Tag: Forex trading

All Forex trading related articles are found here. Educative, informative and written clearly.

MACD Indicator – Moving Average Convergence Divergence

MACD is one of the most popular indicators used among traders. It helps identify the trends direction, its speed, and its velocity of change.

MACD is short for “Moving Average Convergence Divergence.” It is a valuable tool. Traders know how important it is to use MACD as an indicator. Also, how reliable is using this tool in trading strategies. But that can wait for a while, firstly, let’s explain what is Moving Average Convergence Divergence or shorter MACD.

It is a trend-following momentum indicator that presents the correlation between two moving averages of a stocks’ price or in some other assets. We can calculate the MACD, it is quite simple.

Just subtract the 26-period EMA from the 12-period EMA. EMA is an Exponential moving average.

Here is the formula:

MACD = 12-period EMA − 26-period EMA

The 26-period EMA is a long-term EMA, while 12-period EMA is a short-term EMA.

If you need more explanation about EMA, let’s say that the exponential moving average or EMA is a type of MA, moving average. EMA puts more weight and importance on the most recent or current data points. That’s why the EMA is also referred to as the exponentially weighted moving average.

The result we get by using the calculation is the MACD line.

The MACD is useful to identify MAs that are showing a new trend, no matter if it is bullish or bearish. But it’s the priority in trading, right? Finding the trends has a great impact on your account since that is the place where you can earn money.

To recognize the trend you will need to calculate MACD as we show you, but you will need the MACD signal line, which is a 9-period EMA of the MACD and MACD histogram that is calculated:

MACD histogram = MACD – MACD signal line

The main method of reading the MACD is with moving average crossovers. When the 12-period EMA crosses over the longer-term 26-period EMA pay attention since the possible buy signal is generated.

You can buy the stocks or other assets when the MACD crosses above its signal line.

The selling signal is when the MACD crosses below this line.

MACD indicators are interpreted in many ways, but the general methods are divergences, crossovers, and rapid rises/falls.

How the MACD indicator works

When MACD is above zero is recognized as bullish, but when it is below zero it is bearish. If MACD returns up from below zero it is bullish. Consequently, when it goes down from above zero it is bearish. When the MACD line crosses more below the zero lines the signal is stronger. Also, when the MACD line passes more above the zero lines the signal is stronger.

The MACD can go zig-zag, it will whipsaw, the line will cross back and forward over the signal line. Traders who use this indicator don’t trade in these circumstances because the risk is too high. To avoid losses they usually don’t enter the positions or close them. The point is to reduce volatility inside the portfolio.

The divergence between the MACD and the price movement is a more powerful signal when it verifies the crossover signals.

Is it reliable in trading strategies?

MACD is one of the most-used technical indicators. It is a leading and lagging indicator at the same time. So it is versatile and multifunctional, so being that it is very useful for traders. But one feature of this indicator is maybe more important. The indicator has the ability to identify price trends and direction, and forecast momentum, but it isn’t complex. It is pretty simple, so it is suitable for beginners and elite traders to easily come to the result of the analysis. That is the reason why many traders view MACD as one of the most reliable technical tools.

Well, this tool isn’t quite helpful for intraday trading but can be used to daily, weekly or monthly charts.

There are many trading strategies based on MACD but basic strategy employs a two-moving-averages method. One 12-period and one 26-period, along with a 9-day EMA that assists to deliver clear trading signals.

Operating the MACD

As we said, it is a versatile trading tool and the indicator is strong enough to stand alone. But traders cannot rely on this single indicator for predictions. They have to use some other indicators along with MACD to ramp-up success in forecasting. It works great when traders need to identify trend strength or stock’s direction.

If you need to identify the strength of the trends or stocks direction, overlapping their moving averages lines onto the MACD histogram is really helpful. MACD can be observed as a histogram alone, also.

How to Trade Forex Using MACD Indicator

If we know there are 2 moving averages with diverse speeds, we can understand the more active one or faster will react quicker to price change than the slower MA.

So, what will happen when a new trend occurs?

The faster lines will act first and ultimately cross the slower ones and continue to diverge from the slower ones. Simply, they will move away. When you see that in the charts, you can be pretty sure the new trend is formed.

When you see that the fast line passed under the slow line, that is a new downtrend. Don’t think something is wrong if you cannot see the histogram when the lines crossed. It is absolutely normal since the difference between the lines at the moment of the cross is zero.

The histogram will appear bigger as the downtrend starts and the faster line moves away from the slower line. That is an indication of a strong trend

For example, you trade EUR/USD pairs and the faster line crossed above the slower and the histogram isn’t visible. This hints that the downtrend could reverse. So, EUR/USD starts to go up because the new uptrend is created.

But be careful, MACD moving averages are lagging behind price since it is just an average of historical prices. But there is just a bit of a lag. It is not enough for MACD not to be one of the favorites for many traders.

More about MACD

As you can see, the MACD is all concerning the convergence and divergence of the two moving averages. Convergence happens when the moving averages go towards each other. Divergence happens when the moving averages go away from each other. The 12-day moving average is faster and affects the most of MACD movements. The 26-day moving average is slower and less active on price changes.

MACD was developed by Gerald Appel in the late ’70s. It is one of the simplest and most useful momentum indicators that you could find. The MACD utilizes two trend-following indicators, moving averages, turning them into a momentum oscillator. So it provides traders to follow trend and momentum. But the MACD is not especially useful for recognizing overbought and oversold levels.

Bottom line

The MACD indicator is unique because it takes together momentum and trend in one indicator. This special combination can be used to daily, weekly or monthly charts. The usual setting for MACD is the difference between the 12-period and 26-period EMAs. You can try a shorter short-term moving average and a longer long-term moving average to have more sensitivity and more frequent signal line crossovers.

The drawback of MACD is that it isn’t able to identify overbought and oversold levels since it does not have an upper or lower limit to connect these movements. For example, over sharp moves, the MACD can continue to over-extend exceeding its historical heights. Moreover, always keep in mind how the MACD is calculated. We are using the current difference among two moving averages, meaning the MACD values depend on the price of the underlying asset.

So, it isn’t possible to relate MACD values for a group of securities with differing prices.

Some traders will use only on the acceleration part of MACD, some will prefer to have both parts in order.

The one is sure, MACD is a versatile indicator and every trader should have it as part of the tool kit.

9th March 2020
Forex News: Dollar weaker despite the trade optimism

Forex News for December 27: According to FXStreet, the US dollar ends on the last day (December 26) with losses against most major competitors in weak market conditions. Major pairs continue in limited ranges while trading is boring because most markets are closed due to holidays.

Good news comes from the Chinese Foreign Minister and US President Trump. Both of them confirmed that the signing of phase one of the trade deal is just around the corner.

The EUR/USD pair advanced above 1.1100, while the GBP/USD pair re-took the 1.3000 marks, due to the dollar’s weakness, and chances of bigger gains are actually limited.

The Bank of Japan Governor Kuroda said that the central bank would ease policy further if its 2% inflation goal came under peril. He also showed more confidence in the global economic outlook. USD/JPY near December high.

The Canadian dollar is the strongest.

All major markets are opened today (Friday 27), but there is a little action.

Forex News: Dollar Index

The Dollar Index is tanking today as traders await the signing of the “phase one” trade deal.
There are two support levels in the focus of the psychological 97.00 area and below that 96.72 wave low.
There is also a trendline marked in red that might act as support a support area.
Finally, looking at the RSI there seems to be room for a move lower as we are not in the oversold area.

Image source: FXStreet

EUR/USD consolidated near five-day highs of 1.1122 while the Cable traded choppily around the 1.30 handle

Asian stocks hit 1-month highs, Treasury yields traded on the back foot while S&P 500 futures recorded modest gains.

Gold kept its bullishness above $1500. Crude oil traded close to three-month peaks on trade deal hopes and good US Consumer Spending data.

Cryptocurrencies reversed the recent upsurge. Bitcoin slid below $ 7,200 mark.

Don’t miss this: Math Guide for Forex Trading

27th December 2019
Math Guide for Forex Trading

Behind Forex trading lies simple mathematical operations easy to learn.

Okay, math has never been your excellent skill but this math guide for Forex trading will make you clear. The truth is that you are afraid of math and this will help you.

Anyway, let’s see how simple it can be. There are some mathematical formulas that every trader has to know if he wants to be successful in the Forex market.
These math concepts are very simple and easy to learn even if you think that math is difficult.

Change in currency pairs value is estimated in pips. The minimum pip you can see is the fourth digit after the decimal place. The exception to this rule is Yen pairs. The minimum pip there you can see in the second digit after the decimal place.

Let’s use the hypothetical values in this math guide for Forex trading

For example, if the EUR/USD currency pair increases from 1.2530 to 1.32560. It is an increase of 30 pips for this currency pair. In Yen pairs, if the USD/JPY pair rises from 85.20 to 85.40, that is an increase of 20 pips for this pair.

The value of a pip is different for different currency pairs.

Let’s use the forex math formula to calculate the pip value of a currency pair:

Value of a pip is calculated

1 pip/exchange rate x trade size

We are going to use the EUR/USD currency pair with imaginary values.

One Pip = 0.0001
Base Currency: EUR
Exchange Rate: 1.3500
Trade Size: 1 lot meaning 100,000 units of currency
Pip Value = 0.0001 / 1.3500 x 100,000 = 7,407 EUR

How it works on the example on the USD/JPY currency pair

One Pip = 0.01
Base Currency: USD
Exchange Rate: 85.50
Trade Size: 100,000 units of currency which is 1 lot
Pip Value = 0.01 / 85.50 x 100,000 = 11.468 USD

Or let’s see this example GBP/CHF

One Pip = 0.0001
Base Currency: GBP
Exchange Rate: 1.3840
Trade Size: 100,000 ( 1 lot)
Pip Value = 0.0001 / 1.3840 x 100,000 = 7.22 GBP

Let’s talk about probability and numbers to see what lies behind the successful forex trading. Let’s find if a math talent necessary for good trading. We are focused on short-term forex strategies.

So, this math guide for Forex trading led us to the margin and leverage.

In Forex trading, leverage provides you to control a larger position. You will use a smaller part of your own funds and the rest you will borrow from your broker.
Margin is the deposit demanded by your broker. He or she will ask you for a margin/deposit to allow you to open a position.
Leverage is calculated by math formula:

Trade Size/Account Size = Leverage

In this math guide for Forex, here is a realistic example to illustrate this.

For example, you want to enter the position with a value of $200,000. But you have $ 4,000 on your trading account. Your goal is to control $200,000 with the $4,000 you actually have.

$200,000/$2,000 = 50

Your leverage in our example is expressed as 50:1.

What will happen if you instead of $4,000 have $10,000?

You will control $200,000 with the $10,000.

$200,000/$10,000 = 20

Your average will be 20:1.

Brokers can offer from 50:1 leverage for forex trading up to 500:1. But think twice before you accept any offer. It is true that leverage may increase returns but also increase losses.

Position Sizing

This is one of the most serious and frequent estimations that you have to make if you want to be a forex trader. Actually, before you decide to enter any trade, you have to calculate the position size.

We suggest you use one of the simplest calculations. It is a fixed fractional calculation strategy. The best is to risk 1-2% per trade, 1% is better and here is why. Take it as the rule for the fixed fractional risk.

So, you have to decide how much you can afford to risk a per-trade. When you make this decision you have to decide where to place the stop-loss.

Take a look where the most current swings are. Find support and resistance points. When you settle a level where you want to place stop-loss, you have to measure the distance in pips between this level and the entry you plan. Write down that number.

Then, discover the value of each pip. And you can calculate your position size.

Math is in this formula.

current account size x risk per trade/distance between entry and stop x value of the pip

Let’s say your current account size is $20,000 and the fixed fractional risk per trade is 2%. The distance between entry and stop is 100 pips

And the value of each pip is $20

$ 20,000 x 0,2 / 100 x 20 = 0.80 lots

This is just an example and you will find different situations but the principle is the same.

13th December 2019
Sterling is good, the US dollar is trading almost flat

EUR/USD is by far the most important and liquid pair

The dollar index closed yesterday’s trading session in the red zone. The Fed cut its main interest rate range by 25 basis points. The central banks of Canada and Japan held the essential marks of monetary policy at the same level. The release of important economic reports is expected.

Sterling stays good this week and it is possible to have another run at 1.3000 against the US dollar.

The EUR/USD pair is sitting moderately higher on the day at around 1.1160 levels. It is similar to where it was traded on Thursday during the European morning.

Prev Open: 1.11528
Open: 1.11517
Day’s range: 1.11487 – 1.11688
52 wk range: 1.0884 – 1.1623

While buyers are looking to place more upside control with near-term resistance, closer to 1.1179, the important level to look out for will be the 200-day MA 1.1196 and also the offers holding near 1.1200.

Traders are currently 51% net-short GBPUSD.

But wait for the US jobs report later at 1230 GMT.

Buyers are keeping near-term control since the FOMC meeting concluded but unless they can break the resistance levels above, sellers will look to drive the price back lower in the future sessions.

For now, large expiries are seen resting at 1.1150 and 1.1200 so that may factor into keeping the price within a more stingy range before they roll off later today.

The dollar was lower this morning but now losses are seen.

Sterling is good, majors have stabilized. Investors are waiting to see the publication of the US labor market report for October. That could have an important influence on the rate of adjustment of the Fed’s monetary policy. Current economic statements from the United States have been combined. Experts expect a decline in key indicators of the labor market. Presently, the local support and resistance levels on the EUR/USD currency pair are 1.11400 and 1.11750. We suggest opening positions from these marks.

1st November 2019
The Truth About Forex Trading

4 min read

(Updated November 2021)

Traders-Paradise got (and still get) a lot of emails with the questions: What is the truth about Forex trading? or Can you tell me the truth about Forex? or Tell me, please, is Forex profitable or it is a myth?

Okay, people, it’s time to tell you things that nobody will ever tell in one place.

First of all, the vast websites you visited searching for the answer to the question above, are sites with some Forex offers. Doesn’t matter if it is a brokerage, exchanges, system, signal providers, strategies, platforms. They all have one common interest: to present you only THE BEST. Their goal is to sell you their products. There is nothing bad in their goals and intentions, but you must be aware that some things will always stay covered and hidden from you. Until you build your own experiences.

We are giving you the shortcuts because all of us were struggling while we were novices in Forex trading. Actually, our struggle begins before we enter the Forex trading. Just thinking, measuring, asking, searching is struggle itself. And, still, you will find several sites or people ready to tell you the truth about Forex trading. Just because there are some characteristics to trading that the majority will never like to talk about.

And yes, those features of Forex trading are ugly. Some are evil and scary. But Traders-Paradise’s opinion is that we have to talk about everything, doesn’t matter if it is nice and affirmative or ugly and not-so-nice subjects.

We will share what we know to answer you what is the truth about Forex trading.

Just to give you a clear path to decide if Forex trading is for you or not. The benefits you already know, you can make a fortune trading Forex but we want to show you the other side of the same medal. One thing you must keep in your mind: none of us is going to tell you to give up.

Based on our personal experiences, the most common misconception is that you have to be some math geek if you want to trade Forex. Yes, it is beneficial if you can understand the math behind your trades but you don’t need to be genius for that. This has to be said, a lot of very successful traders never even started high education. Have you ever heard about some Forex trading college or university? Of course not. Because if you want to be a successful Forex trader you must have particular skills. You don’t need a diploma. Speaking about those skills, for the profitable Forex trader is more useful to be a strong personality, not to get panicked when trades go in an unexpected direction. If you are nervous and without self-confidence, then Forex trading isn’t for you.

Yes, numerous and complex trading strategies are out there.

And indicators, charts. OMG, Forex is for Nikola Tesla, not for me!

Just stay calm! The ability of self-control is more important. Forex markets are endless tension. Your nerves are what is really in a count, not your math knowledge.

Traders-Paradise will reveal you a secret. The winning traders very often practice one trading system. They learned that system, tested it on some demo account for several months, started the real Forex trades and VOILA! Their result is verified, the system is working, they have profit, so why change anything?

The other thing we would like to share with you is the fact that in Forex trading your entry and exit points are irrelevant. Sound like a blasphemy, right? Imagine us, we are laughing! Because it is the truth about Forex trading. How the mentioned points are important if you can place your trade while sitting in a restaurant with your friends or walking. All you have to do is to take your phone in your hand and start to trade, whenever you want. Sound crazy?

Wait, there are more!

We have heard so many times that humans generally are not good at trading.

The truth is that some are better.

Being a successful trader doesn’t mean that someone is naturally predisposed for that. That isn’t something the mother will give you with a birth.

What you have to do is to start thinking that you have to fight with the market. Just like in flight or fight situation. Imagine that the market wants to still all the money you placed there.

What does your brain tell you? Flight!

No, never if the Forex trading is for you. Your brain should command you – FIGHT! While you are sitting in front of your computer, you have to be the fighter. Or you will gain the loss. Whoever loses a profit, gets a loss. (That is wise, we should spread this sentence all over the world.)

When we are pushing the buttons to place our trades, actually we are pulling the triggers. On our brain’s command. And here is the trick. Our brains will send us variously commands. That’s why you must have a plan. It is a battlefield, you cannot just run around and shoot. That’s when you are afraid or you are disoriented.

To have winning trades you must have a logical plan while trading Forex. If you don’t, you are 100% losers.

One of the biggest lies about Forex trading is that some traders keep 100% successful trades.

No one can ever guarantee 100% success rate, no person and no algorithmic application

This truth about Forex trading you will find nowhere else:

Do you know how some brokers or signal providers, or strategy sellers want you to believe that they have a magic weapon for the markets? That’s a lie. They are lying to you. Trading isn’t so easy.

It may take years until you be able to gain a permanent profit from trading. Our aim is not to frighten you, but this is the truth. You will need months and years of analysis, testing and error corrections to be professional traders.

The biggest truth about Forex trading is that you don’t need superior software or multiple trading screen setups to be a prosperous trader. This is something that no one will tell you. Especially trading websites. All you need is a device with full access to some free charting app.

Remember, the most powerful tool in your trading armory is your brain, not trading software. Some very simple and cheap but user-friendly software can provide you more benefits than a robust one. Remember this.

Traders-Paradise revealed you the most hidden secrets about Forex trading and told you the whole truth and nothing but the truth.

Happy trading from Traders-Paradise Team!

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19th August 2019
Tom next what is it – explanation with examples

3 min read

by Gorica Gligorijevic

Tom next is a short-term transaction in foreign exchange when you buy and sell currency together over two separate days. Actually, it is a business day we are talking about. One day is tomorrow in the sense of one business day. The following day in sense of two business days from today is known as the spot date.

The main aim of this transaction is the traders and investors keep their position and are not forced to exercise real delivery.

So, suppose you already know that in the Forex market, each transaction carries an attached value date. That is the date when buying or selling activities will hit their value. The value date happens 2 business days after the transaction is executed. The profit or loss generated by the buying and selling is settled into a particular account.

To be more clear, when you take a position in a currency it is expected that you will deliver the currency in two days. But, a lot of Forex traders are gambling and don’t even think of taking delivery on the currency.

That is the point where tom next comes to the scene.

If you open and close a position in the same business day, the value dates will be identical for every transaction. Your positions will not be carried over into the next day. Your payment has already been accomplished and will complete on the same value date.

In currency trade, delivery happens two days after the date of the transaction. Tom next trade occurs because the majority of currency traders want their positions to be rolled-over daily. Their goal is not taking delivery.

The purpose of tom next is to restrict traders from having to take delivery of currency and keep their forex positions open to the next day.

Like stocks, forex trades end when the trader takes delivery of the asset. In forex, the delivery day is two days after any transaction. That is the spot date, but tom-next can be applied to prolong the trade after this date. So, the position will be extended by using tom next and you’ll be able to swap any overnight positions for an equal contract that begins the next day. The difference between these two arrangements is the tom next adjustment rate.

So, this simultaneous transaction is a Forex swap.

Depending on what currency you hold, you’ll be charged or earn a premium. If you are holding high yielding currencies you will roll it over at a more pleasant rate (minimum is the best) because of the interest rate differential. This differential is the cost of “carry”.

For example, if two currencies have the same interest rates, they will be swapped at an identical rate.

If you choose not to roll over your position you will be forced to take delivery of that currency. Well, this is unusual, so the tom next transaction is basically the prolongation of your position.

The policy of rolling a position over is more valuable in commodities trading. If it is not finished, you will be left with the delivery of the underlying assets.

How does it work?

Your broker will swap or rollover your position for a new deal that starts the next day. The final result is an adjustment, higher or under, to the opening price for your position on the next day. You will see a tiny difference in the opening price from one day to another day.

Your broker will debit or credit your trading account depending on the change in interest rate. Let’s say you are long with a currency with a higher interest rate.

What your broker will do?

Your broker may credit your account with interest payments. However, if you are long with a currency with a lower interest rate, your broker will pay interest payments from your account.

A tom next will not be applied if you close the position the same day before 17:00 EST. How? There is no overnight delivery involved.

How do you calculate tom next?

The calculation is based on the closing level of the former position, and the change in interest. Swap points plus any interest on your unrealized profit or loss will produce the change on your account.

Rollovers that appear on Wednesday will have an added two days worth of interest. You know, for the weekends the banks are not working, so the broker will automatically credit or debit your account.

Tom next example

For example, you are long USD/EUR at rollover and the average entry price is 120.00. In this case, you select to hold your position. Let’s say, just for the purpose of this example, the quote for the tom next swap points received from the bank is 0.025 – 0.012.

What will happen? Do you remember, this is a simultaneous transaction?

A rollover, your broker will sell and buy USD, and at the same time buy and sell EUR. The final result is that you get a bid rate of 0.012 in your favor. The average price of your position will diminish by the number of Tom-next swap points.

The adjusted price of your position will be

120.00-0.012 =119.988

Tom next adjustment is used to calculating the overnight funding charge on your trading position. You have to pay it if you want to keep your trade open for more than one business day.

The rates can be changed on a daily basis because they are based on the underlying market price.

If you want to buy a currency with a higher interest rate, you will get an interest payment. Hence, if you choose to buy a currency with a lower interest rate, you will pay interest. This payment is known as the cost of carry.

You might also like:

>>> Best Trading Strategy Without Indicators In Forex

>>> How to Use Technical Indicators to Analyze Stocks?

>>> MACD Indicator – Moving Average Convergence Divergence

>>> Indicator Trading And How To Use It

>>> P/E Ratio An Quick Method to Value a Stock

18th August 2019
How well are you doing?

5 min read

by Hans Stam – Trader, Mentor, Author

Impressive

In my journey as a Forex Trader, I come across many different ways of thinking.

Some really think they are the only ones that are right, and everyone else is wrong.

Some contact me and tell me my claims are false or I do them on hindsight trading.

When I show my live accounts where they can see live trading and history, I’m usually getting a response like… Impressive.

Others I never hear from again.

It’s really our loss if we let ego dominate our thoughts.

Always keep an open mind as there might just be something to learn.

Spreadsheets

When you are trading, we like to succeed at a given goal.

One thing that happens a lot is that traders see a certain return, and start calculating.

Some make a spreadsheet and calculate their returns as being static.

Then on their spreadsheet, you can see they are 5-10 years ahead and often millionaires.

Unfortunately, it doesn’t work like that in real life.

Long term goals are good once you have reached short term goals.

What is realistic and doable for you?!

Algorithms

Now that you are all set up, you probably have developed your style of trading.

It’s normal to want an outside opinion on your trading so some sign up for a company that has algorithms running.

But be aware, you might do perfectly in one group and totally fail in another.

How is that possible?!

Algorithms are being programmed by the opinion of the Programmer/Company.

There’s a lot of difference on where their focus is and their results on your trading might be way off.

I have had discussions with some of them, and in many cases, they had to agree they did not think of other things after seeing my live trading.

So, in the end, your results are just based on their opinion and how well you agree with them.

Performances

My suggestion would be to trade for a year and keep an eye on your results Quarterly, Six Months and annual returns.

Keep an eye on the DrawDown and Risks you took by exposure to the market.

Goalsetting is a tricky thing to do when Trading.

It might be best to focus on the number of deposits you are willing to make and set it as being a goal regardless of performances.

You are the one that decides what you do and why.

It’s your money on the line so if you keep on losing ask yourself who you are following.

Is this really your plan or someone else’s plan?

Nothing wrong with that, but it has to be your decision as well.

Don’t just pick a trade because someone tells you if you don’t agree!

So… How well are you doing?

No matter what others say, you are the only one that can determine if you are doing well or not.

You have your own algorithm to perform to.

What are your intentions?

Is it you want to deposit $100 every month for a year?

Is it you are focussed on not having a bigger drawdown than 25%?

So my guess is that you are the one that determines how well you are doing.

Did you reach your goals?

What works and what doesn’t?

Probably the profit-taking results will not work as the market is depending on movement, so maybe it’s better to focus on what you can control.

Opinion

When it comes to trading, you are your own boss.

Only your opinion counts as you are the one making the trades.

Now, that does not mean you never listen to anyone.

Weigh the information, see if it makes sense, apply what is useful!

Sometimes I get good ideas presented, and it doesn’t take long before seeing the goal which supports that idea.

The idea itself may be good, but it doesn’t always apply to my goals.

When I would try different outcomes for different goals, it might become mixed up which makes both goals fail.

Some people lose money fast, and they get very frustrated because their opinions were not their own.

When you find yourself losing money because of someone else’s ideas, review and see why you are losing. And see how well are you doing.

I’m lost?!

When you are doing your thing and just came across a new idea, you might want to throw everything overboard and go for this new idea.

You might feel you are lost once that is not working out.

What you could do is demo test this new idea first, but most don’t have the patience because of their excitement.

What you might do when you find yourself in that place is to open a subaccount and usually it is easy to transfer from one account to the other.

Use your idea on the new account if you don’t choose demo first and let your initial strategy run as usual. When this new idea is producing what you want to do, it will grow on its own, but you will always have a backup from where you already are having experiences.

Easy

It’s easy to do well as long as you have a clear target in front of you which you can control.

When you can’t reach your targets, don’t try to catch up, reduce the targets to a smaller target.

If your first targets failed, then catching up is even more difficult.

Adjust to what is doable for you, and keep the goals closeby and short.

If you commit to depositing $500 a month for the next 5 years, you might want to adjust to depositing $400 for the rest of the year and review in December.

Did your circumstances change? Was it easy to do? Do you want to dedicate more?

You might have lost your job, or got a raise? Lot’s of things can happen in between the plans you make.

Keeping your goals close makes you reach them faster, if you fail the goal, reduce the goal to what fits you at that time.

You can do this!

All the best,

Hans Stam
[email protected]

3rd July 2019
Can I start Forex trading with $100?

Forex Education Part 7

5 min read

by Hans Stam Trader, Mentor, Author

Can I start Forex trading with $100?

Forex trading can be started with a small amount, don’t worry. Brokers usually have a minimum deposit to serve the large group of people who want to deposit as little as possible.

That definitely is a huge market for them.

In all fairness, I think the minimum deposit is not helping you.

What it does is make you think you can make a quick profit, and it’s true, sometimes you can.

The other side of that is, you don’t have much buffer to work with, so you could very easily lose your deposit.

Due to the leverage, taking the lowest amount into a trade would be 0,01 LOT also called a mini-LOT by some, and that would already take you down several percentages in Margin Used.

Then you probably are negative right away due to the Spread which varies per Broker.

When your trade goes against you, and you reach a total drawdown of about 50% of your account, some Brokers will close your trade called a Margin Call.

You would not have enough money to sustain your trade.

I’m not saying it’s impossible, but chances are that even though you managed to get your account up to $200,- it would not take you out of the danger zone.

When it does go your way, you are most likely going to take too much risk which can crash your months of hard work and stress in 5 minutes if you take the wrong trade.

What is the alternative?

When people ask me to mentor them, or if I can help grow their small accounts, the answer I have to give is just as frustrating as it is for them.

I can only tell them to keep demo trading where they can’t lose any money.

It would be unethical of me to tell them to pick a trade which I know will not work in the long run.

The best thing people can do is to gain knowledge and experience, read the articles and create a plan on how to come up with a proper account to make a start.

Career

What most do not understand is that once you really want to go for Trading the Forex (Foreign Exchange) market, it is nothing less than becoming a doctor, dentist, bookkeeper or any other occupation.

Forex trading takes dedication, patience, time and money to start that career.

Same goes for Forex Trading, it would be misleading to tell you it’s easy to do while I know how difficult simplicity can be, and often you are your own worst enemy.

You can’t become a doctor overnight, no matter how dedicated you are but you can make a start educating yourself.

Even a mentor can not magically make you a top trader in a few hours as you would still have to come up with a reasonably sized account.

It’s not that mentors do not want you to help you, but they have gone through the same education most others have and also made all the mistakes before which made them smarter over the years.

Often mentors have made all the mistakes unless they too had a mentor guiding them.

How would you feel if you lost $25.000,- in just 15 minutes and accept that as an expensive lesson? Many mentors have been in that position so you can imagine “losing a patient” on the operating table is really something else to deal with.

So if you apply to become a Forex Trader, please understand it would be similar to asking your doctor to help you to become a surgeon. If all you have is a kitchen knife, what is your doctor to do with your request?

So Forex trading is not for me?

Maybe not, maybe it is.

It really depends on who you are.

Some people have a better position in life to start than others.

I was one that had to struggle all the way and although I was set back a lot of times, I just kept learning and investing in my goals.

To me, that meant making a lot of sacrifices and thinking back, that sometimes still hurts.

Perhaps I was better off doing something completely different, but this was my goal and here I am. Who is to say what would have happened if I took another route.

Right now I just feel blessed to be where I am but it really is your choice to make a decision and do whatever it takes to become what you want to be.

People and circumstances may try to keep you away from your goals so it really takes strength to go after your dreams and there’s nothing dreamy about that.

Why would Forex be my choice?

Often I hear stories about why people start trading.

Some have a nice career but want to do something else, others want another income, some need to take care of their families or children, some are selling their business and want to move elsewhere so they need a new income. But not many of them will actually succeed in the short term.

Still, those people will work on becoming a Forex Trader.

My best guess is that those people are really dedicated to making it work, and I am working with some of them to achieve that goal.

I also know those people will be working with me for the years to come, as they will need solutions in all kinds of Market conditions.

What some do is buy a course and then they are on their own, the best they can get is some live Signals or live chatroom, but before they are there already a lot of money has been spent. I think that doesn’t work as they will not grow to a point where they can anticipate the changing Markets themselves.

It takes the experience to do that and a course alone doesn’t provide that.

When it comes down to business, you will have to go with the information you have and make it your own.

Yes, courses can help understand certain things, but in the end, it’s your money on the line and your decisions that determine the outcome.

Misleading in Forex trading

Hopefully, this gave you a little insight.

It’s misleading to accept the image of fast expensive cars and tropical beaches.

Many traders are down to earth people, realistic about the profits, and those that step out of that zone, usually are being smacked into reality within months.

So yes, there is a lot of misleading going on, but you have to be smart enough to skip through the nonsense and make sense of it all.

I will not say you can’t have those things, but it sure is a long way there starting from scratch. It’s not unusual traders are constantly learning during decades of trading.

On the other hand, it really is possible to become a very good Trader and it really comes down to who you are and what you are willing to learn and do.

Success!

So far this sounded sobering but there is, of course, the other side of the medal too.

I know some traders and others related to trading in the supporting sector, who are really hard working smart people willing to help you.

Like this article you’re reading right now at Traders Paradise, it’s all here to help you get smarter.

Many devoted people are willing to support you on your journey and it took them sacrifices to get to this point where they can.

We’re here to your benefit, serving you the best we can, so one day you too will be successful and have changed your life.

We’re not selling you a glamorous picture, but the reality of what it means to be a Trader.

Most traders still have jobs on the side and some really made this their career, and I admire those people no matter where they are on their journey.

A common characteristic is, they will not give up on their goals and the rewards will be worth it eventually for them.

It’s up to you if you will join that group or not but hopefully, this article has given you a fair look at both sides of success.

Sincerely,

Hans Stam

risk disclosure

13th June 2019
Question everything, it is a vital part for your trading

Forex Education Part 5

by Hans Stam – Trader, Mentor, Author

Interview

You must question everything.

Recently I received a request for an interview.

This was a rare invitation going out to the best traders available to share some wisdom.

Most of the questions were easy for me to answer, but there was one I had to think about for a while, and I would like to share it with you as this might be useful to you.

You see, I’m not a wealthy man at the time of this writing, so let me be an inspiration to you.

Patience is better than a quick fix, experience and knowledge are greater than gambling your way to success.

Best advice

One Question that stood out for me was,

What is the best advice you gave give to other traders?

My answer was…

Question Everything, then make up your own mind!

This may not be advice about how to spot a trend, or how to manage funds, but it really is an answer I like to explain.

You see, in my years of trading, I have tried a lot of ways to make a decent profit.

You may recognize yourself trying to make it all work for you.

As in many cases, the most talented people are also the ones that have made a lot if not all mistakes possible.

The thing that stands out is the way they solved those problems.

Question Everything...

Especially in trading, you can’t just accept what you are being told without any credentials.

There is a lot of misleading going on in the Forex Industry, I rather see proof.

Of course, there are many ways to trade, but even the fancy guru’s don’t always provide you the insight on how to do it yourself.

What I’ve learned in my years of trading is to question everything, and to make up my own mind.

I suggest you do the same.

Example

I’ll give you an example of how to apply this to your trading.

Let’s pick a random scenario.

Some guy tells you he found a great strategy but conditions apply.

And every time it fails, you didn’t understand the conditions or this was a rare case of where you had to take a loss.

Let’s say he claims to win by watching a combination of candlesticks, and whenever that pattern emerges, you have to buy or sell.

When you investigate the claim, and compare it to a monkey pressing buttons, who would win?

Then, I don’t care about the times it works, I’m more concerned about when it fails.

What happens when it fails and why? Is it really worth it or could I just as easy trade the other way around and get the same results?

Does it make any sense to you and are you willing to lose your money on that claim?

It’s up to you to decide.

Make up your mind

Keep in mind, no one on the other side of your trading cares when you lose.

Also, keep in mind, there are people ready to take your money and even might provide you with false signals just because they have to give signals they are selling.

Whatever signals or tools you are being given to work with, ask yourself the question, is this really benefitting me?!

Can this tool cause me to lose? Can this signal be explained and what causes the failing trades?

You have to be very skeptical about everything you hear or read.

Does it make sense to you, does your own trading make any sense to you.

I have provided some serious advice to some people around me, and even though they knew it was working, they still used their gain to waste it on trying something else.

To me, that was frustrating to see, but on the other hand, it’s their money and they too can try and question everything, including what I tell them.

Success ratio 1:5

I had a question earlier by someone who asked how to get a 1:5 success ratio.

While understanding what he was trying to achieve, this question also was a bit silly to me.

Why would you want to have 20% failure in your trading?

Wouldn’t you rather have less losing trades than that?

What causes the 20% losing trades?

Why would you take those trades anyway?

No one can predict the market?

If that would be true, then why are some more successful than others?

Don’t you think that when other traders are consistently winning their trades, they have another mindset?

In this article, I’m asking a lot of questions rather than give you the answers right away.

I do that to make you think for yourself, to question everything and to let you make up your own mind.

To me, this is the basis of becoming successful.

This has to work for you because You will need to make the decisions which trade to pick.

Something to think about

Hopefully, this has given you something to think about, because nothing will change if you stick to being ignorant.

You could read all the articles in the world, pay for whatever service, or follow a stock picking money,

as long as you don’t start to Question Everything and make up your own mind, it will lead nowhere, and nothing changes for you.

Dedication

The chapter most of you will want to read has come.

How do I make money?!

I hear a lot of people telling me, this is my dream, I really want to do this, etc.

Unfortunately, statistics show dedication sticks to words and not often become a reality.

Some people seem to forget it took me about 30 years to figure out what works and what doesn’t.

Also, a lot of people think they can start at $100 and hopefully be rich next week.

Their way of doing that is gambling which most likely will blow their account.

Be smarter than that, do whatever it takes and make educated decisions.

As mentioned before, this really is a career, and you can decide to do it or not.

But it does take action and patience, that seems contradictory but it is what you will need to do.

OPM

Other People’s Money (OPM) is a way to make money faster, once you built your track as mentioned before, you will want to use your talent to make money using OPM.

The way to do that can vary, and usually is done by attracting investors and trade through a MAM or PAMM, which are basically the same technically speaking.

How does that work?

You have your own trading account, and the software will copy your trading to sub accounts.

These subaccounts are in the investors’ name and you have agreed on a fee or commission.

After both have signed all legal documents, the investor funds his account and trading will be done as you trade your own money.

The agreed earnings are then automatically transferred directly into your trading account.

How to get Investors

You might think to yourself, I don’t have any investors, so now what?!

There’s good news for you if you really are talented or educated.

If you are prepared to deposit a fair amount on your trading account and let your results being tracked by A.I. you can get a Track that can be used by a Broker linked to that specific software, and it will make it possible for you to get funded.

How to get funded?

I will go through this simple process step by step.

Step 1. First, sign up for a Live Trading account by clicking here

Step 2. Then sign up for the Free Tracking software by clicking here

Step 3. You keep on trading the way it works for you, and you will automatically be funded once you have gone through the process of 6 months and if your score is 75 or higher.

Step 4. Progress through the system, and 4 months later you are a Pro Trader if you are doing well.

Step 5. Once you already received funding from the Broker, you are now ready to be introduced to the Investors market. No way to tell where that will lead you but it is Free money for doing the same thing.

If you have questions or need help, then Click Here and I’ll help you the best I can.

Experience

Since I’ve been in the market, this really is the best way I have found to start making money while trading the Forex market.

There are other similar programs, and I have had many discussions with several others, but I couldn’t manage to come to a fair arrangement.

Another reason why I promote this one is that there are a lot of options here to make a solid income.

Sounds like a big commercial but this is my experience, the choice is yours.

If you are serious about making Forex trading your career, these are some good tips to your benefit.

If you like to ask me any other questions, I’m here for you.

Click here to contact me

Best Regards,

Hans Stam

5th June 2019
Creating strategy for Forex trading

Forex Educational Series – Part 3

by Hans Stam – A Forex trader

Creating a strategy

We left off in the previous chapter talking about creating a strategy of your own.

It’s obvious you do not want to lose money, your aim is to be right on your trading as much as possible to make a profit.

So how can you create a strategy that will work for you?

I mention specifically it has to work for you because many will sell trading signals on their analyses, but once you try to implement the signals, your timing could be off and totally miss the trade.

Then again, who knows if that signal is very successful and why would you trust other traders signals?

Of course, that’s a personal choice to make, but once you would decide to create your own strategy, here are some tips.

Demo testing before creating a strategy

While creating a strategy that works for you, you obviously do not want to spend a lot of money so you will use virtual money using a demo account.

Once you have set up your demo account, you can start trading as if it was real money, but more importantly, you get to know the trading station you will be using later on.

You see all kinds of options, and most will not apply to you so you will have to figure out what you will use or not.
For instance, the chart used.

If you like to open a demo account.

Charts

Most will stick to candlestick charts but there are many other types of charts to choose from.

Also, there are timeframes you can choose from.

In this example, we’ll stay with candlesticks but many other types of charts will have similar info.

A candle represents what the price did in a specific timeframe.

If you pick an hourly chart, it shows candlesticks and the info of the price in an hour.

Main info a candlestick is giving you the Opening Price at the beginning of that hour, the highest price, the lowest price and the closing price of that hour.

The next candle would start its opening price where the previous candle ended its closing price.

(If that is not the case we speaks of having a gap, but that’s not common)

If you would change your hourly chart to a 5-minute chart, it would give you a lot more information whereas the hourly would give you the bigger picture.

It’s for you to decide what you do with that information and how you would apply that in your strategy or not to apply it at all.

Indicators

Using charts you will also have indicators. For example, you can use a curving line which follows the Simple Moving Average of the price known as SMA.

Others are MACD or RSI to name a few. There are countless indicators, and it’s up to you to use some of them or to ignore them.

Every indicator you would use has its own specific purpose and shows you the result of what that indicator is designed for.

We can’t go through all of them, so if you choose to apply you can do some research on a specific indicator.

Most commonly are MACD, RSI, Moving averages, often in combination with trendlines, Channels which form, Support/Resistance, Fibonacci or Elliott Waves, etc.

It’s up to you what you want to use or go a completely different way in your trading.

Trends

Often when patterns emerge from the charts it shows a direction to where the price is heading.

If you see a clear direction you could translate that to yourself as seeing a trend.

As we talked about previously, we would like to figure out what most other traders would do, and seeing a trend could be useful.

If you build your strategy, you could make up some rules for yourself to test and see what result that gives you, one of them could be catching those trends.

The beauty of trying that out on a demo is, it will be virtual money, so even if you lose, no harm is done. But it is very useful while creating a strategy.

Stick to what works

While trying out your strategy starting from scratch, you will notice some things work, others don’t.

Try to figure out what causes losses, and eliminate those reasons by altering your strategy to where that won’t happen again.

Then go test it again on your demo.

You decide when you think your strategy is working properly, then you can try to trade real money and go make a profit.

As soon as you notice it’s not working, stop trading and go back to demo trading, see what caused it to fail, and alter the strategy.

Rules

When you look at how others trade, they often have rules. Institutions also have rules which you cannot break if you want to work there.

The big advantage we have as private traders is that there are no rules at all.

We can make up our own rules. It’s our money, our strategy, and whatever anyone else says, you can choose what to apply or not.

The broker you work with could have some rules, but other brokers might not have those rules at all.

Choosing a broker may be of importance when you want to trade your strategy.

It really takes some creativity and patience to create your own style, but once you have done that, the rewards will be all yours.

Mentor

If you think to yourself, it’s hard to do all that work, can’t I just get a mentor?

Well, that may be harder than you think.

Often when people look for a mentor they end up in a strategy that can be incredibly difficult to follow.

The alternative is to just let some robot trade which is programmed by these “companies”

Real mentors will learn you how to think for yourself, and if what they have tried and tested makes sense.

The reason why a mentor is very valuable to you

…is that you will have to make your own decisions in the future.

You can’t rely on anyone else to make all the decisions for you, because what would happen to you when that mentor decides to just quit?

Or what would happen when that mentor starts to charge you $1.000 a month just to follow instructions?

If that would happen, the information may or may not be that valuable, but you would still have to make more to end up with a profit.

A good mentor will take you by the hand and walk you through all your questions, pointing out the stones on the road so you can find your way in the dark.

I once met a man who had sold over a thousand courses for the price of $300.

So he made over $300.000 just by selling his course and in addition, he lets his students pay an additional $30 a month just to get access to “Hindsight Trading” on YouTube.

When I talked to him, he did know a lot about indicators, etc. but frankly, I thought he didn’t know what he was talking about as he was guessing just as we would too.

He’s a great salesman, but that is not a guarantee you will get value for your money.

In the end, results count and you will be the judge if it is worth your money or go look for another mentor if you would need one in the first place.

Q&A

If you like me to cover a specific item regarding trading, just let me know by sending me an email, and I’ll try to clear that up in the coming articles.

Best Regards,
Hans Stam

29th May 2019