Forex Trading Truth or Lie? Uncovering the Truths of FX Trading - DailyFX
Forex Trading Truth or Lie? Uncovering the Truths of FX Trading - DailyFX |
- Forex Trading Truth or Lie? Uncovering the Truths of FX Trading - DailyFX
- How to Identify and Avoid Trading Scams by Artur Hochberg - FinSMEs
- Forex Trader urges SEC to provide framework to regulate online forex trading - Myjoyonline.com
| Forex Trading Truth or Lie? Uncovering the Truths of FX Trading - DailyFX Posted: 30 Sep 2019 07:35 AM PDT Do you know the truths about forex trading?Traders face a barrage of information when they start out in the markets – and being able to sort the wisdom from the folly could be the difference between success and failure. Should you risk 1% of your account per trade, or 5%? Does RSI work better than stochastics? And is Bitcoin really a reliable store of value? Granted, some topics will always be debatable, but with the help of our DailyFX expert analysts, we uncover the truth about forex trading, the lies, and the murky bits in between. Truth or Lie: Traders Need a Financial Background"Trading has little to do with 'finance' and more to do with understanding what is involved in performance-related endeavors" - Paul Robinson, Currency Strategist  A financial background can be useful for understanding how forex and other markets work. However, more beneficial are skills in math, engineering and hard sciences, which better prepare traders for analyzing and acting on economic factors and chart patterns. It doesn't matter how much awareness you have about financial markets – if you can't process new data quickly, methodically and in a focused manner, those same markets you thought you knew so well can eat you alive. ANSWER: LIE EXPERT TIP: To prepare for trading, focus on developing analytical skills rather than boning up on financial knowledge. Recommended reading: Truth or Lie: Trading is Easy"Trading is definitely easy. Being profitable is where the difficulty lies" - Peter Hanks, Analyst  Trading is like running a business. In order to be successful, you need to learn from mistakes and have rules in place to help protect your capital. Like a business, it's crucial to have appropriate strategies on hand for varying market conditions. Setting up a business is easy, and similarly, trading is easy too. Developing successful strategies and making money? That's the hard part. ANSWER: TRUTH EXPERT TIP: It will seem easy if your early trades go well, but long-term profitability is a different matter altogether. Make your life easier by researching your trades, using the right position size, setting stops and keeping a handle on your emotions. Recommended reading: Truth or Lie: You can't be successful with a small trading account"A 20% return is a 20% return regardless of the account size" - Paul Robinson  Can you be successful with a small trading account? It depends on your definition of successful. An account needs to be large enough to accommodate proper risk parameters. But success is relative; a high rate of return is based on percentages and not on monetary amounts. For example, a 20% return is a 20% return regardless of the account size. However, if your 20% return isn't worth enough in hard cash, it might be hard to incentivize yourself to improve as a trader. ANSWER: IT DEPENDS EXPERT TIP: Your account size will depend on your goals and your prior success. Naturally, experienced traders will have a larger account but to begin with, concentrate on that rate of return percentage. Recommended reading: Truth or Lie: A profitable trader wins most trades"Think quality of trades, not quantity of trades" - Nick Cawley, Analyst  Bragging rights be damned: the number of trades you win is irrelevant. Profitable traders simply make more money than they lose. Say you win five trades and make $5,000, but lose one trade and lose $6,000 – you have won more trades than you have lost but are still down overall. Profitable traders will set rigid risk-reward parameters for a trade – for example they might risk $500 to make $1,000, a risk-reward ratio of 1:2. If a trader makes five trades using this method, loses three of them and wins two of them, the trader is still $500 in profit ($2,000 profit-$1,500 loss). Don't be afraid of taking a few hits: if your process is sound, one big winning trade can reverse your fortunes. ANSWER: LIE EXPERT TIP: Many successful traders will be losing more trades than they win, but oftentimes it won't bother them. Focus on getting the right setups rather than worrying about the ones that got away. Recommended reading: Truth or Lie: You need to spend a lot of time monitoring trades"Spending too much time monitoring trades can work against you as the temptation to micromanage becomes too great" - Paul Robinson  How much time you spend trading, and monitoring trades, will depend on your trading style. Those employing a scalping strategy, for instance, will make a large number of transactions per day, entering and exiting many positions, and will need to pay close attention to their trades on the shortest timeframes. However, position traders won't need to spend as much time monitoring, as their transactions may last weeks, months or even longer – meaning long-term analysis will account for short-term fluctuations. ANSWER: IT DEPENDS EXPERT TIP: Ask yourself what type of trader you are. Shorter timeframes will mean monitoring and analyzing constantly – being 'always on'. If you favor a more relaxed approach you may be suited better for position trading. Recommended reading: Truth or Lie: A solid stop loss trumps a 'mental stop loss'"Reckless traders use a mental stop loss. Disciplined traders use a real stop loss" - Nick Cawley  Some traders advocate a 'mental stop loss' when the market gets tough – that is, relying on oneself rather than a computer to set a level at which to exit a losing position. The problem is, a 'mental stop loss' is just a number that makes you worried about the money you're losing. You may fret about the direction of the market - but you won't necessarily be compelled to exit your trade. A fixed forex stop loss is completely different – if your stop loss price trades you are out of the position, no ifs or buts. Exercising proper money and risk management means setting solid stops. Period. Answer: TRUTH EXPERT TIP: It can be so easy to neglect your stop loss. When a trade is going your way, the dollar signs can blind you - but you should protect yourself against the market turning. Recommended reading: Truth or Lie: Success comes from trading markets with the tightest spreads"The best opportunities shouldn't be fragile enough in profit potential that a larger-than-normal spread is going to make or break the ability to be profitable" - Paul Robinson  Spreads may represent the primary cost of trading, but they aren't the be-all-end-all when it comes to choosing your market. You may find an asset that has a wide spread but represents a strong opportunity due to its volatility. Similarly, you may find an asset with high liquidity and a tight spread, but that isn't showing much trading potential. Above all, you should let your trading decisions be governed by setups presented by the market, not the size of the spread. Answer: LIE EXPERT TIP: The spread can represent a significant cost to traders – but don't let it be the sole factor dictating your choice of asset. Recommended reading: Truth or Lie: Expertise in economic analysis is important"Economic analysis is only one part of trading. Economic analysis and technical analysis go hand-in-hand" - David Song, Currency Strategist  The economic analysis key to a fundamental approach helps give traders a broader view of the market. Sound knowledge of the underlying forces of the economy, industries and even individual companies can enable a trader to forecast future prices and developments. This is different to technical analysis, which helps to identify key price levels and historical patterns, and provides conviction for entering/exiting a trade. It's true to say that expertise in economic analysis is important. However, so too is expertise in the technicals. Many successful traders will look to combine fundamental and technical analysis so as to be in a position to draw on as wide a range of data as possible. Answer: TRUTH EXPERT TIP: It may be worthwhile to devise a strategy accounting for the nuances of both technical and fundamental analysis. Recommended reading: Truth or Lie: Trading the news provides the biggest opportunities"Correctly capturing a broader theme can be far more fruitful than 'trading the news' per se" - Paul Robinson  News can create big moves in the market, but that doesn't mean trading the news leads to the biggest opportunities. For a start, the volatility of important news events often makes spreads wider, in turn increasing trading costs and hitting your bottom line. Slippage, or when you get filled at a different price than you intended, can also hit your profitability in volatile markets. On top of these drawbacks, traders could get locked out, making them helpless to correct a trade that moves against them. ANSWER: LIE EXPERT TIP: 'Trading the news' can seem like a fashionable thing to do, but market movements can be unpredictable at the time of major releases. It's often best to steer clear during such high volatility. Recommended reading: Truth or Lie: Managing your emotions when trading is vital"Negative emotions like fear and greed can be managed without suppressing positive ones" - Paul Robinson  Excluding emotions from trading is an impossible endeavor. It can lead to more internal conflict than benefits, which is why managing emotions is a better way of looking at it. You have negative emotions like fear and greed that need to be managed without suppressing positive ones like conviction that help drive you towards the best opportunities. Answer: TRUTH EXPERT TIP: Even the most experienced traders feel emotion in the heat of the markets, but how they harness that emotion makes all the difference. Recommended reading: Anything we didn't mention? Leave a comment to give us your own truth about trading, and make sure to share this article on social media.  |
| How to Identify and Avoid Trading Scams by Artur Hochberg - FinSMEs Posted: 30 Sep 2019 05:30 AM PDT
Forex trading is the largest and most liquid market in the world. It trades over $5.1 trillion in a day. Despite the high risk of loss associated with it, investors with a risk appetite cant keep their money off of it. Unfortunately, most traders that lose their capital in FX trading are rookie traders. Artur Hochberg says that the low entry barrier to the market, makes is very easy for anyone to trade in FX. Indeed, all that you need to get started is an internet connection, some capital, and a computer. If you can access an online trading platform, then you too can become an FX trader. Experienced traders such as Artur Hochberg (soarfx.com) say that a trading FX education is paramount for safety and success in the currency market. You also need to take your time before rushing in to invest. Access the trading platform and learn as much as you possibly can about it before initiating a trade. Most trading platforms have trial trading platforms, which do not need actual capital to practice on. This means that there will be no loss of cash as you learn the ropes. If you need a broker, take your time and search for a reliable one. How can you tell that a broker is credible? By looking for positive reviews and experiences as shared by other traders. If you come across a forex broker with an excellent online reputation, establish contact, and ask as many questions as you need. Establish also if they have any legal actions against them. Proper background checks in FX trading can significantly minimize risk. To help you our below are some tips on how to avoid common forex trading scams. The Artur Hochberg list of common trading scams
The too good be true promises are often a sign that something is amiss. If a broker or platform promises gain of 30% on your capital each month, you should be very wary of them. Trading in a contract for difference and currencies requires a lot of education, wits, experience, and screening time, to make profits. High profits are therefore not that easy to come by. Artur Hochberg says that if high profits were that easy to make, the broker would probably trade with leverage and enrich themselves, instead of advertising their services.
If your preferred broker does not have sufficient background information, you should take your money and run for the hills. Legitimate traders, brokers, money manager, or educators in currency trading understand the value of building trust. They, therefore, have at hand proof of their professional history when requested. To ascertain all claims always perform a thorough online screening on the broker you are planning to deal with. Conclusion If you are going to use a broker for currency trading, access trade brokers who are regulated and established. Avoid the allure of quick money and void quick fix money-making schemes that will put your capital at risk.  |
| Forex Trader urges SEC to provide framework to regulate online forex trading - Myjoyonline.com Posted: 30 Sep 2019 02:40 AM PDT  Forex Trader and South Africa's youngest millionaire, Sandile Shezi, is urging the Securities and Exchange Commission (SEC) to be innovative when it comes to its approach toward online retail forex trading. So far, SEC has warned against this market stating it is currently unregulated and consequently may be subject to abuse. Speaking to JoyBusiness, Sandile Shezi stated that industry players are eager to offer assistance on the formation of some regulation to not only make the market safe from scams but also create jobs. "I've said this even in South Africa with the FCA that whatever it is that they do they can't stop people from trading. The only way to stop people from trading is shutting the internet so regulations or not people will be trading online. What's important is people like myself and leaders in the industry sit down with the regulator to explore best ways to make a policy framework functional and ensuring that we protect the people in this industry," he explained. So far the Securities and Exchange Commission (SEC) has warned against online trading in forex and cryptocurrencies as it describes these avenues as "unregulated". In the meantime, SEC says it is opened to proper dialogue with stakeholders in this emerging market. Online currency exchange is an Internet-based platform that facilitates the exchanging of currencies between countries, or businesses, for delivery in a secure, centralized setting. Comprised of a network of computers that connect banks, brokers, and traders, the online currency exchange allows the conversion of currencies for delivery. Forex brokers usually offer online currency exchange as part of their platforms. The particular platform that processes the transaction will vary by the broker offering it, the location of the trader, and the currency pairs traded. Some countries have monetary policies that place restrictions on the convertibility of their money. Currency convertibility is essential in a global economy and critical for international commerce. A nonconvertible currency poses significant barriers to trade and tourism. Some brokers may not handle the exchange of currencies for a contract for differences (CFD). During the settlement in a CFD futures contract arrangement, cash payments substitute for the delivery of the asset.  |
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