Often times we’re confused, to say the least, in choosing a suitable forex broker that we’re comfortable with and one that we feel will make us more profitable. Some brokers cheat their clients and trade against them. The reputable ones don’t, they are even afraid to do so. So what are some of the most important things to look out for when deciding on which forex broker to deal with? Well, I have gathered what I think are the most important things to tick off the checklist when you’re about to do trade currency with a dealer or representative.
Location of the Forex Broker
One most important thing that I like to think of when choosing a broker is the proximity of the broker to me. How far away from me can I find the office of the broker? Are they in the same country as me? Can I easily commute to them to file a complaint or have someone to talk to in person if problems arise? This is a serious point to consider if you’re an investor who cares about his money. The one thing you would want to ever avoid is having your money locked up with someone and then not having a way to meaningfully reach out to them other than phones and emails, which can be ignored at will.
How Big the Broker is
Why does broker size matter? Well it’s logical, the bigger a broker is and the bigger their capital, the better leverage and spreads they can provide. And I believe you’d agree that spread is an important factor when it comes to the success of a trader. When we’re looking for brokers to choose from the most important thing we look out for is how much spreads their providing, be it a fixed spread or a floating one. Also trade executions on bigger brokers are better because they have better liquidation. Don’t ever choose a broker without taking into consideration how tight or wide their spreads are. You’d want to compare a couple more brokers before putting in your hard-earned money if you intend to win.
Is the Broker Regulated
In the forex market, there are several bodies that make sure forex brokerage firms stick to certain rules to protect traders and investors. For instance in the USA, one regulatory body that guides trading businesses is the National Futures Association (NFA). The NFA is there to protect investors, so if you’re trading with a broker that’s under the jurisdiction of the NFA, you can just go to them and file a complaint and they’ll look into whatever problems you’re having with the concerned brokerage firm. Same is the case with other regulatory bodies such as the The Financial Conduct Authority (FCA) in the UK. The Financial Service Authority (FSA) was functional from 2001 until 2011, so if any broker claims they are FSA-regulated, you need to get suspicious. I have seen some brokers in 2015 that claim so. Interesting right?
So what if your broker of choice is not NFA or FCA-regulated? It’s your duty to do some little research in finding whether your broker of choice is regulated. It’s not difficult, just ask them or check their website. Then, check the credibility of their regulatory body and actually, if possible, find a way to confirm that the broker you chose is in fact regulated by them!
Available Trading Platforms
Personally, I find it easy to trade using the MetraTrader 4 (MT4) platform. It has a plethora of tools that makes the life of a trader easier. Even though I don’t use most of them, it’s good that they are there. Dukascopy’s JForex platform is not bad either. But then of course you’d have to trade with Dukascopy, which in itself is not a bad broker. Others prefer Oanda’s fxTrade Desktop. If you haven’t found a platform yet, it’s safe to experiment on as many platforms as possible to see the one that best fits and gives you some comfort while trading. And this is the only time I’d recommend using a demo account. I have a reason for this.
But I bet most traders will fall for MT4 anyway unless they have very special reasons not to, which is understandable because, hey, at the end of the day, it’s your money right?
Most brokers have different account types that they offer. This is the easiest thing do. Among the factors to be considered when choosing a forex broker is to check the account types that they have. Some of these accounts require higher deposits, some offer different kinds of spreads et cetera. Your job is to look through them as part of your to-do list when you need to find a forex broker to start trading with.
This comes in last, but I must mention that it’s quite important. If you’re lucky in finding a broker that is in the country in which you’re located, then of course they’ll speak your language. I have seen some traders open trading accounts with brokers that offer only English support when they (the traders) themselves can’t communicate very well in English. You know what I call this? Stupidity. Not only is the language important in choosing your broker, you could also check how often or how many days they are online for a live chat when the trading session is open. This will mean a broker that offers live support 24/5 is quite ideal. Exness for example provides 24/7 live support. This is not the reason I like them but it’s a cool thing to be able to talk to them whether or not the forex market is open.
There are other minor points to check out when choosing a forex broker. If I missed an important point, please let me know in the comments. Don’t forget to subscribe up above to my mailing list to get my upcoming ebook. You will be thankful.
To your trading success!
Have you ever set a stop loss or take profit and felt that price might go down more but then bounce back up again so you extend the stop loss? Or that you could make more profit so you extent the take profit more and ended up losing? This is not a problem for only people starting out as new traders but also a dilemma that even professionals sometimes face! I like to call it the SLTP Dilemma for obvious reasons.
Often times when I am trading, I tend to feel that I could make more profit so I’m tempted to extend the take profit, most times I don’t but I do sometimes. I don’t like that I do this because then it’d mean that I am not disciplined enough to stick to my own rules. Which is bad. I mean really really bad if you also it. Many traders do this! And statistically the keyword “Stop Loss” is more prominent than “Take Profit” and I guess this is a reason that 95% of traders lose their capital.
Why aren’t we disciplined to take our profits more when we make even just a little pips? Why do most traders fail to set take profits? I don’t get it. It’s either sheer stupidity or senseless greed! But other traders do set SLs and TPs but then they are faced with other problems to alter these thresholds which I understand but don’t support. Once TPs and SLs are set, it’s in your interest to leave those orders to get triggered. If you did your work well, in most cases your TP will kick and you’ll make some money.
Some people say setting stop losses and take profits is for beginners, I beg to differ. These are just tools put in place for traders to use, except that I use my stop losses a bit differently; to protect my profits made so far. I will write a more detailed article as to how I do this and how. I do also set take profits alongside the stop loss orders. But for those traders who have problems with WHEN and HOW to set SLs and TPs, why don’t you just look at trailing stop orders?
A trailing stop is a special type of trade order where the stop-loss price is not set at a single, absolute dollar amount, but instead is set at a certain percentage or a certain dollar amount below the market price. This way you won’t get confused whether to adjust your SLs or TPs, you just leave it and problem solved. Even with this there are complications all of which I plan to address in upcoming articles so stay tuned and subscribe to my mailing list up the pages to get notified of future goodies.
To some extent it’s quite understandable that 90-95% of traders fail. Let’s for a moment forget how some traders can’t control their emotions, are greedy, don’t keep a journal, don’t set Stop Losses and Take Profits. Lets forget about the fact that most of them don’t spend enough time on a demo account to practice and weave out a strategy for themselves. How else can we see some reason why most of the traders fail?
I have been thinking about this for a very long time and came to the fact that the reason may be not so obvious but also very simple. Let’s take for example, a normal person who wants to probably win the Wimbledon and walkover pros like Novak Djokovic, William Renshaw, Pete Sampras, Roger Federer, etc. These handful of guys, are the pros and the few that make consistent profits in the market. The spectators, the crowd watching are the dreamers who would want to play and win that big prize money. Those large crowd are the newbies and that’s well over 95% of people who can’t win the Wimbledon, not now at least, but after years of hard work and constant training and practice. I hope you get the analogy so far. So like any venture that’s being started fresh from the ground up, it’s most likely the stakeholders are going to fail. This is only natural and something forex traders (especially those coming in with a couple of months/years experience) have to accept. Forex trading is like any other profession. The vast majority who fail at it probably don’t even consider it as such. These people are only gambling, and you know what happens at the casino, 9.8 out of 10 times, you lose your money.
Foreign exchange is like all other traded commodities and I’m not quite sure why people treat it differently. Let’s consider one more thing. We know someone like Warren Buffet as a renowned investor. The word here is investor as wikipedia describes him with. I am not sure investors like him stare all day at screens (“unnecessarily”) day in day out to make money. Their speculation are not based on big monitors filled with charts to study. But how many forex traders follow the economic news of the respective currencies they trade? A large number of traders don’t take time to know what moves the market on the fundamental level. I am not sure there’s any normal person who would trade Google (NASDAQ: GOOG) stocks just by staring at charts. To buy/sell these stocks you only react on news. Google wanting (consumer speculation) to give up on Google+ doesn’t sound like a good thing. If this has a big impact on Google stocks, you’d want to be selling. Same things happens with the foreign exchange market. The economic calendar provides us with a daily list of important event that move the market, and only if most of the traders will observe and understand these news events, I believe that high losing percentage won’t exist or will reduce drastically. This is not to say technical analysis should be cut out.
News Affecting Google Stock
I find it disheartening that most new traders enter the market with no knowledge of where and how to find fundamental news. And I know some may say people are trading the foreign exchange market and making consistent profit using only technical analysis, while this may be true, I believe strongly that one way or the other they employ fundamental analysis (without) knowing it indirectly. Proof of this thought is found in the plethora of forex expert advisors (EA) littered all over. Those EA’s have no idea what Non-Farm Payroll nor what the the Federal Open Markets Committee is and how they release news and how their minutes affect traded commodities. And that’s why no EA is profitable consistently if some of them are at all profitable in the first place. Trading technicals, which most traders do is like saying it was 10°C thirty years ago today, so today will be 10°C not taking into account climate change (news about it, in this scenario). Trading technicals alone is nothing more than trading with statistical data. Pattern reading without fundamentals is bullshit in my opinion.
News Affecting Foreign Exchange
Of course this shouldn’t seem like forcing some trading methodology on forex traders. Every individual has their way of thinking and looking at things. This is how I look at the idea of why and how most traders lose. I would like to hear your thoughts on the comments below. If you liked this post please share and do not forget to subscribe to my email list above.
This has been an ongoing debate for a very long time and as far as traders continue to have different strategies and think differently, I don’t see this argument dying out any time soon. I can join in the controversy can’t I? Well, why not? I decided to write about this because I had been seeing this for some time all over the forums and just yesterday, I saw it again! Relax traders, I’m coming to the rescue.
what currency pairs make the most money?
I would like to associate the possibility of amassing pips to volatility for scalpers and day traders especially. The reason is because we as traders need the market to move, bulls or bears. It just has to move one way or the other and it has to move big and wide, this way, if we’re right with a trading decision, we tend to infect others with our sense of humour (hopefully). At least I know for one that I become more social then. A currency pair that’s most profitable for me would be one that is very volatile. There is no pair that’s known to be volatile all day each day of the year, this volatility rotates among most of the pairs. Volatility shouldn’t be mistaken with the most popular pairs because even the EUR/USD can sometimes become very boring to observe on the screen. Thankfully, there are free tools that monitor the volatility of currency pairs. It’s not true that the more popular a currency pair is, the more volatile it is as at the time of this writing the most volatile pair for the past month is USD/MXN with 1,820 pips in price movement, who would have thought.
what timeframe makes the most money?
Are we talking about market timeframes or the timeframes on our charts? Let’s talk about both.
Chart Timeframes: Assuming we’re all scalpers and day traders, trading shorter timeframes will be the best option here. I find the 15min timeframe to be ideal. I do use, though rarely, the 30min timeframe to reduce noise and confirm a trend before placing a trade. The longer timeframes are more for swing traders. There’s no talking about which timeframe makes the most money here as it just doesn’t fit if you get my point. This would depend solely on your strategy. And volatility can obviously be present in the highest timeframe.
Market Sessions: If you want volatility and nothing stagnant to ruin your day, you’d be trading when two market sessions overlap. This is for obvious reasons. During the overlap of two market sessions there is often high activity which would not necessary mean high volatility but you can almost always expect some vigorous oscillations. Serious market movements are caused by news breakouts and this is another topic on its own. The news traders have nothing to worry about here.
So to conclude the most money-making timeframe, I would say is when two trading sessions overlap and when there are news outbreaks to cause bigger price movements. But contrary to this, FXCM, a broker claimed it’s studied data covering a period of ten years of their live traders and analysed millions of trades only to find out that most traders lost during the times that the EUR/USD was most volatile claiming these traders were range traders that traded at the wrong time. I believe timing is essential in trading but I took this info with a grain of salt knowing especially very well that most brokers are against retails traders. Yes, that’s true! Believe it or not. But I know newbies are going to fall for that gimmick and lose even more. No one wants a consolidating market! But FXCM said,
Yeah, this makes sense when you’re scalping and even swinging. I would have loved to see them post the sentimental report on this for the said period.
Feel free, use the free tools to find the most volatile pairs and join the ride, as with the time (of the day) for trading, it’ll will depend on which currency you’re trading and which strategy you’re using but the general idea I have talked about. You can experiment with small lots to see what works well for you. Wishing you all the best.
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Among several fundamental factors that have a big impact not only on the forex market, is one that I dare not ignore, one that you should keep a close eye on eight times (Sometimes more. In 2010, the FOMC met ten times) a year if you want your ROI to be something to write home about. Ladies and gentlemen, the Federal Open Market Committee (FOMC) Meeting.
The FOMC is the arm of the Federal Reserve board that controls monetary policy. Monetary Policy here, refers to the actions undertaken by a central bank, such as the Federal Reserve, to influence the availability and cost of money and credit to help promote national economic goals. It is the FOMC which makes key decisions about interest rates and the growth of the United States money supply. That’s it! Nothing more, nothing less. It’s made up of twelve members; seven members of the Federal Reserve Board and five presidents of the Federal Reserve Bank. These twelve guys combined make decisions that, whatever the outcome, you need to follow before you place an order to trade. If you keep an open ear to what they decide, you’ll just make money in the foreign exchange market, no doubt about that. Read on and I’ll show you how.
what is the role of the federal open market committee?
So what does the federal open market committee do? The answer is actually quite simple. They set interest rates and/or discount rates (on the US Dollar, a trading instrument) by deciding whether to increase or decrease money supply to the banks. How is this done? Let’s assume the FOMC wants to reduce interest rates. First, the FOMC informs the banks that it wants to buy U.S. Treasuries, the transaction is made and the banks are paid in US Dollars, when this is done, the banks now have extra physical cash in hand which they can lend out to clients/customers. Now, because the supply of cash is now higher, the banks encourage clients to borrow money by reducing interest rates and voila! Interests rates reduced. The opposite is true if the FOMC intends to decrease interest rates.
how it affects foreign exchange
The FOMC doesn’t just make decisions, their decisions are based on a lot of other factors that affect national economic growth such as unemployment rate, GDP, etc. When the FOMC reaches a consensus in comparison with the previous meeting’s decision, we as traders can tell whether to sell or buy the US Dollar (as base currency) to get some profits. My recent trades on FOMC decisions fetched me about $6,000 (February 2015) and that’s reason enough for you to follow it too. When these guys increase the interest rates, you’d want to be selling, when they decrease it, you’d want to be buying as much as you can (but by keeping greed under control and always setting TPs and SLs).
Below is the effect of the release of the FOMC minutes and how they affected the USD/JPY and EUR/USD pairs in February 2015.
The USD/JPY pair is what fetched me the most money. The red dashed lines are my sell points (open and close) and the green line is my buy point. All profiting.
And here the corresponding effect on the EUR/USD pair.
After seeing this, if you don’t trade fundamentals or at least don’t follow the FOMC statements, then I’m very sorry to say that you’re slacking. I encourage not only to keep an eye on all fundamental news but by also taking time to learn how they affect foreign exchange and also mastering the “art” of knowing when and how to enter/exit trades around these times.
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Recently I wrote about the best way to learn forex trading after which one can train himself to be a successful forex trader. Learning and practising what was learned, are two completely different things. You can learn and still not be good at something. Pardon my loquacity, but I just want to share a few thoughts.
In my opinion, to be a good forex trader will be to be able to combine all the analytical elements: Fundamental, technical and sentimental analyses. Of course a good trader will be someone who can do combine all these and still be profitable. After all, what’s the sense in doing all three well and not make a positive net profit at the end of the trading cycle? I have met a lot of people who use only one form of analysis and they are doing well. That doesn’t make them bad traders as long as the profits are coming in. And hold your horses, I am not saying a good trader should use all forms of analyses. The message here is, to me, a good trader is one who can use all forms of analyses and still make profits. Meaning he’s robust and profitable under any circumstance and knows how to manoeuvre his way through every market situation. You get the idea. Good traders understand very well all three aspects of analyses. And this is the first point in learning to be a good trader.
To be a good forex trader and successful, by applying all three forms of analyses will also mean spending a lot of time trading a demo account and making it profitable over an extended period of time. While this is not the best way to learn forex trading, it is one step closer to becoming a good forex trader. I would say a year of demo trading is enough to include all fundamental events that move the markets and learn about them and how they make currencies behave. Trading demo can be boring sometimes because there’s no drama, no emotion, it’s feels more or less like a fifty-year-old playing with a Spider Man figurette. But you want to be a good forex trader, then do it.
Another important step to becoming an above average trader is to have a trading mentor, someone with years of proven track record to guide you to learn the ropes. From such people you can learn simple things as when and how to enter and exit trades for profits. It’s not hard finding such mentors, you’d have to get a word-of-mouth recommendation as blindly searching Google for such people will only present you with crooks, most of the time. These people won’t offer their services for free. As a matter of fact they come quite expensive. But it’s worth it. Finding a mentor is not the only way to get good at trading and learn things fast, but it’d be good to find one from the beginning to help you. If a mentor appears to charge very cheaply, especially someone you don’t know, you should be suspicious. And by cheap I mean, something below $50/hour of live consultation. That being said, you should be careful at the same time when you feel a mentor is charging too much. That’s why it’s best to get mentors recommend to though people you know or trust.
Nothing comes cheap. Good traders have in one form or another invested time or money into something for an experience in return. It could be books, webinars or courses. The are plenty out there in the wild. I can’t make any personal recommendations as to which courses to pay for but when it comes to books, Alexander Elder is one guy to look out for. And with webinars, you can always trust the content from Richard Perry of Hantec Markets. Richard is a very experienced forex markets analyst who provides free educative materials through FX Street.
The path to being a good trader will lead nowhere without mentioning mastery over emotions and psychology. There shouldn’t be anything like sad or happy times. One thing to know here is accumulation of pips and accepting the fact that some days can be very rough and moving on when things get real bad. If you can’t do this, you might want to consider investing elsewhere. All good traders have at one point in time lost money, big money. I have, and so have you (or will you) but that shouldn’t end the journey because I believe anytime a loss is made, something is learned to be a better trader. Something that will possibly prevent us from losing more in the future.
There are no magic tricks anywhere. The market is very dynamic and so you should, learn fast and always, everyday with any chance you get and keep practicing a lot on demo and real accounts (with small lots if you’re not good just yet) and in no time you’ll hopefully see the results and profits that you want.
The best way to learn forex trading might surprise you. Because it’s contrary to what the mass does. If you asked most traders this question, they would usually say, trade a demo account for say, a minimum of six months. I say, that’s only a good way to learn forex trading and not the best way to learn to trade. You can try to guess why this is so. There are two things here: Best way to learn forex trading and (a good way of) learning forex trading. Now the best way to learn forex trading is to actually trade real money. Not demo. Astonished? Read on to find out why.
I won’t call myself a pro forex trader, neither an amateur. You know the pros? They are the forex millionaires and billionaires. Those are the people I call pros. But being over five years in the game, I have learned enough to share with you what I think is the best way to learn forex trading. When you start with forex trading as a greenhorn, one thing is obvious — Read. Ok but to what extent? For how long? Well that will depend on you and how fast you grasp and learn from what you read. Personally, I would recommend BabyPips School of Pipsology, complete it, follow Richard Perry’s webinar’s on FXStreet and buy Come Into My Trading Room by Alexander Elder and that’s enough! Yeah, really. That will be enough reading and listening and watching. All you’ll ever need. The best way to learn forex trading is by getting your hands dirty, practicing with real money, putting your hard-earned cash on the line, even from the beginning. You don’t have the balls to do that? Then I’m afraid this is not your game. Let me show you how.
Learning Formally (Well, to some extent)
Online, there’s a plethora of information on forex trading that you can find for free. Most of which are crap though. It’s wise only to limit yourself to what and the amount of stuff you read especially if you’re not so experienced. This will prevent you from getting yourself confused with the information overload. The School of Pipsology has everything you need to get you off the ground. On FXStreet you can join and watch webinars that teach and talk about what moves the market and details of some technical analysis strategies. All these for free. You could get yourself a good read on forex, just buy at least one book from Amazon and read while in the bus or in the waiting room, in the toilet, wherever, doesn’t really matter. Just get the book I recommended above to get yourself enlightened, in a more or less passive way. This first part of getting the best way to learn to trade forex is essential, but don’t overdo this step. You’ll get bored quick or get yourself bemused. The information you need to start is enough. The real, the best way to learn is not by reading anything anyone writes everywhere.
After a couple of readings, you need to trade a demo account. Now here’s the tricky part. You don’t trade a demo account for long. Why? Because I said so! Kidding. Most brokers, on a demo account will give you USD50,000 of virtual money to start with. The question is, on a real account are you actually going to start with USD50,000? I doubt. Trading demo is nowhere near the reality of forex trading. It’s only essential to learn how technical/fundamental analysis works. You use it to actually understand how the indicators you read about work and how economic news affects price action. So on a demo account, if you can set the amount of virtual money to start with, make it as realistic as possible. How much would you start with on a real trading account? USD500? USD2,000? Set your demo money around the same amout that you would trade with when you become ready to trade on real money. What about the duration of trading a demo account? I would say two months is enough to learn about indicators and develop some signal strategies. One broker I recommend for trading a demo account is Exness. Get yourself an Exness demo account now and get to work.
Getting into the wilderness
Forex trading involves high risks, just like any investment outfit. Aside the genuine risks in trading, there are the crooks and scammers who will do anything to get your money. Brokers can sometimes be scammers, some will put re-quotes on your account, delay your executions and do all sorts of weird stuff to see you lose. As a matter of fact, retail trading is meant to make us lose. It’s only a tiny percentage of traders that win. Getting to be a part of this handful of traders is very hard. Like it or not. But once you get there, you’d be very happy you actually got into this business. It’s where the fun is. You could go on holidays anywhere you like for as long as you want! But it takes hard work, dedication and discipline. There are some trusted brokers I personally recommend: Exness, Tallinex and Dukascopy. Tallinex because of the MT4 platform (which makes it easy and comfortable to trade) and the really low spreads and Dukascopy for their awesome Java-powered trading platform and speed of execution. If you’re using a Mac for example, Dukascopy platform, JForex does perfect on Mac and Windows machines. I use both brokers, the only two I use.
Now the hard part. After learning for a couple of months on a demo, now is the time to put in some real money. USD1,000 is enough, or even half of it. You start and make sure you trade the tiniest lots possible. This is not the time to set big goals, this is where you take time to master and control your psychology and emotions. This is where the real learning is. Here you’re trading with real money, it’s going to be hard, but learning the hard way has always proven to be worthwhile. You may blow your account once, twice or more. But if blowing your account doesn’t teach you anything new about how to make money in the forex market, then I don’t know what else will. I must mention here that it’s only wise and important to actually start with real money but with money that you can afford to lose in exchange for a couple of lessons. Once you find what works and build some discipline, you can start to make consistent profits. Things will start to fall into place. Most traders quit after losing a couple of times, that’s OK, because then they learn that trading forex is not for them. Forex trading can’t be for everyone, the same way dancing is not for me. I have met really awesome girls in big clubs but lost them just because I don’t know how to dance even though the money from trading is sitting there somewhere. But life has to go on.
“Only those who dare to fail greatly can ever achieve greatly.” – Robert F. Kennedy
Now, Feel free to call yourself a trader
Trading is hard, honestly. If the challenges in the beginning forced me to quit, I wouldn’t be in my sixth year of trading and I wouldn’t have realised the potential of trading. This business is real and there’s lots of money to be made, but there’s no easy way to get there. Read a few books, learn about technical analysis, get to know what moves the market, like say the Non-farm Payroll among others, start with real money and trade the the smallest lots, lose a couple of times (this stage is inevitable), then feel free to call yourself a trader who actually trades for a living or for any other purpose you can think of. If you keep the zeal and optimism and discipline and really learn from your mistakes, there’s no way you can be a loser. There’s a limited number of mistakes you can make, this is one thing you have to know. The thing to do is to overcome all the fears and errors and actually start making money. If others are making it, if I am making it, why can’t you?
This is the best way to learn forex trading, if you have something to add, share in the comments. And if you liked this article please feel free to share with people and like my page on Facebook. You can also follow me on Twitter.
ForexLive was founded in 2008 and has since been an outstanding source of information for professional and retail traders. It’s CEO, Adam Button, won FXStreet’s Forex Person of the Year in 2014. I got the chance to talk with Adam Button and I hope you enjoy our conversation.
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In this recording we discuss the following questions:
1. What is the biggest strength a trader should have?
2. What is the most successful trading strategy you’ve come across? What triggers these strategies, how are entries/exits made?
3. If you had to scalp on a 5min timeframe how would you do that?
4. Do you trade? Do you capitalize on having a front seat to the news?
5. Of course you have a risk management plan, would you mind sharing some bit of it? Please shed some light on what will be a good entry/exit point related to a particular risk management plan.
6. What are your thoughts on the perennial TA vs FA debate?
7. What do you think about crude oil in the long term?
8. Tips on news trading?
9. What are your future plans for Forex Live? Are you considering starting a forum or something of that sort for users?
John’s introductory trading book, The Essentials of Trading (Wiley, 2006) came directly out of his teaching work. It reached Amazon “Top Seller” status shortly after its release. He has also contributed to SFO Personal Investor Series: Psychology of Trading (W&A Publishing, 2007), and to Technical Analysis in the FX Markets from the publishers of The Technical Analyst magazine, as well as to academic research on automated trading systems. He is also the author of Trading FAQs.
John is currently a PhD student researching retail forex trader performance.
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In this recording we discuss the following questions:
1. What do traditional forex traders think about Bitcoin?
2. Why do you think over 90% of traders lose on the market?
3. What’s the purpose of a trading plan and why do we need one?
4. Difference between trading system and trading strategy. How do we develop both?
5. What are some characteristics of pro forex traders and how can starters get there?
6. What do you think about the current situation in Greece and how much is it going to affect the Euro? What are your predictions?
7. What would you have changed X years ago when you started trading, if you could go back in time?
8. How was a trader like George Soros able to break the Bank of England. How did he find the opportunity that others didn’t see?
9. What is the Trading FAQs?. Where and how can we buy?
10. Advice for people starting/hoping to be pro traders.
People are seriously making big cash in the forex market. Forex millionaires do exist, in the sense that there are people who sit in front of their computer looking at the same MT4 charts as you. But why do you lose? Why do they win? You know the answer don’t you. I keep saying this; that forex needs a lot of patience, persistence, discipline and being plain “hard core”, by that I mean learning not to give up. Those forex millionaires who have made it all lost lots of times. They lost big moneys but giving up wasn’t an option. The trick is, with every fall, there was a new lesson learned, they fell enough times that they’ve been able to correct almost all the mistakes there could be to make them the forex pros that they are now. And that’s what most of us traders lack — These qualities that are putting them on top.
In no particular order of reverence, I have gathered the top forex millionaires alive (bare in mind this is my personal list). This is a list of people I admire and look up to, learn a lot from their way of life, style of trading and anything I can find about them that concerns trading.
Lipschutz is by no doubt one of the best forex traders alive. He inherited $12, 000 worth of stocks after his grandmother died. He invested a lot of time reading and learning about the market which was later to spike up his interest in financial trading. He turned this initial investment to $250,000 but lost it all, something he considered to be a very valuable lesson. He persevered and it’s now known that Bill has made over $300 million per year in trading only on the forex market.
Bruce Kovner borrowed $3,000 to trade, turned it into $40,000 and then back down to $23,000 before deciding to get out. $20,000 of pure profits from an initial $3,000. Not bad. But coming back from $43,000, Bruce Kovner said that trade thought him one valuable thing every trader should know about: Risk Management.
Kovner has a mansion in New York City that has a lead-lined room to protect against a chemical, biological, or dirty bomb attack. What can’t you do when you’ve got the money. He’s worth $4.8 billion dollars as of March 2014.
You expected he’d be next didn’t you? George is sitting on about $26.5 billion. This guy has insight. Soros enjoys dual citizenship from Hungary and USA. He has written a book, The New Paradigm for Financial Markets: The Credit Crisis of 2008 and What It Means that I would recommend you check out. It’s only 208 pages and you can learn a lot from this book! In 2009, George Soros said “We witnessed the collapse of the financial system … It was placed on life support, and it’s still on life support. There’s no sign that we are anywhere near a bottom.” Greece can testify to this.
This is a guy that inspires me a lot personally. He’s worth $4.7 billion. He sold his family business to get a starting capital in the forex market and succeeded. He had previously worked with George Soros, another successful trader. Joe is now a tax exile in the Bahamas and lives a happy life like every one with money would. If you’re an active forex trader, you would know about him. And oh, there’s another Joe Lewis! But he’s nothing near this Joe Lewis I am writing about, he’s actually the complete opposite.
This guy is a doctor, a psychiatrist. No. Seriously. At age 16, back then, he entered medical school. He understands psychology like it’s no one’s business, well, I don’t want to say this but… duh?! And applying his knowledge in the field of trading makes him one of the best traders alive. He has a couple of books as far as I know. One of which is widely recommended: Come Into My Trading Room: A Complete Guide to Trading. The funny thing is that I honestly can’t tell how much Alexander is worth but judging from his past successes with trading and trading books, any could bet his net worth is well over the $1 million mark. However, I included him in this list anyway because he’s worth following!