Warning: 10 Secrets That Forex Brokers Never Tell You. | Invest 318
1. Forgot about buying fancy software and don’t waste your money on FX robots. It’s easy to get blown away on-line trading, real time data, charts, business channels and bells and whistles.
The truth is, less is more, and information overload makes you a worse trader.
The more complicated your system, the less chance it will work or that you will follow it.
The majority of technical trading indicators are a total waste of time and you do not need to waste money on expensive trading software that claims to predict markets.
The most important factor when trading any market is the price.
2. Day trading FX is a waste of time ultimately you will lose money. A researcher did a study into new FX traders and found they made less per hour trading than working on minimum wage at Mcdonalds.
3. The most successful FX traders make money from longer term trends. Pro trader has held currency trades for weeks, months and even years – not quite what the media make you believe that you have to be glued to 10 screens all day. Brokers want you to over trade as that way they make more commission and spread.
4. Whilst charts can be helpful do not look at short term charts they provide no value and are near random. Pro traders use Daily, Weekly and monthly charts. The main tools he uses are trend lines, Moving averages and support and resistance levels. Keep it simple.
5. New traders should avoid O T C FX brokers and should not use margined FX. To start with consider Exchange Traded Funds on currencies and options on currency futures. You get a better deal and have more protection using a currency futures contract than and OTC broker. Be aware what FX brokers often claim “tight spreads” which are misleading.
6. Many traders don’t realise the news they hear and read has, in many cases, already been discounted by the market. Normally, new traders jump into a market based on a story in the morning; the market many times has already discounted the information.
7. Trade with what you SEE not what you Think. You may think the Euro is overvalued and you may be right eventually, but if the price is moving from 126,128,132,137,144,147. It does not matter what you think, it does not matter what the “guru” on CNBC says – the price is moving up and you should be trading with the trend.
8. Many focus on the major currency pairs but some others have made large amounts from trading the not so well covered currencies such as Norwegian Crown, Swedish Korna and South African Rand.
9. Some times the best trades in FX are the ones you don’t make! It does not matter if you are trading with currencies, prodcuts, shares or bonds… Pro investors trades currencies, commodities, stocks and bonds and can move from one market to another. If the FX market is dull he will move focus and funds to commodities.
10. New traders just think about the entry of a trade, truth is the EXIT is more important than getting in.