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YES;
IT IS PROFITABLE & SUSTAINABLE; BUT!
PLEASE NOTE THAT.....
It's very
possible to earn sustainable profits trading Forex. You however must and need
to develop the right mentality, find the simple strategy that suits you best.
Be committed and be fearless, but be smart. The amount risked on your trade
should not be greater than the potential gains you expect. Be informed that the
best trading & profitable opportunities are in the longer charts (4hours
and Daily). You can become a consistent profitable full time trader thanks to
nobody but your ability to control your emotions and your greed. With a little
bit more patience and planning, you can spot possible oversold/overbought levels
with Moving Averages, Pivot Points, Support and Resistance Levels and Price
Action. Generally, with high probability and low risk trading strategies, you
can conveniently record a 10-25% Monthly Return on Investment.
CREATING A SUSTAINABLE
AND PROFITABLE
FOREX TRADING SYSTEM
When you first
start to look to develop your own Forex systems you will no doubt be staggered
by the quantity and variety of third party systems that you can find online.
Many of these systems require the individual to make the final decision to
trade from the indicators provided. They supply you with the indicators and a
set of trading rules for the strategy. Other systems are fully automated and
are more popularly known as Forex robots. This is something of a black box solution
to trading with the system simply left to run on your account. These systems
however fail to provide an external trading logic, such as taking account of
news developments and simply process strategy. It is surprising to note that
nearly all of these Forex systems make assertions of being able to make you a
high level of easy profits on your Forex account! Often they will boast of
being able to double or even triple the value of your account deposit in just a
few weeks or months!
However you need to be skeptical of most of these claims,
as if this were the case, then everyone would be using them and reporting the
same big profits. But the based on account profitability disclosures of US
Forex brokers, only about 25% of the accounts of held by most of them were profitable. The central aim
of a Forex system is to identify reliable and accurate levels in the market
where a profitable position can be taken. They also need to be able to add a
degree of real world thinking before entering a position to decide the risks
involved. Newbie traders as well as some seasoned traders can be swayed by
their emotions when trading decisions are made. They may trade out of fear and
decide to exit the market prematurely cutting positions at a loss when they could
have generated profits instead.
Greed may at
times get the better of them and make them hang on to profitable positions too
long in the hope of making more only to face a sharp market turn around running
their profits into losses. Nervousness in initiating a trade makes them
indecisive at times allowing good trading opportunities to pass them by. A
great Forex trading system must therefore be designed with these two goals in
mind –
1)
Be
able to generate accurate price action points based on the traders pre set
profit objectives and pre-determined maximum allowable drawdown per trade It
should assist the trader in keeping control of their emotions when trading the
system.
2)
Profitable
Forex systems should not only be able to deliver targeted profit objectives,
they also need to be simple enough to use by even the most inexperienced
traders. Not only should they be able to prove their effectiveness, accuracy,
and profitability through back testing using historical data, they should also
be able to withstand the test of time.
3 THINGS
I WISH I KNEW WHEN I STARTED TRADING
- ROB PASCHE
*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 returns 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. This
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 MAKE WINNING STRATEGY 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
The
3rd lesson I've learned should come as no surprise to those that
follow my articles... using the Speculative Sentiment Index (SSI). 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 online 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"
Good
trading!
“Click Here to Open a Personal Account with Minimumof $2,500 and I will give you a Simple Trading System Capable of Earning 10-25%Minimum ROI Monthly”
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