3 Things I Wish I Knew When I Started Trading Forex.
Trading Forex is not a shortcut to instant wealth. Excessive leverage can turn winning strategies into losers. Retail sentiment can act as a powerful trading filter.
Everyone comes to the Forex market for a reason, ranging between solely for entertainment to becoming a professional trader. I started out aspiring to be a full-time, self sufficient Forex trader. I had been taught the 'perfect' strategy. I spent months testing it and backtests showed how I could make $25,000-$35,000 a year off of a $10,000 account. My plan was to let my account compound until I was so well off, I wouldn't have to work again in my life. I was dedicated and I committed myself to the plan 100%.
Sparing you the details, my plan failed. It turns out that trading 300k lots on a $10,000 account is not very forgiving. I lost 20% of my account in 3 weeks. I didn't know what hit me. Something was wrong. Luckily, I stopped trading at that point and was fortunate enough to land a job at a Forex broker, FXCM. I spent the next couple of years working with traders around the world and continued to educate myself about the Forex market. It played a huge role in my development to be the trader I am today. 3 years of profitable trading later, it's been my pleasure to join the team at DailyFX and help people become successful or more successful traders.
The point of me telling this story is because I think many traders can relate to starting off in this market, not seeing the results that they expected and not understanding why. These are the 3 things I wish I knew when I started trading Forex.
#1 – Forex is Not a Get Rich Quick Opportunity.
Contrary to what you’ve read on many websites across the web, Forex trading is not going to take your $10,000 account and turn it into $1 million. The amount we can earn is determined more by the amount of money we are risking rather than how good our strategy is. The old saying “It takes money to make money” is an accurate one, Forex trading included.
But that doesn’t mean it is not a worthwhile endeavor; after all, there are many successful Forex traders out there that trade for a living. The difference is that they have slowly developed over time and increased their account to a level that can create sustainable income.
I hear about traders all the time targeting 50%, 60% or 100% profit per year, or even per month, but the risk they are taking on is going to be pretty similar to the profit they are targeting. In other words, in order to attempt to make 60% profit in a year, it's not unreasonable to see a loss of around 60% of your account in a given year.
"But Rob, I am trading with an edge, so I am not risking as much as I could potentially earn" you might say. That's a true statement if you have a strategy with a trading edge. Your expected return should be positive , but without leverage, it is going to be a relatively tiny amount. And during times of bad luck, we can still have losing streaks. When we throw leverage into the mix, that's how traders attempt to target those excessive gains. Which in turn is how traders can produce excessive losses. Leverage is beneficial up to point, but not when it can turn a winning strategy into a loser.
#2 Leverage Can Cause a Winning Strategy to Lose Money.
This is a lesson I wish I had learned earlier. Excessive leverage can ruin an otherwise profitable strategy.
Let's say I had a coin that when heads was hit, you would earn $2, but when tails was hit, you would lose $1. Would you flip that coin? My guess is absolutely you would flip that coin. You'd want to flip it over and over. When you have a 50/50 chance between making $2 or losing $1, it's a no-brainer opportunity that you'd accept.
Now let's say I have the same coin, but this time if heads is hit, you would triple your net worth; but when tails was hit, you would lose every possession you own. Would you flip that coin? My guess is you would not because one bad flip of the coin would ruin your life. Even though you have the exact same percentage advantage in this example as the example above, no one in their right mind would flip this coin.
The second example is how many Forex traders view their trading account. They go "all-in" on one or two trades and end up losing their entire account. Even if their trades had an edge like our coin flipping example, it only takes one or two unlucky trades to wipe them out completely. This is how leverage can cause a winning strategy to lose money.
So how can we fix this? A good start is by using no more than 10x effective leverage.
#3 Using Sentiment as a Guide Can Tilt the Odds in Your Favor.
The 3rd lesson I've learned should come as no surprise to those that follow my articles. .. using the Speculative Sentiment Index (SSI). I've written many articles about this topic. It's the best tool I've ever used and is still a part of almost every trading strategy I am using, present day.
SSI is a free tool that can be found here that tells us how many traders are long compared to how many traders are short each major currency pair. It's meant to be used as a contrarian index where we want to do the opposite of what everyone else is doing. Using it as a direction filter for my trades has turned my trading career completely around.
Learn From My Mistakes.
If I could tell my younger self 3 things before I began trading Forex, this would be the list I would give. I hope they help your trading as much as its helped mine.
---Written by Rob Pasche.
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Can Forex Trading Make You Rich?
Can forex trading make you rich? Although our instinctive reaction to that question would be an unequivocal "No,” we should qualify that response. Forex trading may make you rich if you are a hedge fund with deep pockets or an unusually skilled currency trader. But for the average retail trader, rather than being an easy road to riches, forex trading can be a rocky highway to enormous losses and potential penury.
But first, the stats. A Bloomberg article in November 2014 noted that based on reports to their clients by two of the biggest publicly traded forex companies – Gain Capital Holdings Inc. (GCAP) and FXCM Inc. (FXCM) – 68% of investors had a net loss from trading currencies in each of the past four quarters. While this could be interpreted to mean that about one in three traders does not lose money trading currencies, that's not the same as getting rich trading forex.
Note that those numbers were cited just two months before an unexpected seismic shock in the currency markets highlighted the risks of forex trading by retail investors. On January 15, 2015, the Swiss National Bank abandoned the Swiss franc's cap of 1.20 against the euro that it had in place for three years. As a result, the Swiss franc soared as much as 41% against the euro and 38% versus the U. S. dollar on that day.
The surprise move inflicted losses running into the hundreds of millions of dollars on innumerable participants in forex trading, from small retail investors to large banks. Losses in retail trading accounts wiped out the capital of at least three brokerages, rendering them insolvent, and took FXCM, then the largest retail forex brokerage in the United States, to the verge of bankruptcy.
Here then, are seven reasons why the odds are stacked against the retail trader who wants to get rich through forex trading.
Excessive Leverage : Although currencies can be volatile, violent gyrations like that of the aforementioned Swiss franc are not that common. For example, a substantial move that takes the euro from 1.20 to 1.10 versus the USD over a week is still a change of less than 10%. Stocks, on the other hand, can easily trade up or down 20% or more in a single day. But the allure of forex trading lies in the huge leverage provided by forex brokerages, which can magnify gains (and losses).
A trader who shorts EUR 5,000 at 1.20 to the USD and then covers the short position at 1.10 would make a tidy profit of $500 or 8.33%. If the trader used the maximum leverage of 50:1 permitted in the U. S. for trading the euro, ignoring trading costs and commissions, the potential profit would have been $25,000, or 416.67%. (For an explanation of how to calculate forex P/L, see How leverage is used in forex trading.)
Of course, had the trader been long euro at 1.20, used 50:1 leverage, and exited the trade at 1.10 to the USD, the potential loss would have been $25,000. In some overseas jurisdictions, leverage can be as much as 200:1 or even higher. Because excessive leverage is the single-biggest risk factor in retail forex trading, regulators in a number of nations are clamping down on it.
Asymmetric Risk to Reward : Seasoned forex traders keep their losses small and offset these with sizeable gains when their currency call proves to be correct. Most retail traders, however, do it the other way around, making small profits on a number of positions but then holding on to a losing trade for too long and incurring a substantial loss. This can also result in losing more than your initial investment. Platform or System Malfunction : Imagine your plight if you have a large position and are unable to close a trade because of a platform malfunction or system failure, which could be anything from a power outage to an Internet overload or computer crash. This category would also include exceptionally volatile times when orders such as stop-losses do not work. For instance, many traders had tight stop-losses in place on their short Swiss franc positions before the currency surged on January 15, 2015. However, these proved ineffective because liquidity dried up even as everyone stampeded to close his or her short franc positions. No Information Edge : The biggest forex trading banks have massive trading operations that are plugged into the currency world and have an information edge (for example, commercial forex flows and covert government intervention) that is not available to the retail trader. Currency Volatility : Recall the Swiss franc example. High degrees of leverage mean that trading capital can be depleted very quickly during periods of unusual currency volatility such as that witnessed in the first half of 2015. OTC Market : The forex market is an over-the-counter market that is not centralized and regulated like the futures market. This means that forex trades are not guaranteed by a clearing organization, which gives rise to counterparty risk. Fraud and Market Manipulation : There have been occasional cases of fraud in the forex market, such as that of Secure Investment, which disappeared with more than $1 billion of investor funds in 2014. Market manipulation of forex rates has also been rampant and has involved some of the biggest players. (For more, see How the forex "fix" may be rigged.) In May 2015, four major banks were fined nearly $6 billion for attempting to manipulate exchange rates between 2007 and 2013, bringing total fines levied on seven banks to over $10 billion.
If you still want to try your hand at forex trading, it would be prudent to use a few safeguards: limit your leverage, keep tight stop-losses and use a reputable forex brokerage. Although the odds are still stacked against you, at least these measures may help you level the playing field to some extent.

Can you get rich off forex

Ibfx binary options What moves the forex markets Fatwa malaysia forex haram Forex hedging martingale strategy stock Award winning forex trading software So to conclude let me say this: There are no miraculous secrets to trading forex. There are no special indicators or robots that can mimic the dynamic forex market. You simply need to understand how the major players (bankers) trade and analyse the market. If you get these aspects right then your well on. Forex Trading, The New Way To Get Rich. Invest in Forex, the world's fastest growing market. It is definitely possible to earn much money and be rich as a forex trader. However, you should remember that currency trading involves substantial risk. forex, money, easymarkets. Forex trading: Trading forex has now become a. (Deciding which markets to trade can be complicated, and many factors need to be considered in order to make the best choice. Check out Should You Trade Forex Or Stocks?) TUTORIAL: Top 10 Forex Trading Rules. Get Rich Quick Advertising has rapidly expanded the retail market in forex. This has brought many people.
Forex armageddon.
Here are the top 10 option concepts you should understand before making your first real trade:

Can You Become Rich Trading Forex? – Secret Strategy Revealed.
It’s a cold hard truth, but it doesn’t mean you can’t beat the odds and become part of the five percent.
In fact, with the right strategy and emotional fortitude, you can become rich beyond imagination in no time at all. The problem is, most trading advice promotes principles that seem alright at face value, but may not fit with your personal situation.
Sure, you can become a millionaire eventually by trend trading the daily charts and only increasing your lot size after every 500 pip gain. However, given the $400 starting point of most Forex traders, this would take way too long, result in increased risk, and eventually cause you to fail rather than succeed.
To avoid this, I’m about to share with you a proven strategy to evade these pitfalls, methodically grow your account, and become rich trading Forex. Keep reading to learn how.
Table Of Contents.
How to Earn Seven Figures with Forex.
“Can I become rich trading Forex?”
This is one of the most commonly asked questions by those new to the risky yet profitable currency trading arena.
If you want to make a million on a single trade, think again. Not only is next to impossible to cash in on a 10,000-pip market move, but doing so would require you to open a position size of 10 lots and earn $100 for every pip gained.
Given the recommended risk percentage of 1-5%, to achieve this you would need a starting account balance well over $10,000.
There is, however, a dynamic strategy to employ in order to rapidly compound your earnings.
Stacking Trades and Scaling In.
Unless you’re starting out with five figures, earning a million dollars from a massive market movement like this is impossible unless you stack trades.
By stacking multiple trades on the same market move, you can compound your earnings and make more with each one.
For example, let’s say you’re starting out with $1,000. With this, you’re able to open a trade with a position size of two mini lots and a stop loss of 20 pips while not risking more than five percent of your account.
As discussed in part one of my Turning a Small Forex Account Into a Big One guide, if you take the trade right after a shooting star, engulfing bar, pin bar reversal signal, supply & demand level and your profits begin to build, you can open additional positions and stack multiple trades on a single price movement.
Not only that, but with each trade being placed at a larger lot size than the last, this allows you to increase your profits with less and less market movement.
The Method.
To do this and take full advantage of market momentum, open your first trade at the normal lot size you trade with given your particular account balance.
How do I spot a market momentum in the first place & how does it looks like?
You will see big candles moving in the same direction with minimal retrace.
Where to look for momentum before it happens?
You can’t be 100% sure when a momentum will occur but it usually happens on key levels.
In the Eur/Usd example 1 above price rise from a weekly demand.
Weekly demand from 2003.
Reaction of weekly demand from 2003.
The entries.
You can’t just enter because price is at key level. That’s a recipe to disaster. Instead, let the price show you the way & give a good sign.
What is a good sign?
A good sign is a big retracement and the retest of it.
Entry Method 1: Supply & Demand Levels.
Let’s take a look on our Eur/Usd example above:
That could be your 1st entry utilizing supply & demand method with pending orders.
Additional entries on the daily chart:
As you can see, you could add 6 more positions without losing a single one*, 7 positions in total.
*You could possible lose position #5 but depending on your money management, that could be a break even entry if you take 50% of your position at 1:1 RR for example or if you move stop loss at break even after price has advanced x amounts of pips.
Entry Method 2: Engulfing candles in combination with Supply & Demand levels.
Let’s see how many additional entries we can get with engulfing candles using the same example as above.
Here you have 4 more additional entries by entering on daily engulfing candles. Again, without a single loss even if you put the stop loss below the daily low candle.
Entry Method 3: Shooting stars + Pinbars.
Even though by text book definition Shooting stars and Pinbars are different, to me they are the same thing.
Let’s see how many additional entries we can get by using them.
Here you have 3 more entries without a loss.
Just by using the 3 entries methods above, you could get 14 positions without a single loss!
How to manage your positions.
As your profits begin to build, take some of your profits from this trade to open another position in the same direction. Only this time, increase your leverage.
Now, you’re profiting from two trades rather than one and the second trade will make you more money in less time.
At this point, you can take the profits from the first two trades, increase your leverage, and open a third position in the same direction.
How to add even more positions.
As an example, you could open a position on a pin bar or shooting star on the daily chart, and then open more positions using the 4-hour chart to identify additional pin bars and optimal buying or selling opportunities.
Here are some additional entries on the same example we used above, Eur/Usd.
For instance, let’s say you open a EUR/USD buy position on the emergence of a pin bar on the daily chart. You then switch to the 4-hour chart and open a second position in the same direction when you identify another pin bar, and the distance between the two points is 400 pips.
Trading a single mini lot, in which each pip is $1, you will have earned $400.
When you see a new pin bar forming on the 4-hour chart, you can then move the stop loss on the first trade and lock in $200 in profits. Regardless of what happens, you will secure $200.
You can then use that $200 in guaranteed profits to open a second position at a larger lot size when the next pin bar forms.
To calculate the size of your subsequent positions, divide your profits by the distance between the stop of the first trade and the entry point of your second. In keeping with our example and assuming the distance was 60 pips, you would place your second trade at approximately three mini lots.
Remember, you’re first trade is still running as well.
When another pin bar forms to provide another buying opportunity, once again use the total profit from the first trade, not the second, to up the leverage yet again and open a third trade.
To determine the lot size, simply divide the total profits of the first trade by 50%. So, if you’re in profit $1,100 on the first trade, the maximum you will want to place on this final trade is $550.
When you factor in the stop loss distance of the last pin, you may be able to open your last trade at twice as much as the second, which in our case would be six mini lots!
Plus, the first two trades are still running and making you money as well!
With the third trade, your profit could top $1,500 in only a week, so at this point you may want to consider taking your profits from trades two and three, which may net you upwards of $5,000 or more.
I recommend closing the last two trades and keeping the first trade running to see if any new pin bars appear and if you’re able to take advantage of even more buying and scaling opportunities. If one does occur and there is no sign of a long-term trend reversal in sight, you could once again use the profits from the first trade to repeat the scaling process.
While I used the daily and 4-hour timeframes for our example, you can use this strategy on any timeframes you want. If you’re a day trader and really want to snowball your earnings to reach $1 million in no time at all, you can easily spot trending movement on the 5- or 15-minute charts and scale exactly like we did above.
The Freedom of Multiple Positions.
Taking multiple positions in the market gives you ultimate freedom and flexibility to test and tweak your trading methods.
For instance, rather than having two or three trades open with lower and higher amounts of leverage, you can have several smaller trades open on strong trend movements. You can even have multiple trades open at the same time on different currencies.
Not only will this allow you to better mitigate your risks, but you’ll still earn equivalent profits.
Trading this way will also make you a sharper trader. Most traders open a trade and wait to close it before placing another. Most never think to open more trades.
When you find yourself in a winning trade, you should be placing additional trades in the same direction. That’s the key to becoming rich in Forex. It’s all about momentum.
Bottom Line.
Can you become rich with Forex?
Although trend movements like the example above are rare and growing a small account into a large one with five, six, or seven zeros is no easy task, it can be done.
My goal with this post was to give people just like you a genuine, real method for rapidly growing small accounts into large ones. While some people may not agree with these trading strategies, they work.
If you keep following the same old trading advice, you won’t be able to advance in your trading career. The stats speak for themselves. According to Oanda, 60% of their clients lose money, and many think this number is far too low.
This is proof that traditional trading advice consistently delivers poor results. If they didn’t, much more people would be making much more money.
Thanks for stopping by.
Be bold and conquer young trader.
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8 Responses.
As a beginner, how do i know when a pin bar and a shooting star is forming or forms.
1st you must decide the timeframe.
If you’re trading daily candles, then you will see if a pinbar or a shooting start has formed when the candle closes.
Depended on your broker, the daily candle may close at Sydney open, Tokyo Open or New York open. Check it with you brokers.
If you don’t know what a shooting start or a pinbar is, then you must start with the basics first.
Love this article Tim as i do all your others.
Thank you Atlas 🙂
Hi Mentor, I have one practical question, what about EURUSD in the future, pls see my screenshoot. I appreciate your comment and some trading advice.
oops, how can I post my screenshoot?
Use a screenshot tool such as this one: prnt. sc/ and paste the link here.
hope will works.
Your view is correct.
So far, EU daily is respecting every demand level. My short view area is at.
1.21240 on EU Daily.
My weekly area of interest for shorts begins at.
Judging from the current Daily & Weekly chart I would say there is a high probability of visiting these zones above before falling …