FX Education – Forex Academy

Last month a private symposium was held in Las Vegas, Nevada, sponsored by a narrow circle of international forex traders. The event hosted more than seventy high-profile traders from around the globe. Traders were debating about some of the most sensitive topics and the ways of risk managing. What came up as the most important topic was: On how many currencies should we focus on during the trading session? What is the right balance between our abilities and the optimal number of seized opportunities? And does more trades mean more profits if we are consistent?

Among all the exotic currencies that are out there, here we want to focus on eight majors: the USD, Euro, Pound, Aussie, CAD, NZD, JPY, CHF. If we take a combination of those eight major currency pairs and minus one, we will end up with twenty-seven. Yes twenty-seven, all the cross pairs, minors, and majors, however, you name them.

Why minus one? According to some professional prop traders, EUR/CHF is the least trending pairs, therefore in a positive correlation. The euro/Swissy has been tied together for such a long time that it doesn’t really trend in a way where it can trip our algorithm and where we can actually earn money. It is simply not worthy of our time, it might be a headache for now if you are a trend following trader as these professionals are. Focusing on this question from a different kind of angle might just be integral in changing our forex trading forever, regardless of how long we are trading, how successful or just in the process of learning.

For those people who trade a lot less than twenty-seven, like just one, three, four, we want to explain why that might be a gigantic mistake and how the mentality behind that approach might seem downright silly. What could be profitable about trading this way is, after we dive deep into our algorithms, little tools, and indicators that we use, we would have potentially a twenty-seven really good chances for success. Many people don’t do that. Someone who only trades a few different currency pairs or sometimes only one currency pair. Some people only trade euro/dollar because they’re assured that’s the most liquid pair, or they believe that the correct path to benefit is mastering at one currency pair before they move on to a different one.

Liquidity stands for the ability of assets to be sold and bought immediately closest to the market price. The Euro/dollar is the most liquid currency pair which accounts for around 29% transaction volume in the forex market. Therefore many don’t even consider trading with other pairs of currencies. Here we think that the euro/dollar isn’t a great pair to trade, especially if you are a newly-born fish in the sea. For somebody who is a beginner in trading, it has so many obstacles against you. So if you really insist to trade only one pair, don’t make it the euro/dollar. That might be the last pair you should be trading with.

Next thing, the fact that people who trade only one pair because they want to be good at those before moving on the other ones mean they don’t know much. Just because the GBP/USD likes to stay in range or AUD/JPY likes to trend, that doesn’t mean it’s going to do that into the future. A currency pair trends, it falls into a range, it consolidates, it might go crazy right after that…just like every other currency pair out there. If we think that some currency pair is range-bound, the one time it stops being in a range we could be doomed, so we better erase that conviction from our heads.

Currency pairs don’t have their own unique movement, the volatility might be specific but not the movement. If somebody did well trading with euro/Chinese yuan, for example, it is not going to be like that forever, it might be moving through the path that strongly supports the way that particular person likes to trade. All of that is going to change, we need to be careful and pay close attention. We don’t want to develop bad habits.

Further on, we want to trade the daily chart exclusively according to certain trade experts. They believe more than anything that the daily chart is the far superior chart to trade when you are using the trend following strategies. Trend following is also statistically proven to be the best method of trading. Every technical tool, everything that we use works better and more consistently on the daily chart than any other chart out there, according to their experience. Every single time the daily chart turned more consistent results even if we use horrible tools. Trades win more often, and we shouldn’t spend more than twenty minutes managing our positions. So maybe we should consider making that switch or start trading this way from the very beginning.

Probably the biggest reason why we should be trading many more currency pairs than we currently are is that we’re severely limiting ourselves by only trading one, two, three, or four pairs. We want to have a well-balanced system in place and make a lot more money than others who trade with just a few currency pairs. If we trade with twenty-seven pairs we would have much more opportunity for success, we want to open our trading horizons. We need to warm up our algorithms, our little scales that we put together for ourselves on a technical level, we need to duplicate them on twenty-seven different currency pairs on the daily chart and we are always going to be in a comfortable position.

This is how we are going to create the best chance of making the most money possible in the market in the long run. Most of the money-making leading lecturers in a symposium agree on this. If we try to use those trading principles and go trade twenty-seven different currency pairs, all combination of eight majors, exclusively trade daily chart, we might be a lot further ahead than many other traders. Our goal should be to set up our best chances of winning in the forex because, in the end, it is all about winning.

Crypto traders love to engage in community discussions, sharing opinions of events, and jointly weighing their options. While group support has its psychological benefits, in the world of trading groupthink often implies a lack of independence and strategy. Therefore, to achieve sustainable growth and profit, traders sometimes need to go outside their immediate communities and adopt skills and knowledge externally. Based on the analysis of the crypto trading scene, one of the key areas requiring more effort and learning is planning, one of the essential pre-requisites for dealing with the markets we trade such as forex.

To generate long-term success, forex traders put the effort into understanding the market’s needs and analyze tools and information they gather through research. The most successful ones recognize the importance of constructively assessing the data they acquire because it will essentially serve to develop a plan and the strategies which will allow them to reach the goals they have previously defined. Of course, acquiring a good amount of money is plausible even without initially devising a plan but, in reality, these instances are merely coincidental, and to render lasting success, one needs to adopt an equally long-term approach.

A number of different testimonials and experiences point to the ratio between planning and outcome. If you are intent on trading cryptocurrencies and develop your trading carrier, you may need to let go of the lottery mentality and start viewing your participation in the market holistically, not as individual, unrelated steps. A macro perspective will help you see how your choices correlate with global events and where you can make improvements so as to mitigate losses and increase financial returns.

Remain Loyal to Your Plan (Within Reason, Of Course)

Making money overnight can often hinder one’s attempts to remain loyal to their plan, which can be detrimental to their entire trading careers. If we make a conscious choice to stick to the original idea of how we want to act in our market of choice, we often assume that such an approach would immediately generate constant money flow. However, devising a plan and committing to it also implies accepting that there would be periods of lower returns and no activity as well. Even when prevailing conditions seem to be unfavorable, every trader has a responsibility to assess the circumstances as objectively as possible, endure the hardship against all odds, and collect the profit at the best possible time.

With regard to investing, if you have already collected some crypto and you desire to obtain some more, you should be cautious about overleveraging. A trader who holds a cryptocurrency may not thus want to exceed 5% of portfolio value. Even if overall conditions worsen, with such an approach traders can still earn money from their investments. Moreover, the upside-downside ratio can be indeed helpful in gaining a new perspective on this matter, in that if everything collapses and a trader loses all money, the upside on such investment is incomparably more satisfactory. Therefore, if you use this strategy, you know that you can either lose only what you initially invested or truly amass a fortune.

Another important notion every crypto trader should incorporate in their planning is diversifying, as we cannot exactly predict which direction the crypto market is going to take in the future. Even if we turn to some experienced crypto traders for advice, we will learn that they may not necessarily be on the same page with regard to their outlook on different cryptocurrencies. Hence, the more we know about different coins, the more security we can guarantee in trading in the crypto market.

Hatching Your Escape Plan

Apart from practicing discipline, outlining a plan for your trading also entails defining an exit strategy. Protect your investment by thinking of how you can improve your buy and hold strategy for different coins and tokens and invest in developing money management skills. Despite the current favorable conditions in the market, every trader must absolutely think of various scenarios and have ready solutions both for the challenges which have already occurred in the past and the hypothetical ones.

Traders are often afraid of going after a huge return because they fear potential losses. As long as you weigh out the upside-downside ratio and construct a system where your foundation is always protected, you should follow trends and use all the chances to increase your finances. Every trader should create a hierarchy where the basis should denote the majority of their investment. Nonetheless, such a strategy does not imply that all other layers will not render any success, but one should bear in mind that the higher the layer, the higher the leverage is.

If we use cash or stablecoin as the base of our investment strategy, we know that all other investments we make will not endanger our stability. The very next step could involve bitcoin or XRP as the second most stable layer. Then, we can invest a smaller amount of money in altcoins of choice and possibly use several different coins because we may not always be sure which one is going to take off at that point. We can, as the ultimate layer, consider longshots because, even though we are not going to allocate large amounts of money for these investments, we are aware of the possibility of upside, which is essentially why we are devising this strategy incorporating these high-leverage investments.

We have yet to discover what the best time to buy is, but if you believe that there is a likelihood of any cryptocurrency moving in a favorable direction, you do not need to wait for it to plunge to any lower value before you feel certain that you should take this step. What is more, if you have analyzed the market, and especially if you have already seen some upside or witnessed a similar activity before, there is no reason for you to be shy and thus fail to earn a much greater amount of money. The ability to make such decisions for yourself is an extremely important part of being an independent trader who is not dependent on the news announcing upcoming events in the crypto market.

What Comes Next for the Crypto Market?

Looking into the future, traders feel optimistic claiming that the crypto market is not only going to persist but that some coins are going to gain in importance in the coming years. Some even state that bitcoin is going to become the main vehicle for all major global transactions. While the crypto as we know it may last the test of time, we cannot know for sure how the individual interest in the crypto market is going to change and thus affect the coins’ value. Even if the market keeps generating interest worldwide, we cannot tell which actions governments may take so as to alter the amount of money individuals get to earn.

History has shown how fiat currencies often have an expiration date and we cannot know for sure whether cryptocurrencies would take over at some point in the future. However, whatever the short-term and long-term circumstances you face as a trader, your greatest ally against external conditioning is planning. Incorporate objective thinking, money management skills, discipline, and strategizing into your trading and most importantly invest in nurturing independence, which will ultimately help you stay on track with your plan.