Secret of FOREX trading
Do not make your Forex broker greedy
You as a retail trader do not have a faintest idea of what is happening inside a Forex broker and with your account with them. I will talk about what happens inside a Forex broker in another blog. Now please understand that Forex brokers are there to make money. They are not there to make YOU money. The key is to make the most out of them without them focusing on your account. I will tell you the first step to do that here. The next steps will follow later.
I never open a big account to make my broker greedy and attract his attention. I trade with a small amount of money, raise it into some reasonable amount, and then withdraw most part of it and leave a small amount in my account again. I always do this.
I enjoy growing a small account. I do not like to have a million dollar account and make $50k every month, withdraw the profit and leave my capital there.
There are lots many ways a Forex broker will scam you – I will tell you that later
How to make consistent profit out of you Forex broker without them knowing
The secret here is to lay your eggs in different baskets – Do not invest all your money with one Forex broker, especially if you are in India. Rest of the world is no different. Be it a regulated or a non – regulated broker they have the same techniques no matter what they write in their website or live chat. They are there to make money not to make you money. The more you lose the more they gain.
I am not going to get into any technical here because in Forex trading no technical of the broker will help you. Identify the correct entry and exit points, trade and get out. Do not be greedy, you broker is greedier than you.
Invest small amount of money with a number of brokers. Make the small amount grow with each broker. Withdraw the most of it frequently. Remember all brokers encourage the small retail traders to invest smaller amount and they will be ready to give you hefty bonuses just to make you invest, this is because they knows that you will surely lose the small amount which you also are mentally prepared to lose. But imagine somehow if you make that small amount grow little by little?
You need good supporting software for that
36 Awesome Features of Alertel BUY SELL Signal Software for FOREX, MCX and NSE
If you invest a large amount with a Forex broker his only intention is to make you lose and boy do they have the techniques? We will talk about that later. Do not get their attention. If you have thousand Dollars I would suggest you Invest 100 each with ten different brokers or 250 each with four different brokers.
Following are nice to know things not secrets that will make your small Investment grows provided your broker has a little bit of honesty left with them. When ever you ask anybody on how to trade Forex you will get the following all the time except for the below key factor.
Key factor – Do not trust your broker’s website and do not be fooled by words like STP and ECN ( Does not make a difference)
- Do not trade large volumes or lots – Reduce your lot sizes and Increase the number of trades, but too many. An ocean is full of small drops.
- Tighten your stop loss– Yes sometimes you will be stopped frequently but your losses will be reduced to mere sums.
- Do not exit your winning trades so fast – people tend to wait on their losing trades but not at their winning trades, this is a wrong move. It gives you a momentary pleasure and relief but eventually it gets to you.
- Take long breaks– Avoid trading everyday take long breaks even days or weeks, clear your head, your brain should be relaxed and should have the ability to think rationally.
- Control your emotions– trading is not and extended version of you or your loved ones- money markets does not care about you. Approach it with care and understand it is a double edged sword.
- Do not mix superstitions in your trading– No superstitious beliefs will help you in your trading. Use your brains to think.
- Manage your stress– when stressed you are bound to make huge mistakes – Relax Rome was not built in a day. So keep your cool.
- Get a good trade support signal system– You need to identify the buy and sell areas of your chart A good system can guide you in this process
- Treat all your trades equally – give equal importance to all the trades not just to the winning ones.
- Do not change trading support signal system too often – It will mess up with you and finally you will end up with no system at all.
- Casinos are for gamblers. The Forex markets are for traders who are interested in the investment, not the big win.
Some basic not to be avoided tips for a profitable online Forex trading are
You need to make sure that your account is never void of money. To win or to lose you need an account and that account has to have funds in it. Be a good money manager. A good trading strategy is definitely important, using solid money management and having a rational, disciplined trading attitude will get where you deserve you to be.
Always use a stop loss
Stop loss is your friend. You will not find its value unless you check your stop loss on trades.
Do not expect gargantuan winning trades. Be realistic while trading and use a specific strategy and stick to it.
Interact with other traders
Interact with other traders to know their tactics and reasons of failure. You will gain more than you expected.
To summarize and to add a little more
- Always choose a licensed broker – Stay away from bucket shops.
- Have a supporting signal system as your friend
- Start your trading with fewer amounts.
- Frequently withdraw your profits
- Keep practicing in demo account- although the trade conditions in your demo and live account are completely different go ahead using the demo account for wild trades and to learn the pros and cons.
- Patience is the key – Those who waits will inherit good fortune. Rome was not built in a day.
- Do not get so excited over your wins– Keep a low profile and enjoy bigger fruits. No trades are alike. Couple of winning trades does not mean that all your trades will make profit.
- Trend can be your friend – do not go against the trend all the time.
- Do not be lazy– Market conditions are different each day. Keep yourself updated with world news and economic events.
- Do not be greedy– No further explanations
- Past is not the key to the future – Your past winning trades may not be the key to your future trades. Be cautious.
Most common mistake a Forex trader makes
Here are the top mistakes traders can make based from my experience too.
- Adding losing positions or wrongly implementing position averaging
- Trading multiple pairs at a time , neglecting correlated pairs
- Applying hedging in wrong way
- Adapting newly found trading system in live account
- Using larger lots to cover previously lost positions
Is news trading a good strategy?
Yes for the experience but not for the inexperienced.
I used diversified strategy. A strategy that uses different trading system for different market conditions. One of my systems is news strategy.And I found it profitable when you know the type of news to trade on . For me , I look into major news only like NFP and the like or those colored red in ForexFactory or any news sources.
In spot Forex, you can buy and sell in less than a minute because the Forex market is too liquid or huge. It’s a 5 Trillion per day transaction. So, buying and selling is not a problem.
Different brokers may vary in their execution time. But it’s difference is not significant unless you are a scalper.
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