This is not a “follow my advice and make a boat load of cash in the Forex market so all of your wildest dreams will come true!” post. It is also not a “nobody makes money trading currency so why even bother” post. This is my real life experience in dealing with currency trading, that is all.
First off, even though there is already a disclaimer on this site saying I may just be some blowhard spouting nonsense and any so called “advice” you may heed from this blog comes with the caveat of “at your own risk” (that is paraphrased, of course) I should mention specifically here that trading, by nature, carries a certain amount of risk. Forex, or currency trading especially carries a high amount of risk and you stand to lose a lot of money by partaking. Conversely, you can also make a lot of money. High risk – high reward scenario at its finest.
What Is “Forex” Anyway?
Forex, short for foreign exchange, is the global market of currency trading and exchanging. (I’ll use “Forex” and “currency trading” interchangeably in this article) It’s an amazingly large market with an unfathomable amount of money changing hands on a daily basis. It operates on a global scale, around the clock and is only closed for about half the weekend. The Forex market has actually existed for decades but with the advent of the Internet and the fact that it makes information accessible for billions of people world wide, the Forex industry has drawn a massive amount of interest in recent history.
There are many companies or brokers online where one can set up accounts for free. Having these companies on the web has made this industry accessible for anyone who wishes to invest in currency trading, simplifying the process from what it used to be.
Nobody Makes Money With Forex
False. Blatantly, patently false. I greatly dislike blanket statements like this because you find me one person who has made money trading currency and that totally negates the statement that “nobody makes money with Forex”. I have made money in this market so I can absolutely tell people, to their faces, or to their electronic faces, that yes, people DO make money this way.
Forex Is Just Gambling
It amazes me when people say this to me. I always ask them what their definition of gambling is and they’ll usually tell me something like risking money with no control of the outcome. Like the stock market? There are many, many parallels between Forex trading and buying and selling stocks. Both carry an inherent risk and in both scenarios you have no control of the outcome. The only things you can control in both situations are your entry and exit points. The rest is up to the market. It is gambling in the sense that true, you have no control of which direction the market is going to swing. Other than that, I personally do not consider trading currency as gambling.
My first exposure to the Forex market was just shy of two years ago. I latched on to it at once and immersed myself with knowledge. The more I read the more it made sense. I became really intense about it, as I tend to do with many things, and lived and breathed currency. I’d read financial news at every opportunity, I’d be glued to my computer screen or my phone, monitoring the markets and I loved every second of it. I found blogs and forums with a wealth of information and began reading about what other people had experienced and learned while trading currency.
I came across people who had very complex, expensive multi screen setups that had each screen plastered with indicators. I was also exposed to people who took an incredibly minimalistic approach, such as price action trading. I found experiences of people from every walk of life utilizing a successful trading system or developing their own. I set off on a mission to find out what worked for me.
I had been actively trading for a very short time when I first blew out my account. I had become emotionally attached to my money and my trading and I had a trade that I was sure was solid… I was so positive that it was a good trade that when it turned sour I adjusted my stops to allow it to travel further in an unfavorable direction than was wise. Before long (it actually seemed like an eternity) I stopped out and lost, what was to me a very significant portion of money. I was angry. Angry at the market and at myself. My thoughts were irrational…like the market was out to get me or something! It was ridiculous. Up until that loss, I had been trading with literally 100% success. Once I calmed down, I inferred from this that one of two things was happening.
1. I was experiencing blind, stupid luck.
2. I actually had a system that was working but my emotional attachment fouled everything up.
I looked at my series of trades up until that point with a fine tooth comb. I had one loss out of dozens of trades placed. That’s pretty remarkable. Yes, it turns out there was a portion of luck playing out in my early trading as well, but from that initial analysis I found the single pattern that would turn out to be the system I use today. I won’t get in to it in depth here, but it involves analyzing one time window with one indicator. That’s it. Beautifully, remarkably simple. Just the way things should be.
Over time I refined my personal system and have made it safer and more accurate. I have experienced the emotional fumbles a few more times since that first big loss and each time I get angry at myself. It’s been quite some time, though, since the last time that happened. Today, I trade with about a 70% success rate. I am very pleased with this but continually try to improve my record.
Would I Recommend Forex Trading?
One must take care while doling out “advice” or even “recommendations” in a public arena such as this. Again, as stated in multiple areas of this site, any advice you may receive from me or anyone else on this site is to be taken at your own risk and you are to understand that there is an inherent risk to doing anything with your money. That being said, if I were to recommend Forex trading to anyone, here’s how I would go about it.
The Quick Forex Checklist
1. Find an online broker and open a free practice account.
2. Research peoples’ systems and use or adapt one that fits your personality.
3. Research more.
4. Trade using your practice account.
5. If this is something that jives with you, open a real account.
6. Trade actively.
Questions, comments, concerns? Share them via comments or emails!
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