I have been trading a live Forex account for roughly one year now. I’m feeling lucky, because I might be one of the few that saw the light at the end of the tunnel in just one year.
Maybe you’ve been trading for four or five years, but something is missing. You’ve probably lost a lot of money trying. Your friends were all telling you that this is gambling and you should stop right away. You didn’t listen and now you’re sad after losing so much money in the process. I’ve been there and I’d like to share a few thoughts with those of you still struggling.
Forex is the most popular trade market in the world; the average turnover is 3.2 trillion US dollars per diem. Trading ensues twenty-four hours a day. It starts in Sydney, Australia, and shifts to Tokyo, Japan, to London, England, to New York, USA.
Investors can respond to currency fluctuations immediately especially by using forex currency charts or fx currency charts.
The exchanging of foreign currency, or Forex, is the most popular trade market worldwide. Though it may seem strange, traders like to have their own forex currency songs while exchanging.
A complex practice, it is severely important that all parties interested participate in extensive video training preceding their involvement. Amateur traders who jump into it unknowingly often suffer great monetary loss. This is why there are many programs and guides to help amateurs get involved. This can even be done from the comfort of home, and is the only likely way to profit from this market.
What kills most newbies?
You will find out in time that the biggest obstacle in trading is not your technical approach, your brains or the news. It’s you!
You are your own enemy. Take my word of advice and:
1. develop a trading plan
You need to come up with a set of rules, write them on paper and stick to them. If you’re not organised, you will never make it. You can’t win if you trade chaotically, using your gut feeling. You need to play it smart.
Treat it like a business, not like a casino game. Your plan has to tell you the maximum number of trades per day, how to adjust your stop loss / take profit orders, when to enter or exit, what currencies and timeframe to trade etc. It needs to be specific.
You need to trade as mechanical as you can, because that’s the best way to fight yourself (and you are your worst enemy), your deadly emotions. Fight fear and greed by creating rules that force you not to overtrade, overleverage, be afraid of taking an opportunity or closing a trade too early.
These emotional mistakes can explain 90% of your failure so far. Learn from your mistakes and start fighting yourself. Discipline is key.
2. learn how to read supply and demand (a.k.a. support and resistance)
I strongly suggest you learn how to read supply and demand on a chart. When you enter a trade, you should know the obstacles that are against you. When you buy, you have to know where supply is. Never buy into a supply area. If you do that, it means that you buy at high prices. Isn’t that stupid? The logical thing is to buy low (at demand) and sell high (at supply).
There are a few good sites on the internet that explain the concept of support/resistance. Just search for that using a search engine and do some research. Watch your charts. There’s nothing better than screen time!
3. develop a good method to time your trades
In my opinion, time is more important than price. Study the concept of cycles and find a good way to time your entries. I do have a wonderful method for this, but I will not make it public. If you truly want to be successful, you will find a method as good as mine (or better). Just remember that time is as important as price. Don’t ignore it.
B. Using your win percent to your advantage
After you have developed a good trading plan and tested it on a live account (I never recommend testing on demo accounts, do it live with a small account instead, deal with your emotions), you should have some initial statistics.
If you won more than 50% of your trades (hopefully over 70%) and your average win is higher than your average loss, then you are ready for the next step. You can incorporate a gambling trick used to win at roulette.
First, I’ll explain the roulette technique. On the roulette wheel, there is only one green number: 0. The rest are either black or red. We will ignore the green one, since it is insignificant and does not change the probabilities much.
So on each spin there is a 50% probability of the ball stoping at either red or black. We start our game by betting 1$ on red. If we win, the probability for the next spin to show red again diminishes and becomes 50% x 50% = 25% (mathematical formula). So we go with the higher probability, meaning we bet 1$ on black (75% probability).
That is the rule for when you win. But if you lose, then it means the color was black, so the probability for it being black again diminishes and becomes 25% on the next spin.
That means every time you lose on a color, the probability of it turning up on the next spin increases. Knowing that, you double your bet next time and bet 2$ on red. If you lose again, the probability is over 80% and you bet 4$. If you lose again, the probability is over 90%, so you bet 8$ and so on. It is basically mathematically impossible for you to get the same color more than 8 times in a row.
So in maximum 8 tries, you will eventually win. If you lost say 5 times in a row, then you lost 1$ + 2$ + 4$ + 8$ + 16$ = 31$. Then you double your bet, play 32$ and you win. That means you earn 32$. 32$ – 31$ = 1$. You are 1$ in profit. Now you bet on black and repeat the process.
This works 100% and the casinos will ban you if you try this. But what if we use this in Forex? If you have a 70% win ratio, this is very powerful. You shouldn’t lose more than 3-4 times in a row if you have a good trading plan.
So the simple trick is that after a loss you double the lots. When you finally win, you return to the normal number of lots. This will make a great difference, because it will bring you faster profits and cover your previous losses.
Just remember to keep it organized and simple. Trading is simple, but we complicate it.