Things Successful Traders Avoid Saying

Becoming a successful trader in the forex market is not easy. You need to have a certain amount of discipline, ingenuity and a penchant for identifying trends if you want to become successful in the forex market. Most traders in the market often find it difficult to generate profits, simply because they look for big rewards in the short term. Becoming a successful trader in the forex market is all about developing a sense of discipline. However, if you want to take a look in the mentality and mindset of a successful trader, you need to figure out the things that they generally avoid saying. To give you a brief idea, here are some of the statements that a successful trader will never say:

“I don’t take losses”

No successful trader will ever say that. What most people don’t realize is that losses are likely to occur. They are a part of trading. Successful traders know that a major loss is more than likely to wipe out their account completely sooner or later. Therefore, they are always prepared for this. However, what separates a successful trader from an unsuccessful one is their ability to win rather than lose. Successful traders know that losses are a part of trading, and while they try to avoid them as much as possible, they don’t shy away from losses.

“You don’t need to manage money”

You will never hear a successful trader say that they don’t need to manage money while trading. Money management is an essential part of long term trading, and you need to be very careful when deciding the amount of money you are willing to risk on every trade. It is vital to the long term success of your trading portfolio.

“I use a strategy that’s profitable in all market conditions”

There are essentially two distinct ways of making money in the forex market. One is to make use of a defined trading strategy, which will help you make money in certain marketing conditions, or a whole lot of money in very limited conditions. The other is to make money using your own understanding and intuition. No trader can claim to have a trading strategy that works in every market condition. Remember, there is no magic formula involved in forex trading. There will be times when you will incur a loss, and there will be times when you will make money. How you trade is all that matters.

“You Should Trade Daily”

We are seeing a trend developing here. A successful trader will know that a lot of discipline is required in the forex market. However, no trader will ever ask you to trade on a daily basis if you want to become successful. There are off days, and there are good days. Knowing when to curb the losses is essential if you want to become a successful trader. These are just some of the many statements that you will never hear come out of the mouth of a successful trader.

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How Do Forex Islamic Accounts Work ?

If you are a Muslim and wish to trade on the Forex market, there are plenty of options available to you. Most practicing Muslims often try to avoid the Forex market due to the interest rates. However, many brokers that deal in Forex accounts and binary options have begun to provide their customers with the option of opening Islamic accounts. In order to understand how Islamic forex accounts work, you need to develop a sound understanding of the Sharia law, which is the law followed by most practicing Muslims.

The Sharia law provides detailed guidance about different parts of life, and has a whole section pertaining to banking and finance. According to the teachings of the law, a Muslim is prohibited from accepting interest or any loan fee in monetary or other form, whether the payment is floating or a fixed amount. In Islam, this is known as riba or usury.

As of today, there are more than 1.6 billion Muslims in the world. By 2009, more than 300 banks and 250 mutual funds across the globe were using the Sharia law. Just last year, that figure rose to represent around 1% of the total world assets, equaling an amount of just around $2 trillion in funds. It is important to note that not every Muslim practices Sharia law firmly. According to Ernst and Young, only a small percentage of Muslims follow the law. However, Islamic banking has grown considerably in the past few years (at a rate of 17.6% annually between 2009 and 2013). If projections are to be believed, Islamic banking will grow at an accelerated rate of around 19.7% per year until 2018.

Now, under standard trading conditions, all currency trades are executed within 24 hours in the spot market. At 5:00 PM New York Time, all positions that are left open are rolled over to the next 24 hours. Daily interest is calculated and added to the company’s accounts every day. The brokerage firm has the option to pay the interest or charge it on the client’s account. This is often added to your account as a “rollover fee.”

There are plenty of traders who hold positions overnight. As a result, rollover fees can have a huge impact on their final account balance. However, things are different in Islamic accounts. For starters, no interest is charged for as long as the Islamic account remains open. But then, this poses a problem for any open trades that are rolled over at the end of the day. This would be known as usury in the Islamic world, which is why conventional rollovers are strictly prohibited in Islamic accounts.

This leaves us with one question: how does a broker make money out of the account? Simply put, the broker generates money from the trade spreads. Essentially, this is the difference between the Ask and the Bid prices of any pair of currencies. Most brokers who provide Islamic accounts often increase the spread in order to recover their amounts.

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Basics of money management on Forex

To be a successful trader, it is not enough to open an account and deposit it with some money. A rookie trader might not start earning immediately. Before anyone launches into trading on Forex, it would be wise to develop a smart program of money management.
Trading on Forex, control of a money flow in and out of a trader’s pocket is a “must know” to keep a trading account alive and make profits. It is a vital skill to keep an equal ratio between a profit amount and a loss amount per average trade. Only in this case trading will be a gainful business, but not a game of chance and luck.

Let’s consider the main principles of money management.

       1. Every trader should have a reserve fund which is to be spent in case of emergency. An amount of a reserve fund should be at least half a deposit size. 
       
       2. To avoid losing all money, it is advisable to invest no more than 10-15%% of the whole deposit in one market. 

       3. A trade volume should not exceed 5%% of the total account equity. Otherwise, if a trader executes a losing trade, it is possible to face runaway losses. 

       4. Every trader is focused on big earnings. However, everyone should be aware of potential losses. If you invest your capital in a market of a certain type, the whole margin should not exceed 20-25%% of the cash flow as markets of the same type move in a similar way. In this case, it makes sense to optimize investments. To be exact investments should be diversified. If one trade turns out to be a failure, a profit on another trade can offset that losing trade. 

       5. A trader should determine to what extent one’s portfolio is diversified

Diversification of risks is one of the methods to hedge investments. A trader should always keep balance between concentration and diversification. If a trader opens several positions in parallel at least on 4-6 markets of different types, this strategy provides a quite safe allocation of one’s portfolio.

      6. Stop orders 

Please make sure you set stop orders while you are getting away from your workplace in front of the trading platform. It will enable you to avoid losses. Besides, take profit orders are used to lock in profits in case a trading instrument moves in a favorable direction.

     7. Profit/loss ratio 

In case a trend reversed in an adverse direction while a position is open, a trader should strike a balance between possible losses and profits. As a rule, the efficient profit/loss ratio is 3:1. Otherwise, it would be wise to avoid opening a trade. 

    8. Trading several positions 

Let’s assume a trader enters a market opening three positions. So it would be useful to divide them into position trade and trend trade. Position trader holds a position for the long term setting rather flexible stop orders, which enable this trader to keep a position even when prices go through consolidation and correction. Position trading is the polar opposite of day trading when a position is restricted by rigid stop orders. This strategy is used for speculations within the same trading day.

    9. Rules of opening a position

• A position should be opened only in case an indicator generates at least one signal. 
• Before a position is opened, it is essential to determine a market entry price, a price to close a gainful position, a price to close a losing position as well as time to hold a position open. 
• A counter-trend position should be opened with caution for a short time frame. 
• Similar things should be considered when trading on a sideway market. Rules of holding a position and partial closing before a time frame expires 
• A trader should hold a position open only if analysis confirms decisions made prior a market entry. 
• It would be wise to close a position partially when current losses have already exceeded estimated losses or when a price has reached the level which is expected to gain a profit. 
• A trader should make a pause if total losses are still below estimated losses, a price is holding flat, or a price has not approached a level calculated to make a profit yet.

    10. Rules of closing a position 

• A time frame has expired. 
• An estimated profit has been gained. 
• A calculated loss has been reached. 
• A position has yielded an utmost profit. 

Please always bear in mind that a properly elaborated strategy of risk diversification is a steppingstone to gainful trading on the forex market.

Read more: http://www.mt5.com/ms/articles/fundamentals_of_money_management/

Is Forex Trading Worth It?

Anyone who has ever gotten even the slightest glimpse inside the world of forex always ends up asking himself or herself one very important question, Is Forex trading worth it? As professionals we have been doing this for a long time, we have grown and become part of the industry but we can still never offer a clear answer to this question. The only true and honest answer we can provide you is this: It depends on who is asking.

It’s understandable that this might not cut it as a straightforward helpful answer but it’s the truth and let us explain why. Forex trading isn’t a decision that can be made in a day nor is it a career or pastime path that can be taken easily. Yes it can be taken by anybody but specific skills and characteristics must lie within the person in order to not only come out alive from the market but to come out on top. 

From one point of view Forex trading IS worth it. It’s worth it because it’s a completely different arena than anything else you have experienced before, the sheer adrenaline that rushes through traders and investors daily as they monitor the market movements is unmatchable. It’s also worth it because of the abundance of new found knowledge you are instantly supplied with. The market works globally therefore a trader is opened to various cultural events and insight without even knowing it, interacting daily with numbers, figures and people from all over the world. 

A forex trader enters the finance big league, there’s no playing around with money here, money is business, money and knowledge is power. So to a person interested in studying in a completely different school where knowing how the trends roll and affect the industry we would say: ‘Yes, it’s completely worth it’.

Standing on the opposite side, Forex trading isn’t worth it. The entire nature of the job is cutthroat and downright ruthless. The market is unforgiving and it doesn’t spare anyone’s feelings. If you are in it to make a quick profit then your loss is not only guaranteed but it’s also magnified. Online forex trading is not something one can take lightly because of all the variables involved. Many people mistake forex trading for betting but they couldn’t be any more wrong. Betting is simply trying to guess the odds of getting A or B, red or black, 0 or 38 with a 50% chance of success. Whereas forex involves knowing the effect of current global events, past trend movements, and how present conditions may shift the instrument a trader places their investment on. 

Forecasting isn’t guessing, it’s being able to understand past and present and figuring out what will take place in the future. So to a person who is only looking at forex as a way of making money easily then we would respond: ‘No, it’s not worth it’ and advise them that it’s best they kept their money in their pockets. 

Conclusively, next time you or someone else asks this question you should know that the answer depends solely on yourself. There is nothing any forex expert or fortune teller can tell you that can justify just how ready you are to go head to head with others in this arena and the only one that can measure your success is you.

See more at: Forex Expert