier and more sustainable your trading will be. By relying on the right approach to trading, you will additionally discover how, together with a suitable mindset, proper money management also forms the foundation for lasting success and is one of the crucial elements each trader needs every step of the way. Although these topics are not discussed by many, the failure to adopt the right mindset and the lack of money management skills are certainly the most common reasons why traders get disappointed and are pushed to stop trading, which is why these topics must be part of any desirable type of approach.
Approaches to trading may differ significantly and this does not reflect the belief that necessarily only one method is good. You should always feel encouraged to keep searching for tools and tactics to fulfill their own needs and goals, but different people can have varying degrees of acceptability. Moreover, we cannot expect to assign equal significance to the same factors as other traders do. While on the surface you may find different sources to support seemingly identical values, once you dig deeper you will see how any existing differences also entail the difference in what they prioritize or hold as relevant. With the help of the general guidance provided in this article, you should be on the lookout for the system which will help you to manage your time and enjoy your day without having to sacrifice your freedom for money. You will thus increase your effectiveness without having to work long hours by default or put excessive amounts of energy into trading.
Such an approach will also help you reduce the number of mistakes you are making, which are often caused by highly conflicting or even downright inapplicable advice. Even if you are using the best indicators that are specifically developed for trading currencies, although this is quite often fertile ground for improvement in this regard, making the same mistakes repetitively will keep pulling you back. Unless you differentiate right from wrong, you may never achieve the level of expertise even after investing great amounts of time and energy, and the approach you choose to use should be able to provide you with such assistance. What such an approach does, in comparison to the majority of others, is to offer you a self-sustaining system where you will need to put in very little effort to see tangible results.
As you can see, by implementing the tips we reveal here, you will reap numerous benefits and the only precondition is that you invest in learning before you really start trading. Having to trade for approximately a quarter an hour a day from the moment you acquire knowledge onwards probably seems like a fair deal and, what is more, you are always advised to run demo trades to confirm the efficacy and efficiency of the tips you come across. After you discover a system like this one, you will feel confident enough to put your emotions aside, knowing that you no longer depend on the hours you invest, but precisely on this system that you have previously developed through learning. Besides learning beforehand, you should also bear in mind that an approach like this is not intended to serve as a quick solution for impatient individuals wanting to amass a fortune overnight. Such an approach, in fact, does not rely on luck and, therefore, does not advise traders to follow sources that disclose signals.
People who are ready to take time to learn and are eager to explore whatever advice is offered to them are the ones who will benefit the most from this article. Compared to the time when forex was an entirely new market and there were no available materials and resources to turn to, traders had to learn how to develop such a system the hard way. As a result of the tips provided here, you will be able to come by a genuinely amazing functioning set of rules and tools you can use to build up your own algorithm and strategy, which are compulsory for growing your forex trading account.
The first step for every beginner in this market is learning how to trade. Some of the best websites, blogs, podcasts, and YouTube channels will not assist you in understanding the key trading/financial/investment terminology, so you will have to devote some time before to study what terms such as pip or trend line stand for. Understanding how this market functions is equally essential, if not even more so, for the traders who are coming from other markets, such as the crypto market, because they often wrongly assume that the same strategies and tools are applied just because both markets revolve around the topic of trading. This assumption is often the reason why the rate of failure is so staggeringly high among these cross-overs, causing them to give up almost at the very beginning.
Learning is hence the number one step in even attempting to take up trading in the forex market not only because of its specific mechanics but also because knowing the basics will help you construct a system you will then be able to use forever. After learning about core concepts, some of the most important topics you should also focus on include money management, trading psychology, and technical analysis. However, whatever you read, watch, or listen, always strive to fully understand why forex trading requires a unique approach and this will shorten the time your learning will require, help you opt for the right tools, and prepare you for the challenges that trading in the forex market imposes.
While the number of tips offered here may still be very high, you are advised to use a notebook/laptop and start documenting all pieces of information that you find useful. Remember to always think of forex trading from the perspective of indicators and, most importantly, trends because such an approach will lead to sustainable results. In order to maintain success and prosperity, you will also need to set up and keep improving your own toolbox as it will make the algorithm you will use in your trading. While searching for advice on how to develop your own approach to trading, make sure that you understand what this system should comprise.
Always test whatever information you come across and, once you feel like you have found the right indicator or strategy, strive to use it consistently until something better comes along. Maintain a level of curiosity because it will keep you active and prevent you from failing to see some innovative and creative solutions to existing problems. In addition, give yourself the freedom to adjust and accommodate anything you use in trading if you feel that you could gain more success after some improvement. Last but not least, practice being patient because this characteristic will allow you to stay positive, preserve your mental health, and prevent you from endangering some long trade just because you cannot wait to see the end results. All in all, you now know that successful forex traders worldwide always invest in knowledge and tools to design the best possible strategy and algorithm, and you are thus ready to set sail and continue exploring this market to reach mastery.
If you look around the internet, you will find a lot of excuses out there about why someone may not be trading well or why they have been losing money. The problem with these excuses is that they often show that the user has a lack of understanding about how the markets work, either that […]
If you look around the internet, you will find a lot of excuses out there about why someone may not be trading well or why they have been losing money. The problem with these excuses is that they often show that the user has a lack of understanding about how the markets work, either that […]
If you look around the internet, you will find a lot of excuses out there about why someone may not be trading well or why they have been losing money. The problem with these excuses is that they often show that the user has a lack of understanding about how the markets work, either that or they are in denial and do not want to admit that it may have actually been something that they did that caused the trade to lose.
We are going to be looking at some of the more common excuses that you see posted about the internet on blogs and on various trading forums, we are sure that you would have seen some of them posted before and we are sure that you will also see them posted many times again.
My broker is a scammer!
This excuse could actually have a little merit to it, depending on the broker that is. There are some very shady and dodgy brokers out there, ones that have taken part in some pretty low business operations which have left people without any of their money, or tactics which encourage people to deposit money that they cannot afford to deposit, if this was the case then the excuse would be pretty valid. The problem comes when we look at the more reputable brokers, the ones with great track records that have done pretty much nothing wrong in their entire existence. People still claim that these brokers have scammed them and stolen their money, simply due to the trader losing their money.
This can also be seen with people who claim that all regulated brokers are good and unregulated ones are bad. The regulation covers the protection of their money, it does not always dictate the behavior of the broker, so people claiming that all unregulated brokers will scam you is not the case at all. The majority of traders who use the reputable ones have simply treated badly or gambled, the brokers often do nothing wrong (unless they are an actual bad broker). So be wary when you see people claiming to have been scammed by the broker, it is not always the case.
The markets are against me.
This is something that we see a lot, people take their time to analyse what they think is a good trade, they have put the time and effort in, they then place the trade and it goes the wrong way, or it starts to go well, then suddenly turns and zooms off in another direction. What happened? The markets must be against me, they obviously saw me put on this trade and then decided to go against me so I would lose my money. Reality check, the markets do not even care who you are, they do not notice the little money that you are putting into the markets. There are trillions traded each day on the markets, you $100 trade is nothing to it, not worth anyone’s time or effort to try and trade against it.
Newer traders often don’t realise how many things there are that can affect the markets. You can never prepare for them all, in fact, you cant prepare for even half of them, news events, natural disasters, banks changing consensus, loads of things affect them, just because it went against you, doesn’t mean it was anything personal.
Trading takes too long.
Trading does not take a long time, what takes a long time is the preparation of trading. This is unfortunately the part that you need to do at the start of your career and so it is the part that newer traders see the most. The thing that many do not understand is that once you have gotten through the initial planning and preparation stages, the actual process of putting on the trades does not take time at all. It is common to see it plastered all over the internet and forums that you will not have a life when you start trading or you won’t have time to do it after work, but you can, and many people do. Many people trade part-time after or before work, it is more than possible, people just do not want to put the effort in, or simply look at the start of the process and then assume that the entire trading career will be the same.
Trading is too complicated.
Trading looks complicated, in fact, it is complicated. We will probably give them this one. It takes a lot of effort and time to learn how to trade properly, not something that a lot of people want to actually do. The problem is that from the outside it looks incredibly simple, here isn’t actually that much to it, you guess that something will go up or down and put that trade on. Unfortunately, it is not that simple and once people have started trading they have realised this, do not want to put in all the time and effort to actually learn how to trade properly and simply chalk it up as too complicated and give up.
You can’t make enough to live on.
This is normally something that people say if they have gone into trading with their expectations of what they will be able to do is set way too high. The unfortunate truth is that a lot of people are now getting the idea that trading can make you rich overnight, this view is often formed when people view some of the frequent adverts that are promising less than realistic returns. When you go into it thinking you will have the world, you will be disappointed.
People also go in with the expectation that they will be able to make enough to quit their job within a couple of months, again, this is not something that is realistic. Yes, you may be able to make enough to quit your job, but that will take a long time to happen. It takes a lot of time to learn, not something that some people want to put in, so as soon as they do not make as much as they want, they blame forex and simply state that you cannot make as much as people say that you can.
So those are some of the things that you often see posted around social media or on trading communities. They are often from people who have entered trading without a proper understanding of what is involved or even what trading actually is. If you have that knowledge then you most likely won’t be making the excuses that we went through above.
If you want to get really good at something, it helps to take a few tips from the professionals. In this case, we’re looking at professional trader George Soros and the methods that have made him successful. If you haven’t heard of George Soros before, here are a few quick facts you should know: George […]
If you want to get really good at something, it helps to take a few tips from the professionals. In this case, we’re looking at professional trader George Soros and the methods that have made him successful. If you haven’t heard of George Soros before, here are a few quick facts you should know: George […]
If you want to get really good at something, it helps to take a few tips from the professionals. In this case, we’re looking at professional trader George Soros and the methods that have made him successful. If you haven’t heard of George Soros before, here are a few quick facts you should know:
George Soros’ current net worth is 8.3 billion dollars.
-Institutional Investor Magazine named him “the world’s greatest money manager” in 1981.
-He earned the title of “the man who broke the bank of England” in 1992 when he made more than a billion dollars selling the pound sterling.
-George Soros is co-founder and manager of the Quantum Endowment Fund, which is an international hedge fund worth more than $27 million dollars.
As you can see, George Soros has had a lot of success and experience in his 40+ years of trading. Many traders aspire to be sitting in his place one day in their future. The best way to follow in this successful businessman’s footsteps is to study the way he trades and manages his funds.
George Soros is a short-term speculator, meaning that he purchases assets for short periods of time and uses strategies to profit from changes in the price. His strategy involves making huge bets that are highly leveraged in the direction that he believes the market will go. The hedge fund we mentioned earlier is famous for making large, one-way bets on the movements of assets based on macroeconomic analysis.
Macroeconomics combines economic trend analysis, long-term projections, analysis for alternate trends, the impact of fiscal/monetary measures, and simulations of the economy. There’s a lot to it, but the internet has a lot of helpful information that covers macroeconomics so that all traders can familiarize themselves with the concept. Soros believes that traders themselves influence the market fundamentals and that their irrational behavior leads to booms and busts, which offer investment opportunities.
Although we can learn a lot from this investor, everyone can’t mimic his strategy. In fact, most wouldn’t be able to do so effectively. This is partly because he makes massive trades that would be beyond many trader’s abilities. The man is a billionaire after all. Another thing that could stop one from copying him is the fact that he uses high leverage on his trades. Leverage can obviously work to one’s advantage, but it is often referred to as a double-edged sword.
Overleveraging trades has caused many traders to wipe out their accounts completely because it is very risky. We would only recommend using a high leverage ratio if you are a skilled investor that can afford the risks that go along with it. A good way to become more acquainted with leverage would be to trade from a demo account using different leverage options.
If you aspire to be one of the greatest traders in the world, it helps to take notes from the experts. George Soros is the perfect example of a self-made billionaire that has launched himself to success through trading. Many traders look up to the businessman and want to copy his strategy. The bad news is that his game plan cannot be mimicked by just any trader. Making huge, highly leveraged bets requires experience, bravery, and obviously one would need a large sum of money in their account. Some traders might have the resources to do this, but those that don’t can still take some very helpful tips from the billionaire.
Consider his belief that booms and busts are caused by trader’s irrationality. You could also study macroeconomics and plan your trades based on that information in order to trade with the same thought process as George Soros. In conclusion, every trader could one day find themselves sitting in the same place with a lot of hard work and determination. Even if you can’t follow Mr. Soros’ strategy exactly, his success can still offer some important trading lessons.
If you don’t already know what your trading style is, it’s important to spend the time learning about the different styles so that you can figure out what type of trader you are. Finding the right trading style is one of the first steps on the journey to becoming a successful forex trader. Once you’ve […]
If you don’t already know what your trading style is, it’s important to spend the time learning about the different styles so that you can figure out what type of trader you are. Finding the right trading style is one of the first steps on the journey to becoming a successful forex trader. Once you’ve […]
If you don’t already know what your trading style is, it’s important to spend the time learning about the different styles so that you can figure out what type of trader you are. Finding the right trading style is one of the first steps on the journey to becoming a successful forex trader. Once you’ve found it, you’ll be ready to start working on your trading strategy. To be clear, there are differences between a ‘trading style’ and a ‘trading strategy’. Your trading style refers to the way you trade, for example, swing or day trading, position trading, and scalping. Your trading strategy revolves around the way that you make your trades and goes into more detail about the reasons why you decide to make a trade when you choose to enter and exit a position, your risk-management precautions, and other factors.
Novice traders should begin by choosing a trading style before moving on and choosing a strategy. If you skipped this step and already started trading, don’t worry, you can still go back and work things around. Below, we will describe the four main trading styles to help you decide which is the best fit:
Day Trading
As the name suggests, day traders trade during the day, often opening several positions per day. In most cases, day traders close out all of their positions before the end of each trading day. This style can be time-consuming – some day traders even complain that they can’t leave their computer to eat or use the bathroom, otherwise, they might miss a good opportunity. Still, this is a popular style, even though it is considered to be risky because of the number of positions one opens per day. We would recommend this style to traders that have enough time on their hands unless you’re considering using a forex robot to trade for you if you don’t have the time.
Swing Trading
Swing trading is essentially the opposite of day trading in that traders usually open one medium or large trade and leaves it open for a period of days or weeks so that it can accumulate. There are some advantages to this style because it is considered part-time and can be taken up alongside regular job hours if you wish. On the downside, most brokers charge fees for leaving positions open overnight, and this can really add up if you’re leaving your position open for several days, especially considering that triple charges often apply on a certain day of the week. The positive side of swing trading is that it doesn’t require much effort and it’s even been said that the best traders trade less often.
Position Trading
Position trading is similar to swing trading; however, traders actually keep their positions open for months or years instead of days or weeks. These traders are looking for more historic price movements and can really capitalize off of those movements. This doesn’t require much time, as you barely have to watch the markets, but you do need to have a strong belief that the market is going to go up in the long run.
Scalping
Scalping is our fourth trading style and is like day trading, with the main difference being that traders can make hundreds of trades per day where day traders make less. Each and every market movement is an opportunity for a scalper, and they attempt to make small profits from those movements. Over time, profits add up to a substantial amount, although one of the downsides to scalping is that one large loss can eliminate the multiple wins that the trader worked so hard to obtain. This style is considered to be intense but rewarding when done correctly.
The Bottom Line
There are several different trading styles out there and it is important to find the one that suits you best. One of the first things to think about is how much time you actually have to trade, considering that day trading and scalping require more time spent at the computer while swing trading and position trading don’t require as much attention. The pros and cons of each style are also important, as some styles are riskier but can be more profitable as well. Once you figure out which trading style is the best option for you personally, you can put much more time into perfecting your trading strategy.
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.
[embed]https://youtu.be/3UzHBYVKOkk[/embed]
Hello, and welcome to this latest edition of courses on demand brought to you by forex dot academy. In this course, we will be discussing
[embed]https://youtu.be/3UzHBYVKOkk[/embed]
Hello, and welcome to this latest edition of courses on demand brought to you by forex dot academy. In this course, we will be discussing
Hello, and welcome to this latest edition of courses on demand brought to you by forex dot academy. In this course, we will be discussing leverage and margin. There is, of course, inherent risk when deciding to trade the financial markets. So, just before we begin, please do take a moment to familiarise yourself with the following disclaimer.
So, let’s go straight in, and untack all the real reason behind the risk or the real availability for risk in trading the financial markets leverage, first of all, will have to define what is leverage, and actually, give it a good explanation with. So, me various examples obviously you’re aware as financial traders that there is an element of risk, when trading the financial markets it’s how we tackle it’s how we approached that level of risk in our trading actually will deliver success over the long term. So, we’ll explain that in a lot of detail, then we’ll move on to discussing notional trade sighs when we decide to trade these markets, whether it’s a Forex pair or whether it’s a commodity like gold oil silver perhaps. So, things like coffee cotton there’s always a notional trade sighs how much of the actual commodity or asset are you trading in the real world, and how does that relate to the initial capital that you have on your trading account that then brings us nicely into discussing trading Lots, and that’s really how we assess, and how we attach a level of risk to any position that we love to take, and trade in the financial markets we look at both 0.01 lots, and 0.1 lots, and of course for warm lots, and we can always refer to those as micro-lots many nuts or the full training lots as well. So, we look at that in a lot of detail will then discuss leverage itself as the risk factor, and how that relates to margin on your current really your margin is a good faith deposit for your ability to actually take on. So, risks in the financial market, and then we’ll discuss that actually practically on the trading platform looking at taking on. So, me risky trades taking on. So, me not. So, risky, and I’m really discussing the difference between those positions really, and hired manufacturer training in the markets. So, let’s move on, and what first of all is leverage well within the financial services industry itself hedge funds, and other financial institutions send and receive short term loans to one another, and this is of very large amounts of money. Now, it’s perhaps for a very short time they may lend perhaps at ten million dollars ten million euros to over the weekend perhaps for short term rates or for. So, rt of short term positions just to actually have that extra capital to hold as margin as well this is to allow them to assume more risk and increase the leveraged size of their own positions, and what we refer to this in the financial markets in terms of financial sector trading is gearing up. Now, that it’s actually no different to our own trading as regional traders we – as market participants can gear up by accessing higher levels of capital with which to trade from, and that’s done via the broker this enables retail traders to enter trading the many asset classes that offer leveraged products such as contract for difference okay. So, that would be the more common approach we would look to trade these markets; obviously, there are other products leveraged, such as binary options, and perhaps futures contracts, and perhaps. So, me spread betting accounts as well are often available through the retail traders we prepare contracts for difference just given the structure of the product as a leveraged product as well leverage itself allows traders to increase the buying power of their initial capital in order to profit from smaller fluctuations in the price of a financial security. Okay, this security may perhaps be a futures contract or a global commodity like oil and/or commonly a CFD on a particular forex market like the euro US dollar. So, let’s just reverse back on this, and discuss this in a little detail. So, whether we decide to trade, something like perhaps oil the oil market well, if we think that the price is going to rise in oil we don’t actually look to buy that to actually physically own that commodity, and may be stored in a garage for a period of two weeks until hopefully the price rises, and then we can sell it for a profit no, no as traders as market participants we look to agree with these level of contracts in the market whether it’s futures contract or whether it’s a contract for difference it’s between two parties one agrees to buy one agrees to sell the asset at that price, and they simply speculate on the price that actually that product itself allows us to trade the leveraged product of perhaps a barrel of oil which is maybe too expensive or too difficult for us to actually access.
So, that’s the main point leverage effectively enables traders to actively participate in financial markets that would otherwise be inaccessible or perhaps too costly to trade, and again perhaps a too costly to trading example would be well perhaps. Something like 10000 euros, if you want to trade the notional trade size of 10000 euros you don’t necessarily have the capital for 10000 euros but you want to take advantage of these moves in the markets well leverage will allow you to do that perhaps with the smaller current size of a 500 euros you could maybe access that amount, and given the leverage factor on your account. So, let’s delve into this in a little more detail again to reiterate leverage makes trading in the financial markets more accessible to you, and me okay leverage is essentially the rate of multiplication to which you can trade. So, it’s effectively the multiplier or the risk factor of your trading position I came to use the euro or Forex example it can actually allow us to trade very large sums of money perhaps 20,000 50,000 euros of notional tray actual cash value against the depreciation or an appreciation of that currency, and again from perhaps a smaller amount size of 1000 or 2000 euros. So, we can actually access these markets in such a way to take on leverage, and risk this multiplication of your funds held on deposit allows you to trade bigger size, and access more markets, and leverage allows you to pay less than full price for a trade giving you the ability to enter larger positions than would be possible with your current funds alone. So, that is the same as suggested there just with the financial sector itself, and they want to take on headphones often do this pension funds as well, when they want to trade in the markets will look to the financial services sector for short term money on deposit simply those interest rates, and that’s that’s effectively what LIBOR is for in terms of short-term money lending, if you’re in the UK the London interbank reott effectively for loaning a short term money to another party but the aim is to a gear up for your investment. So, that you have access to larger capital to make the trade perhaps once the trade is performing you can take. So, to profit out of the trade, and within a few days look to give the money back into the financial sector. So, that’s something we can do with a smaller current says we can access these marketplaces, and actually look to trade quite large sums of money in terms of notional trade size. Now, obviously there is risk involved, and not, and we’ll discuss it throughout this webinar the assumption of leverage is an essential product for the retail trader to trade the global financial markets okay the ability to greatly increase notional trades as expands our purchasing power as traders it is absolutely imperative that this acceptance of risk could be understood, and respected, and that is why we have 4x that Academy here of plenty of risk management courses we are big avid advocates of actually trading the markets with a very consistent approach in terms of developing risk management I’m protecting capital, and it’s it’s very much the professional approach in terms of not looking to trade or speculate in a gambling manner with these marketplaces always respect the risk that you’re trading. So, try to explain this in a detail perhaps for the beginner or novice trader there’s perhaps thinking of entering the markets for the first time we can use this example to highlight leverage quite quite well, and the question I would like to pose that do you know any learner driver who takes their driving lessons in a Porsche absolutely not I do not indeed, and that I would assume would be the same answer for many of you learning to trade the financial markets here do you know any learner driver looking to start their lessons by driving a Porsche no I would why would apart from the obvious why would that not be a good idea well it’s the same as leverage that we converted in this manner, if leverage is used incorrectly it can have a devastating effect on your trading account. So, novice traders, what can they often do they could take too much risk, perhaps started an account with 500 euros, and effectively, unfortunately, blow up that account or lose everything, and that’s because they’re taking on too much risk.
So, let’s go back to our Porsche example if we’re looking to start our first ever driving lessons in a Porsche well, I know that it’s quite sensitive to drive; it’s quite speedy it’s quite fast perhaps the gear change is much more difficult than. something more simple to drive a Ford Fiesta it’s just a very dangerous car for a new beginner to learn how to drive. So, let’s look at our training occurrence here, and that might be the same for a 1000 euro current at perhaps four hundred to one leverage well what does that mean, when you actually look to set up an account with a broker, and they offer you different leverage accounts more generally they will offer two hundred or four hundred to one that actually means that you can trade with your 1000 euro account a notional trade says potentially of four hundred thousand euros. So, if you were to hypothetically, if you were to start your first account with one thousand euros, you could effectively take a risk in the financial markets of that amount of four hundred thousand euro. So, if you take the full risk on your account, one hundred cents. So, you can see quite clearly, and quite obviously that that would not be recommended you’re taking on too much risk, and the market really doesn’t have to move against you too much for the year 1000 euros to effectively be wiped out let’s move on to our 1000 euros hypothetically with an 800 to 1 leveraged trading account that has the potential to trade a notional trade size of 800 thousand euros. So, can you see that that is just too much leverage to access, if we’re, if we’re actually looking to trade the full 100 percent risk on our trading account what we want to do is aim to reduce leverage as much as possible, when trading, and learn how to drive in a much more suitable car why is that well it’s simply safer guys it’s simply safer we want to approach the markets with our education we want to develop consistency, and it is true that, when you take on more risk, of course, there is more profit available, but you might have four or five very very profitable trades indeed, and then, if you have no risk or are taking on too much leverage or perhaps no stop-loss you can’t often see those earnings those winnings erode quite quickly. So, trying to develop your idea of leverage trying to take that on board with your risk assumption is always the wisest approach, when deciding to trade these financial markets, let’s discuss notional trade science. Now, a very important factor indeed, and one that is often overlooked by many a financial market participant notional trade size or n TS is the overall position size over-leveraged trade wherein a small amount of investor money can control a much larger position in the markets accurately calculating trade size is a crucial component of risk management strategy what we should do is accurately be aware of the notional trade says for each market you trade. So, what is this really in layman’s terms what does this mean it means we need to know what we’re actually trading, and I don’t mean what market or product are we trading gold, if we’re likely going to be trading the gold market well we know that we’re going to be trading gold as we open the market, and begin to trade what it means what it refers to is, if we are trading gold do we know with our trade says perhaps how many ounces of gold, if we decide to trade perhaps the oil market do we know effectively how many barrels of oil we decide to trade at our given volume, if we decide to trade the US dollar against the Canadian dollar do we know how many US dollars we actually have as a position size, if it’s, if we take a rather large trade size, and we’re in the market trading, and it’s moving five euros per pip, and we think that’s perhaps good if someone wants to turn around, and say you’re actually trading 200 thousand dollars there of actual cash would that shock you. So, these are all the things that actually relate to trade size notional trade size, and the amount of leverage that we were assuming in these markets. So, let’s go through just for. So, me examples here you have a table just jumping in from the right there, and we have first of all forex our forex markets there we have equity indices, for example, the footsie there in the UK, and we can discuss commodities, and we have an I mean we have gold here as the example as well. So, let’s just go through them here in terms of defining the notional trade size for these markets well one standard lot for the forex market sure as you look across either the majors minors are perhaps. So, me more exotic pairs 100,000 of the base currency is your one lot. So, we can see that one standard lot here is our base of 100,000. So, that’s quite a lot that’s a large trade size even by placing that. So, here’s our 100,000 for our one lot a one mini large-size is ten thousand at Euro against the dollar for our base currency, and that is zero point one zero lot, and what we call there is the mini lot, and then what we have is 1 micro lot size, and that is warm thousand of base currency, and that is perhaps rather 0.01 of trade size.
So, you can see it’s quite well defined in terms of looking at the looking at trading the Forex pairs that’s that’s actually the same in terms of input value for the embassies we have a 40 which is simply one index is one, and then obviously the fraction of that is hand, and 0.01 index point is actually 0.01 micro lot size the gold as well considering it’s a commodity we have gold weight in ounces. So, actually, one standard lot in the gold market is 100 ounces of gold. So, we know that I’m not as effectively r1 lot, and one mini lot says there is 10 ounces of gold obviously as the fraction, and then, if we decide just to keep our risk small we want to train to safer how this market appreciate, and depreciate in terms of one ounce of actual weight gold we know that we can trade in 0.01 micro lot for the market. So, very self-explanatory there, but it is actually in position sizing for these trades that you’ll become more accustomed to trading the markets with your risk appetite, and perhaps your strategy sellers. So, perhaps you want to trade one of these markets here with your actual position says, and you’ll need to know then what size you’ll actually look to trade let’s use an indie see here, for example, we want to trade the foot see, and we have an account size of perhaps 1000 euro you’ll often, and do. So, mathematics or. some equation to let you know, and we have obviously a risk management calculator to help our students with this that perhaps um if you want to take a 2% risk on that trade, it might be. Something like 0.04 that you’ll be looking to trade on the actual account. So, this is how we look to a position in the markets with you know our account size relative to the amount of risk we like to assume per trade. So, let’s move on, and I’ll actually look at this honour a trading platform regarding specifically the trading lots of markets. So, here we have our new order, and that is just in the top left of the mt4 platform that is where we look to execute all of these trades, and then we get our order box that will pop up centre screen here then we have the instrument, and here we have the Euro Pound, and it’ll tell you euro versus Great Britain pound. So, obviously, the euro is the first leg of this currency pair, and the pound is the second currency pair. So, when we see this market rise that would dictate to us that the euro is stronger than the pound and, when we see this market fall that would dictate to us vice-versa obviously that the euro was weaker than the pound, and the pound is stronger than the euro during the trading period what we can see here that we have highlighted in yellow is our 0.01 trade lot size micro a lot I know, if you result of our notional trade size again we can see that a 1 lot within this market is relative to 100,000 euros 0.01, therefore, is relative to 1,000 euros of cash to trade from the appreciation or depreciation of this currency pair. So, that’s fineness can you see the difference there that’s absolutely fine in terms of a very small risk trade let’s move across to perhaps looking at. So, me other markets here we have there’s that the Euro Pound again we can actually see a one-load notional trade size again is actually imported into your volume, and that is relative to 100,000 euros of trading in terms of actual cash that you look to trade across this market. So, you can see that’s a huge position to take in these markets, and here we have a US oil WT crude oil, and we have imported into our volume zero point one zero or zero point ten, and that is referred to as a mini lot what does that mean in terms of how many are notional trade size for how many barrels of oil well we know that one lot is one thousand barrels of oil, therefore, the fraction of that zero-point-ten is 100 barrels of oil. So, that’s a relatively a strong position to take in the markets, but it’s within good risk management it would depend on your account size of course but you can see that there is a big difference from your wallet to the zero-point-one lot in terms of trading size on both the cash that will rate relate to on your trading occurred, and the size of the actual market position that you’re taking with 100 barrels there in the market. So, let’s move on to discussing their leverage, and margin, and what that means for our current well the margin requirement is the amount that we take in from your account, and he’ll as a deposit when a trade is opened ok different markets have different margin requirements. So, do be mindful you do need to be careful with the amount of margin, and on requirements that you will need to assume. Some of these trades margin is a part of your net floating balance, whether it is positive profit or negative for loss. So, what does that mean well that simply means, when you start your initial account let’s say you start on the cart with 1000 euro, and you accept one trade, and perhaps at one percent risk as that market moves either positive or negative negatively let’s say for discussion purposes it moves into a profit area, and the profit on the trade is 23 euros then your account size is 1020 three years with your open position. So, the actual floating balance of your margin is actually relative to, and the positions that you have concurrent in the market again on the flip side, if you have 1,000 euros, and for. So, me reason you have a 200 euro negative position well, then your margin will be much less. So, it’ll be 800 margin considering you have a negative position on a current balance margin can become a sizeable amount of your current balance depending on how many trades you have open on the size of those trades. So, what does that mean again well it means that this good faith deposit this margin that you are able to put up in terms of accessing these markets, and looking to trade this risk is actually held on your recurrent I’ve just at that moment you’re in the trade.
So, again let’s use an example of a warm thousand euro account, if we were to help spur take take on five trades in five different markets at the one time that may reflect quite strongly on the actual amount of margin we have left because, as we increase or as we put on each extra trade there will be a certain amount of capital that needs to be locked away as a good-faith deposit in terms of accepting the risk on that trade. So, it’s not always a good idea to perhaps have you know 20 30 open trades at the one time specifically for those smaller occurrences I’m not lead us on to discussing that it can be a barrier to trade. So, if you just think logically about that I’m you have 1,000 euros, and perhaps you’re trading in five-six different markets, and some of those trades are winning and some are losing and Some are perhaps 50 euros, and to the negative well then your margin is gonna be greatly affected by that perhaps you only have 100 euros left of margin which is not good. So, if you decide to take on another trader perhaps see a very good technical service that you do want to take, you might not have the capital, and in terms of actually, and putting out trade on for risk. So, it can become a barrier to trade okay what I want to do is really explain this to you in detail, and practically on the trading platform leverage, and trading risk. So, when we discuss leverage, when we discuss margin, how does not relate to actually our trading risk as financial traders well here we have the euro US dollar here, we have no technical analysis, and I would like to point out this is just our jafx demo current. So, there’s going to be no analysis in this trade, but in terms of looking at more generally, if we zoom in on the price action, we can see that we have reached a bit of a consolidation period above these highs, and lows here. So, we’ve just seen a bit of a pullback with today’s price action. Perhaps this could look to trade further toward the down says. So, what we will do is actually look to sell this market what I’m going to do is to place three trades with different associations of risk or notional trade size or leverage to show you how that may affect your trading account. So, we can just open RM or balance here at the bottom this is our our actual screen to let us know what trade positions that we are in, and what we can actually assume in the markets what I’ll do then is place three similar trades again this is our euro US dollar let us place first of all as we press the order this pops up, and on the other screen there let’s just change this to 0.01, and we’re going to trade the eurodollar again we’re selling this I cannot stick here just to the right of the new order screen, and looking for this market to continue. So, I’ll sell a notional trade size of 1000 euros, i.e., a volume of 0.01 I’m not more get how that trade has been placed there. Now, what we can see straight off the bat is initially we have accepted the trade position it has cost us in terms of the spread of the market which is absolutely fine that’s the cost of doing business in these financial markets we can see that that is effectively costing us not a lot at all the Commissioner has been 0.04 switch for centrally it’s nothing that will really affect our trading over the long run considering we obviously look to become profitable traders, and that the position says itself as the market trades it’s really trading, and with you know 1/2 cent per pip.
So, that’s fine, if the market was to go perhaps 100 pips we might look to make you know in an around 1 to 3 euros. So, and what we’re looking for is actual large moves in the market. So, what I can do is just to show you what this actually relates to. Let’s just go back to the platform here, and what we’ll do we’ll modify this order, and we will look to perhaps just pick a price point here for our take profit perhaps 1 2281 1.2 281 as we can put that into our platform we can scroll over, and that will tell us that, if the market rates down from this trade we’re actually looking to make at twelve seventy-two. So, twelve dollars and seventy-two cents. So, that’s absolutely fine. You can see how the risk on this trade is small that, if the market moves down today or over the next two days, we’re looking to make twelve dollars off our trade. So, we’re feeling how are we feeling about this trade quite objective to the trade position we’re not under any pressure, of course, of course, we look to put a stop loss in there which I didn’t do, but that’s always how we approach this markets again this is it the more current really what I’m looking to show you is the effect of leverage on this account. So, let’s move on to actually placing the same trade really we’re going to sell this market again with our new order, and we’re actually going to trade a zero point one. So, there we have placed the exact same trade, and you can see just as I had at the end with my desktop, and again that the second trade has actually taken on a little more leverage, and there’s actually showing us zero-point-six, and it’s moving $0.10 per pip. So, you can see that the spread is actually the risk factor is multiplied we can see that’s affected in the Commission at 0.4 cent, and and then 40 cent for us for our trade, and again as the market moves the risk factor has been multiplied we’ve taken on not one thousand but ten thousand euros of notional trade says, and the market looks to move. So, if the market then trades down to this level, and Hort a profit is there will look to make not twelve dollars, and seventy cents but 127, and dollars. So, you can see it’s been multiplied there. So, let’s just go back again, and not that isn’t a hugest trade but you can see it’s relatively large in terms of what we’re looking to do in the markets perhaps it’s too much for us to trade what is certainly too much for us to trade let’s place the exact same trade again with a 1-0 lot a full lot of currency, and what this is relative to is 100,000 actual euros cash in the markets, and will sell at that price. So, straight away that, we can see that the risk factor has been multiplied we can see not we’re effectively in the same position not that has cost us seven euros for entering the trade we can see the commission for the trade was four euros. Now, four euros is a relatively small amount considering we are looking for a very big move, and obviously we would make quite a sum of money, if we were correct, and this market actually looks to trade to the downside but what we can see is the leverage, and the margin here we have in the current balance of seven thousand four hundred, and thirty-three dollars we only have a margin there of 275 for the current, and the free margin is actually seven thousand. So, we’ve taken a fall 275 dollars from a margin, and that’s quite significant in terms of one two three trade positions with our trade size as well I should point out that forex markets are notoriously cheap to trade as well. So, that’s why they’re often preferred, if you’re looking to trade other assets, that margin would be much more extensive in terms of the margin for capital needed. So, that’s just one example we can see we technically we have at three positions in the market we’re selling the market there or more or less the exact same trade what you can see the risk factor has changed for trade one-two, and three here we can see as the market moves it’s moving in smaller more medium on very large incremental shifts in actual cash itself. So, people react very differently, when trading in this market, and taking on too much risk let’s discuss the webinar then in its review what we discussed was leverage itself, and training to find it with. So, me good explanations we buy. Now, you should know inside out notional trades as what that means for how many perhaps barrels of oil were looking to trade how much currency were looking to trade, and what that means in terms of training Lots on your trading platform we know leverage is the risk factor, and what that really means in terms of margin on your account or the amount of capital needed for placing trades, and how does that relate to you as a trader with your own risk appetite training aids financial markets that’s always the key questions that finishes off our assessment then of leverage, and margin a very very key principle for us as financial traders. So, all that’s left for me to do is thank you very much for joining us on this installment of courses on demand brought to you by Forex Don Academy we do hope to see you very soon, bye for now.
:max_bytes(150000):strip_icc()/GettyImages-940035118-5b31152da474be0036210e94.jpg)
You are naturally looking at the news: Looking at the various news sites and economic calendars is not really something that newer traders do, yet when you are becoming an expert trader this should be something that comes very naturally to you. The start of each day, the evening before, anytime is a good time to check the news and the economic calendars. It can provide you with a lot of information. Eventually, you will do it naturally without even thinking about it. 
You no longer blindly follow others: When we start out trading, we don’t really know what we are doing, due to this, we often take the words of others with a little more attention, often we will simply place trades because someone that we think is an expert has placed them without really knowing why they have been placed in the first place. Instead, we no longer blindly follow others now, instead, we make our own trades, or if we do take another’s trading idea, we know why they are trading it and have a full understanding of the trade before we place it.
You still understand that there is still a lot to learn: You can never know everything, in fact, you can never know a lot, new traders may get the basics and then stop learning, but an expert will do the opposite. An expert will know that there is always more to learn, so much so that they spend a lot of their time still learning. New strategies, new assets or currencies, pretty much every aspect of trading has an unbelievable amount of information that is constantly evolving… So a sign of becoming an expert is the fact that you are able to continue to learn and still have the drive to continue to learn.
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 
