Tag: Forex trading

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

How Much Money You Can Make In Forex Trading?

3 min read

Are you tired of being scammed, fake script?

Do you wanna earn?

But you want secret strategy 100% working, real and very legit.
Yeah!

How much money you can make?

Can you become a millionaire through Forex trading?

Well, the answer is YES and NO.

I am not saying that it is impossible to make millions with Forex. It is.

But if you want to turn a $500 or even a $5000 account into millions, then I have to tell you that you will have a hard task.

Yes, I know. You’ve heard of traders making millions in the financial markets.

But it is not good to compare yourself with them.

Why is that?

Because you’ve got different account size, risk affinity, risk management, trading strategy, and etc.

So is it possible to get rich trading forex? Absolutely!

But you need to keep some things in mind before you try it. Many people want to get rich trading forex and there is no doubt it offers the potential to do so but most fail. Forex trading is risky we know that already but with risk goes reward. If I want to explain how much money can you make from forex trading I have to do it with objective measures.

Just statistics, numbers, and the cold hard truth.

Are you ready?

In your trading the most important thing is metric. If you only win 20% of the time and you can have a 1 to 2 risk to reward on your trades, you will be a consistent loser.

It is obviously your risk to reward isn’t the answer. What else can be? Your win rate maybe?

Let’s see.

You have a 90% win rate but if you lose $0.95 for every dollar you risk, you will also be a constant loser.

So, where is the catch?

Your risk to reward and win rate is meaningless on its own. You must combine both your win rate and risk to reward to establish your profitability in the long run.

This is known as your expectancy. That will give you an expected return on every dollar you risk.

Mathematically it can be expressed as:

E= [1+ (W/L)] x P – 1
NOTE:
W means the size of your average wins
L means the size of your average loss
P means winning rate

You have made 10 trades, 6 were winning and 4 were losing trades. That leads you to your percentage win ratio is 6/10 or 60%.

If your six trades brought you a profit of $6,000, then your average win is $6,000/6 = $1,000. If your losses were $3,200, then your average loss is $3,200/4 = $600.

Apply these to the expectancy formula:

E= [1+ (1 000/800)] x 0.6 – 1 = 0.35 or 35%.

This means, the expectancy of your trading strategy is 35% and your trading strategy will return 35 cents for every dollar traded over the long term.

On the other hand, most of the casinos work 24 hours a day, 365 days a year.

The reason is the more they play, the more they make. And it’s the same for trading. You must PLAY more to WIN more.

The frequency of your trades matter.

However, the more trades you put on, the more money you will make (while having a positive expectancy).

Let’s see how important this is.

You have a forex trading strategy that wins 70% of the time, with an average of 1 to 3 risk to reward.

But it only has 2 trading signals a year.

How much money can you make from this forex trading strategy?

Not a lot, am I right?

Well, you might even lose in that year since there’s a 9% chance of losing two trades in a row.

As you can see the frequency of your trades is important but it’s not enough to determine how much money you can make in forex trading.

There are a few more factors that play a crucial role.

I’m sure you heard a lot of stories where a trader took a small account and trade it into millions within a short time. But you have to know that for every trader that attempts it, thousands of other traders blast their account.

Let’s not treat trading as get – a – rich – quick – scheme. Treat it as a business you’re looking to grow it constantly over time.

Let’s say that can result in 20% a year (on average).

If your account is a $1000 you’re looking at an average of $200 per year.

Your account is a $1m, you’re looking at an average of $200,000 per year.

Or your account is a $10m, you’re looking at an average of $2,000,000 per year.

Let’s say it is the same strategy, same risk management, and same the trader. The capital of your trading account is the only difference.

No matter what strategy or system you’re using, the bottom line is you need money to make money in this business. Period!

Because your bet size determines how much you can make.

How?

The bigger you risk, the higher your returns.

Let’s say your trading strategy has a positive expectancy and trigger a return of 20R per year. And you have a $100,000 trading account.

How much can you make from your trading?

This depends on how much you’re risking per trade.

If you risk $1000, you can make an average of $20,000 per year.
Or if you risk $3000, you can make an average of $60,000 per year.
And if you risk $5000, you can make an average of $100,000 per year.

This is the same strategy, same account size, and same the trader.

The only difference is your bet size (or risk per trade).

But…

If your bet size is too large, the risk of screw up becomes a real possibility. That is to say, you have a higher risk of detonating your trading account and it will reduce your expected value.

So, how much money can you make from Forex Trading?

However, it depends do you withdraw or compound your returns.

If you make an average of 20% a year with a $10,000 account, after 20 years you will have $383,376.00.

But if you withdraw 50% of your profits each year you will make an average of 10% a year and after 20 years you will have $67,275.00 on your account.

So, It is clear enough that compounding your returns will generate the highest return.

But is it workable or not depends on how you manage your trading business.

OK, you’ve learned the main factors that define how much money can you make from forex trading.

Now, let’s see how to use this knowledge and figure your potential earnings.

Example:

Trading expectancy – 0.2 (or 20%)
Trading frequency – 200 trades per year
Account size – $10,000
Bet size – $100
Withdrawal – None

Now implement this formula: Trading expectancy * Trade frequency * Bet size.

And you will get:

0.2 * $100 * $200 = $4000

You see?

To sum up, you can expect to make an average of 40% a year.

And the answer is, there’s no one factor that determines how much money you can make in forex trading.

You must look at these 5 and monitor and assess the success or failure of various processes
1. Trading expectancy
2. Trading frequency
3. Account size
4. Bet size
5. Withdrawals

Then implement formula: Trading expectancy * Trade frequency * Bet size.

In this way, you will have an objective measure of how much money you can make in forex trading.

Read this too: Best Forex Brokers UK FCA Regulated

Risk Disclosure (read carefully!)

31st July 2018
Demo And Real Account – What Are the Differences In Forex Trading?

Some beginners in forex trading avoid using demo accounts. Maybe they are right, maybe wrong. Read to the end and find the answer.

By Guy Avtalyon

Demo and real account, what to choose? That is the question now! Before you start trading with real money, it’s always smart to open a free demo account to experience what trading Forex may be like. There you can practice your skills, learn, follow experienced traders. Well, demo trading isn’t live trading, and ti will never show you how to react but it is a valuable tool and useful to learn how all things work.

You can learn how to survive the ups and downs of trading financial markets if you use the demo account. As I said, the problem is that demo accounts don’t always reproduce reality.

Demo accounts are generally offered with the best possible terms and fees but those conditions are out of reach for most of us. And demo trades execute free of latency and other handicaps that we have to deal with when using real accounts.

What are the differences between the demo and real accounts?

Every trader can notice the difference in a short time.

On real account, you don’t have that magical help and nothing will help you to make money in some easy way.

A demo account is a live simulation. So it mimics live prices very closely. They do have a slight difference at some points in price as well.

Paper trading executes one goal, to teach you to learn how to properly execute trades as they say and test strategies without risking real money. Paper trade is advisable until you learn enough to execute trades without making mistakes. These mistakes will cost you money and you have to learn how to avoid them. The lack of a demo account is that paper trading does not develop your trading mindset because there is no real money at risk.

For whom are a demo account and real accounts better?

A demo account is always recommended for beginning traders.

Trading on a demo account is not only vital to consolidate the right knowledge and strategy. It can give important knowledge about how to react and avoid emotional reactions. After you’ve tested your trading strategy for a few months with “paper money” and it is now showing steady and promising returns, maybe it’s time to move to a real money account.

This transfer might seem easy and just an administrative step. But actually, it can be one of the most challenging periods you’ll meet as a trader. The moment you switch to the real account is also dependent on which type of user you belong to.

Two types of users of the demo account are recognizable.

One who never takes the demo trading account seriously.

It’s just a game, simulation of the possible real situation for this kind of trader. That kind of user becomes childish with their accounts. Placing crazy trades and not really caring about it because there is so much money in the demo account. They are masters of the game in their minds.

This is the worst type. From the beginning, you should look to stay away from these kinds of actions. This always limits your growth the trader gets. Such traders don’t spend time trading their plans or gaining wisdom from the demo trading account.

The other type is represented by traders that take the demo account too seriously is different. However, there are drawbacks to this as well. Traders who are not successful in this group may leave the market.

You have to know that no one is able to hit the goal straight away and every day. In the beginning, you have to give yourself a growth period.

Trading with ‘‘paper money” allows the user to practice the mechanics of trading without the risk of losing real money and allows convenient testing of new and unproven trading strategies, spreads, fees, swap interest, instruments, and trade execution. All of this should all emulate those of real accounts that the broker offers. Demo account models an idealized trading environment. The execution of trade orders is simulated to show what would happen in a perfect case.

Contrary, real trading involves many dynamic variables that are impossible for a simulation to properly model like are supply and demand constraints, order processing and information transfer limitations as well as imperfections in the various technologies and some of these are beyond the broker’s control. On the most demo platforms, the trader is likely to achieve a level of performance that would not be reachable on a live trading platform.

What is the first problem in real trading?

The first problem in real trading is that of latency or slippage. You have to understand, there is no electronic trading system that is perfect. There will always be time lags between receiving an order and the platform being able to fill it. These time differences can be small, but they may create discrepancies in trading performance, especially when markets are moving quickly.

Demo accounts don’t interact with the market and it is impossible for them to model supply and demand properly. It means that if other orders are ahead of yours in the order row, you may not achieve the entry price you want. This happens because the offers displayed at the time you entered the order have already been matched with other buyers or sellers.

With some trading models, this triggers a request and you have to reenter the order. This means, your entry price can be significantly different than when you first entered the order. Also, if you placed a stop/limit order to execute at a certain price level, the entire order may not be filled at one instant.

What is the biggest problem of demo and real accounts?

The simulations, in short.

The aspects of supply/demand cannot be simulated entirely because the order flow from the demo account itself would influence the market. It’s clear.

A demo platform publishes a quote at which to trade when in fact there is no market. It’s usually not a problem when trading major Forex pairs owing to the size of the market and because retail order sizes are usually relatively small. There are cases in some instruments where an order cannot be filled because there is “no market” at a given point in time. These are known as liquidity gaps and this can happen when the market is adjusting to an important breaking event. This causes the price to “gap” a certain distance.

In real trading, an order like this, would not be filled at the quoted price because the broker’s matching system would find that there was no price to take and complete the order.

In simulated trading, the order would be filled anyway, even when the price fell through a liquidity gap.

When choosing a demo account you should choose the one closest to the account you plan to trade with. It doesn’t make much sense to use a $100,000 demo account that trades standard lots when the one you plan to use will be a EUR 250 micro account.

But you can still use such a demo account.

But be aware, if you trade with big cash on your practice account, this can give you an unrealistic sense of your margin for error.

What is smarter to start forex trading with a demo or with a real account?

More popular nowadays is to bypass demo trading altogether and start with a real account with a very low balance. Some brokers allow trading with very low cash balances and you can adjust the trade sizes. One of the problems with using paper money is that traders have very little emotional connection with what they are doing.

So, there is no competitive element, and traders often lose interest. Using a demo account is good for traders who don’t want to place their own money at risk but want to develop their skills. A “real” account has the risk of losing your hard-earned money.

Protect your capital and trade smartly. The emotions of fear and greed will come into play when you trade real money and these emotions need to be understood and controlled.

You have to have trading rules in place to make sure you don’t let emotions destruct your trading.

20th July 2018
What Are The Best Days For Forex Trading And Why?

Trading time, the market is open for five days throughout the week.

By Guy Avtalyon

The best days for trading Forex… I’ll stop here and give to you some explanation. Most forex traders are more successful during the late US, Asian, or early European trading sessions – essentially 2 PM to 6 AM Eastern Time (New York), which is 7 PM to 11 AM UK time.

If you are a newcomer you would like to trade every second of every day. We know all about that. Our case: We figured the more active we were, the more money we would ultimately make. It so-called addiction to trading! (more about this kind of addiction you can find HERE) Frankly, we all are probably yet, but we know how to handle it. We hope.

But after many years we figured that making money in this business isn’t about quantity, it’s about quality. So, you must find the best days for trading Forex.

Well, you decided to become involved in Forex trading.

Good!

But you must have taken to attention the fact that market volatility does not remain constant during the day. Proper timing may be the crucial aspect of successful short-term trading.

You have to be sure when are you going to trade. When is the best trading time? Because engaging the marketplace during periods of maximum participation increases the efficiency of trade execution. As well as the probability of recognizing the opportunity.

The market is open for five days throughout the week. But volatility is subject to change during any given time span: a month, a week, or a day. If you are aware of patterns, according to which this volatility changes, you can modulate your trading strategy. And you’ll be able to take the maximum profits from trading are gained.

OFC, if you know which trading time is producing favorable setups, you’ll know whether to stay on the sideline or begin searching for new opportunities.

That’s the goal!

If you trade the 5 or 15-minute charts, it is important to have many varied parts of sessions throughout the day. But if you want the switch to a higher time frame such as daily time frames, these sessions become less important.

But instead of concerning intraday sessions, let be more focused on the day of the week because the Forex market never closes, and the currency pair can open on Monday at a different price from where it closed on Friday. It is called the weekend gap. If you aren’t cautious, you can get grasped on the wrong side and not even your stop loss will save you.

But let’s go to the object of this post, what is the best trading time.

The most quality setups realize between Tuesday and Thursday. The middle of the week is the “sweet spot” for finding profitable ideas because this is the time when most action happens.

Why the best days for trading Forex is the middle of the week?

On Tuesday, volatility is 20 to 30% higher than on Monday. But it is followed by Wednesday’s moderate decrease, which occurs due to swaps. This can be described as an exchange of assets between traders. What happens at a certain predefined trading time.

During the swaps, traders who keep holding their positions agree to exchange their investments or financial instruments at a preset price. Sometimes, a triple swap is collected, as Wednesday evolves into Thursday, and traders keep their day’s positions open. Traders are getting back to work on Monday, after the weekend, so things move a bit slower. When the market opens on Monday, there’s a high level of uncertainty about what direction each pair will go on that week.

For this reason, try not to trade on Mondays. The only exception is if there is a highly favorable opportunity that you just can’t let pass up. Fridays are when traders begin to pack up for the weekend, they exit positions in preparation for their two days of rest.

The best days for trading Forex: Mondays and Fridays aren’t a time to relax.

It is the best time to analyze the market, update the watch list, and make yourselves ready for new opportunities.
Positions last from a few days to a few weeks, but they almost always include at least one weekend in the process. And it can cause a dilemma for most traders.

You must hear many tips on how you have to avoid holding positions over weekends due to gaps that can form on Monday. But if you place a trade on Wednesday or Thursday, that’s difficult.

What are the best days for trading Forex?

You can do two things to protect your capital when heading during a weekend.

The first is to make yourselves aware of any events on the calendar. If you have Euro exposure on Friday and you see, for instance, it will be some referendum in Spain or elections in Italy over the weekend. It’s probably a good idea to exit the position. You have to be aware of when certain events are taking place. Even political.

The second thing you have to do is to make a decision based on where the trade is in its lifecycle. Is it trading near your entry or are you up 150 pips by Friday’s close?

What is smart to do?

In the first example, you have a 100 pip buffer between current prices and your entry. Sticking with the position could be the right move.

In the second example, you don’t have a buffer. If the pair opens next week near Friday’s close, chances are you’ll be able to secure the same entry

Optimal time in which to enter or exit a given market is the exercise for traders. For some traders periods of enhanced liquidity and volatility may be desirable, others may see plenty of risks.

Individual capital resources, risk tolerance, and style of trading must be taken into consideration when deciding on the best time of day or week to trade

13th July 2018
What is needed to trade on Forex?

Are you disciplined?

2 min read

What is needed to trade on Forex? To come to the answer we must clear several things.

CONCEPT OF FOREX TRADING

Forex represents the foreign exchange/currency market. The word forex itself is made of two English words: foreign and exchange and signifies the purchase of currencies from different countries.

Unlike other stock exchanges, Forex does not have its physical seat in a city. It exists in an electronic network consisting of large financial institutions.

Today, Forex is the largest financial market, which has a daily turnover of around $ 5.5 trillion a day.

You can complete this whole process online

The term currency market means the sale of one currency with the simultaneous purchase of the other. As currency pairs are traded, in order to profit from the shift in the exchange rate, you need to buy the currency that you think will strengthen and sell the other.

There is no need to wait for a growing market to profit. At any moment, one currency will strengthen in relation to the other.

The FX market is constantly creating opportunities for investment

What is needed to trade on Forex, the essential part

Since nothing concrete and tangible anything is bought and sold, this type of trade can be a little confusing. You should think that you are buying a part of the value of a country. If you buy a Japanese yen, you are buying a part of the Japanese economy that is in direct correlation with what the market thinks about the current and future health of the Japanese economy. Generally, the established exchange rate of the two currencies is a ratio that reflects the state of one economy in relation to the state of another economy (the state, the currency).

Forex is opened 24 hours a day, except on weekends, so that Sunday trading starts on Sunday from 21:15 CET and runs until Friday at 23:00 CET. During the day there are several time intervals that coincide with the working hours of the world’s largest stock markets.

Who trades on the Forex market?

Forex traders can be classified into two groups, hedgers and speculators.

Hedgers: governments, companies (importers and exporters) and some investors who are exposed to exchange rate changes.

Speculators: This group, which includes banks, funds, corporations, and individuals, creates artificial pressure on the course in order to profit from variations or price movements.

Basic terms

Pip
Represents a change in the ratio of the currency by one decimal. It is the smallest unit change course. Pip is the last decimal in a currency relationship

Stop and Limit – Orders
Often the trader wants to limit the loss in the position he has opened (in that case he sets the “stop” order) or wants to take profit at a certain level, which is acceptable to him (in this case he sets a “limit” order).

Long – Tremin used for the purchase order,
Short – tension used for a sales order,
Bid – bid price,
Ask – the price that is claimed,
Buy – Shopping,
Sell – sale,
Spread – the difference between the sale and purchase price,
Chart – graph
Time frame – time period,
Candlestick – Candlesticks show that emotion by visually representing the size of price moves with different colors.

What is needed to trade on Forex?

Before you start trading the currency, you need to open an account with a Forex broker. Our recommendation is that before you decide on trading on Forex, open a demo account with one of the brokers so that through the use of the platform, you will continue to monitor market activities and learn more.

Conditions for Success

You must have a good knowledge of technical and fundamental analysis, as well as managing your account. You should also know the psychological aspect of the trade and that you are disciplined. To be able to trade Forex successfully, there is a whole world of education, really extensive analysis and countless hours of tracking a very large number of relevant and potentially relevant information, all without any guarantee that the right decision will be made.

So once again, the investment rule has been confirmed: high risk must be taken to achieve high income.

To learn more about Forex trading follow Educational series HERE

Risk Disclosure (read carefully!)

28th June 2018
How To Trade Crypto And Stocks / Forex

Basically, it is the same but with some differences. In this post, you’ll find all about them.

By Guy Avtalyon

How to trade crypto, stocks, or forex? It is similar but at the same time different from other trades, for example, stocks or forex. At first, we have to define the difference between crypto and Forex or stock trading because you have to have theoretical knowledge.

What is crypto trading

Crypto trading is simply the exchange of cryptocurrencies. Just like in Forex. In crypto trading, you are buying and selling a cryptocurrency for another. It’s the same as you buy Bitcoin or altcoin for USD and Euro.

What is the Forex market

Forex, also known as FX, or currency market is where you can trade currencies. The forex market isn’t centralized. It is, also, OTC or over-the-counter market. Here you can buy, sell, or exchange currencies at determined or current prices. So, it operates like any other market.

What is stocks trading

In short, it is the buying and selling of company stock – or derivative products based on company stock – in the hope of making a profit.
Let’s go further!

How to trade crypto

Honestly, all of these types of investments are risky. Crypto gives greater growth than stocks or forex.

You all know all about the Bitcoin. Well, Bitcoin isn’t the only digital currency that you can trade on the market. It is really the first and most popular one and is the real digital gold in the industry. The most important part behind cryptocurrencies is the technology that holds a large part of their value. The technology is what provides a safe way to identify a transaction and, also, the way to transfer currency or fiat money in exchange.

If you want to trade crypto you need as first:

1) A cryptocurrency wallet (or two).
2) An exchange or platform to trade on.
3) By using a bank account (find more HERE)

There are only a few things, but important, you have to know about trading cryptocurrency.

Trading cryptocurrency is simple to start, but there are some essential aspects to understand before you start trading and this is basic friendly advice to mull over, not professional investment advice.

I’ll explain an example of Bitcoin.

How to trade crypto

Firstly, you’ll have to buy the underlying asset from an exchange or online broker.

If you want to protect your Bitcoin, you must have underlying. That’s the best way. However, you’ll have to take some reasonable steps to reduce the risk of Bitcoin stealing and loss of private keys. The steps are simply a diversification of holdings across different wallets/storage types. Keep in mind that you’ll need two-factor authentication and strong passwords.

Further, you can trade a CFDs derivative and hold a cash margin.
If you want to trade on Bitcoin for a short or medium period find, use an online forex broker that will provide you 24-hour trading. Also, ask for the potentially lower margins, and also, the ability to go long or short. Choosing the right broker is very important. Your broker has to provide you the best trading tools and favorable commission rates.

It is always smarter to buy a publicly listed security linked to Bitcoin and hold that shares with an online broker.

Stock investors, investing in Bitcoin through listed security, for example, ETF or ETP, could be suitable. Especially for investors that prefer taking a passive position. More active traders might notice that the limited trading hours and possible lack of volume are limiting factors. That could limit their trading indeed.

Overall, using listed securities that invest, track, or hold Bitcoin can be a viable alternative to diversify away from the risks of margin trading or safeguarding private keys when buying the underlying.

How to trade forex

You can trade currency based on what you think its value is, if you think a currency will increase in value, you can buy it. If you think it will decline, just sell it.
In forex trading, you’re betting on the value of one currency against another.
For example, EUR/USD, which is the most-traded currency pair in the world.
EUR as the first in the pair is the base currency, while USD, as the second, is the counter. Read more HERE

When you see a quoted price, that shows how’s much one euro worth in US dollars. Also, you’ll always see two prices. That is because one is the buy price and the other is the sale price. The difference between these two prices is the spread.
When you choose to buy or sell, you are actually buying or selling the first currency in the pair.
If you think the Euro will rise in value against the dollar, you buy EUR / USD. And vice versa, if you believe the Euro will drop, you sell EUR/USD.

If prices are quoted to the hundredths of cents, how can you see any return on your investment when you trade forex?
Leverage!
When you trade forex you’re borrowing the first currency in the pair to buy or sell the second currency.
To trade with leverage, you just set aside the necessary margin for your trade size. If you’re trading 200:1 leverage, for example, you can trade $2,000 in the market while only setting aside $10 in the margin in your trading account. Still, leverage will not just increase your profit potential. It can also increase your losses. If you are new to forex, you should always start trading with lower leverage ratios, until you feel comfortable in the market.

How to trade stocks

Stock markets are places where buyers and sellers of shares meet and decide on a price to trade.

It is important to know that the corporations listed on stock markets do not buy and sell their own shares on a regular basis. You have to know that you\re not buying shares from the company, you are buying it from some other shareholder.

There are many stock exchanges, many of which are linked together electronically which means markets are more efficient.

The prices of shares on a stock are established through an auction process

The prices of shares on a stock market can be set in a number of ways, but most of the most common way is through an auction process where buyers and sellers place bids and offer to buy or sell. A bid is a price at which somebody wishes to buy, and an offer (or ask) is the price at which somebody wishes to sell.

When the bid and ask coincide, a trade is made. If there are many buyers and sellers at higher and lower prices, we say the market has good depth. Stocks are quoted by their ticker symbol, represented by between one and four capital letters, which are often loosely representative of the company name.

Market orders are simply orders that direct your broker to buy or sell shares at the best possible price. A market order doesn’t guarantee the price, but it does ensure that you’ll get the number of shares you require. When an order is completed, it is said to be filled.

Stop orders are contingent on a certain price level being attained to activate the trade and your trade will be executed only when what you want to buy or sell reaches a particular price.

If you understand how the financial markets are structured you can use the same skill and experience to profit in all three.

It’s the same, you buy low and sell high against the crowd. There is no difference.

23rd June 2018