TWO KINDS OF FOREX TRADERS - WHICH ONE ARE YOU?

In today's world of trading, i see different kinds of Forex traders with different ideas/mind-set towards the Forex market.What i find very disturbing the most is the fact that out of millions of traders in the world, only few percentage see the Forex market as an investment, while others think its a business.These two words "investment/business" are not the same.They are two different words with different meaning when it comes to the category of finance.Any forex trader in the world needs to understand this fact.

The Business Traders and the Investor Traders

        The FX market trade is always active 24 hours a day non stop and 5 working days a week doesn't mean a trader should.On the contrary, what this means is that the currencies are in combat the whole 24 hours and 5 working days but all you have to do is to find a perfect game point and time to support a currency against the other by placing your bid period.So if this is true, do you think it would be advisable to keep placing bet the whole 24 hours while the currencies are in combat? Of course not.The reason is because, multiple bets a day/week simply means more exposure to risk and your chances of having a profitable trading week or month is affected.

This is the point where a lot of traders get it wrong. As a matter of fact, this is what a lot of professionals don't wanna reveal to the traders out there.The real Forex gurus don't just bet on currencies in combat, what they do is wait, observe and pin-point a trading activity that would have a high percentage winning when a bet is placed and that is just it! Its that simple. No any other secret than this.This are the so called investor traders.This doesn't mean they don't make loss too but you see, their losses is nothing compared to their winning.

Now, this takes me to my next point. How does a trader takes advantage of a winning or losing currency in a combat? Its simple.You need a strategy like the pros, they "wait, observe and pin-point a trading activity". And how do you do this? By creating a profitable trading system that would automatically be your informant.So you see why you cannot trade successfully without having a strategy.

So, the decision is yours.What trader would you rather be? The Business Trader or the Investor Trader? You can comment below.This is an open blog.

WHAT MAKES SCALPING A BAD DEAL IN FOREX TRADING

Am still surprised to see large numbers of traders encouraging this type of trading pattern.The fact that it gives micro pips as profit is a bad news already not to talk of how it breaks your heart to have just one loss.This makes it even worse because a loss trade could destroy all your effort for weeks or months which could be very devastating.
   We all know loss is inevitable in the Forex business and if this is true, don't you think it is advisable and very wise to have a loss trade that would probably take away only one or two of your profitable trades which can be easily recovered, rather than having a loss that would take away almost all of your profitable trades.
      Even a novice can scalp for pips successfully for few times but how about that lose you cant avoid.Are you really willing to take such risk? I think you should answer that question yourself after taking a deep thought.

FOREX MONEY MANAGEMENT RULE

This in one of the most important aspect in trading. To begin with, what is Forex money management rule? This simply means; managing your volume, stop losses and other factors or parameters properly in your trading system according to your account size. "Why is it so imperative?" you might ask.

                Well the simple truth is that we are all in the Forex business to make money but it’s so unfortunate that many traders only thinks of profit making without considering the other aspect which is loss making. If you calculate the total percentage of losers in Forex trading and also trace their reason for failure in the business, you would realize that almost 70 percent of losers fail not only because of a non-profiting trading system but because they lack money management rule in Forex.

                Such trader re always anxious to get into trading without considering their total account size. Traders with no money management rule are no difference to gamblers. They don’t look at the long term profit on their investment instead they look for that jackpot. Money management rule will not only protect your investment but will make you a profitable trader in the long run. Only if you learn to control your losses, you will have a chance at being profitable. Remember, the more you lose, the harder it is to make it back o your original account size.

                For instance, you have a $1000 account size and you lose 50%, you would be left with $500.The question is, what percentage of the $500 do you have to make in order to get back to your original account size which was $1000? It’s not 50%, you would have to make back 100% of your $500 to get back to your initial account size ($1000). This is called draw down. For this example, you would have had a 50% draw-down.

                The point of this illustration is that when trading with a high percentage of your equity, it is very easy to lose significant money and a lot harder to make it back. This is more of the reason why you should do everything you can to protect your investment. Therefore, risk only little percentage of your account in each trade.

                I am not saying you should make pips that are valueless but all am saying is that you should always try to consider that profit made or that profit you are about to make as a loss then try to see or imagine the effect of the loss on your investment. If the loss doesn’t or wouldn't have too much effect on your investment then your money management rule is okay. But if the reverse is the case, it means you have to work on your money management rule according to your account size.

                However, don't forget forex trading is meant to be an investment and not a get rich quick system. If you learn to manage your funds, then you could be a profitable trader, all you will need is a profitable trading system.