What I have experienced and learned in Forex trading?
• Forex trading is not an acronym for instant wealth.
• Excessive leverage can turn winning strategies into losing strategies.
• Retail sentiment can act as a strong business candidate.
Everyone has a reason to enter the forex market, from just fun to be a professional trader. I am beginning to desire to be a full-time and self-sufficient Forex trader.
You have learned the "perfect" strategy. I tested it for months and backtesting showed how I can make $ 25,000 to $ 35,000 a year from a $ 10,000 account.
My plan was to trade foreign exchange for a living and let my account accumulate so that I can be affordable and never have to work again in my life. I was committed and kept 100% to the plan.
I gave you the details, my plan failed. It turns out that trading 300,000 lots in a $ 10,000 account is not very forgiving. I lost 20% of my account in three weeks. I didn't know what hit me. Something was wrong.
Fortunately, at that point I quit trading and was lucky enough to get a job with a forex broker. I spent the next two years working with traders from around the world and continued to educate myself about the forex market.
He played a huge role in my development as the trader I am today. After three years of profitable trading, I have had the pleasure of joining the team at DailyFX and helping people become successful or more successful traders.
I believe the purpose of telling this story may be about launching this market without seeing the results that many traders expect and not understanding why.
These are three things I want to know when I started trading Forex.
1) Forex is not a quick opportunity to get opportunities
Unlike what I have read on many websites on the web, Forex trading will not take your $ 10,000 account and turn it into a million dollars.
The amount we can earn is determined by how much risk we take rather than how good our strategy is. The old adage "It takes money to make money" is a true saying, including forex trading.
However, this does not mean that it is not a viable initiative. After all, there are many successful forex traders who trade to make money.
The difference is that it develops gradually over time and raises its accounts to a level that can generate sustainable income.
I've always heard about traders aiming at 50%, 60% or 100% profit annually or even monthly, but the risk they take will be very similar to the profit they're targeting.
In other words, it is not unreasonable for you to lose about 60% of your account in a given year in order to try to make 60% profit per year.
You might say, "But Robert, I'm trading an advantage, so I'm not risking as much as I can." This is a correct statement if you have a strategy with a trading advantage.
Your expected return should be positive, but without leverage it will be a relatively insignificant amount.
And in times of bad luck, we can lose one after another When we put leverage into the mix, traders try to target these extreme gains.
This is because traders can make huge losses. Leverage is useful to the point, but not when it can turn a winning strategy into a loser.
2) Leverage can be a profitable money loss strategy.
This is a lesson I wish I had learned before. Excessive leverage can destroy a profitable strategy.
Suppose I have tokens when you hit the head, you make $ 2, but when you hit the tail you lose $ 1. Can you flip that coin? I guess you will definitely throw that money away.
You want him to come back again and again. When your chances of winning $ 2 or losing $ 1 are 50/50, this is an unwise opportunity you will accept.
Now suppose I have the same coin, but this time if the head gets hit, you triple your net worth; But when your tails get high, you lose everything you have.
Can you flip that coin? I guess you wouldn't do that because a broken post would ruin your life. Although you have exactly the same percentage advantage in this example as in the example above, no sane person will ever throw that money away.
The second example is the number of forex traders viewing their trading accounts. They'll be "all-in" in one or two transactions and eventually lose all accounts.
Even if trades have an advantage, such as the coin toss example, it only takes one or two unlucky trades to completely eliminate it. Leverage can result in losing a winning money strategy.
So how can we fix this? A good start is not to use more than 10 times the effective leverage.
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