2Bull Forex Blog

Most new forex traders want to know if they can be successful forex traders in real time trading so, they try a demo account and conclude that as they have made money they will win - nothing could be further from the truth.

Trading a demo account lacks the vital ingredient of the pressure you feel when trading real money. This is why all novice forex traders should try the new service outlined below which is provided by some online forex brokers.

Before we begin lets think about pressure and give you a scenario:

You can throw a ball into a basket in your garden easily when practicing in your garden - but try it in front of 100,000 people, you have to score to win and the pressure is on and it’s not so easy!

While not a direct comparison, it shows you what influence pressure has and it’s the same in forex trading, when only dummy money is on the line - its easy.

With real money on the line it becomes harder.

A demo account is useful only for learning the basics of executing your forex trading strategy, executing signals etc and knowing how the platform works and that’s about it.

So how do you get the feeling of pressure, without taking a big risk?

The answer is - a protected forex account.

This is an account with limited risk and the salient points offered by forex brokers in relation to these accounts are outlined below:

- You trade small amount with fixed leverage
- You make as many trades as you like in a set period even if you are debit

At the end of a set period the following occurs:

- You take all the profits made
- The broker takes the losses

The set period is normally a few weeks and the advantages are:

You have limited risk on small amount of trial money and get a lot of practice, as you can trade even when you’re in debit.

You also have the motivation to make money, as you keep the profits and the risk is limited and capped.

These accounts offered by forex brokers, act as bridge between demo accounts and real time trading. They give you a feel for what its like to trade money, while at the same time offering a set risk.

Forex trading is probably 20% method and 80% mindset.

You need the right mindset to execute your forex trading system with discipline.

Most traders fail because they lack discipline as methods are easy to learn.

This new service from online forex brokers offers a taster of what it’s like to be a trader and deal with pressure.

They’re useful for all new currency traders. If you try it with an online forex broker, you will have an indication of whether you can enjoy long term currency trading success or not.

Here we are going to outline the story of “the turtles” who were a group of people who had never traded before and went on to make over $100 million in just four years. This article is all about learning forex trading for beginners and the lessons that you can learn from the turtles, for long term forex success.

The story begins over 20 years ago in 1983, when trading legend Richard Dennis decided to prove that anyone could learn currency trading - with the right training so, he conducted an experiment.

He gathered a group of 14 people together, from all walks of life, both sexes, various ages, who had varying levels of education and then set about teaching them to trade in just 14 days.

After the 14 days training was completed, he had taught them a forex trading strategy to execute in real time and set them up with real money and real accounts - the result?

This group of traders went on to make $100 million dollars in just 4 years and many went on to become trading legends.

So what can you learn from this experiment?

The first point is - it shows the potential of trading using leverage and although you may not make as much money as the turtles with your forex trading system, it shows that anyone can learn if, they have a desire to learn and the right education.

It also shows that trading is a specifically learned skill, not some god given gift and that all people can learn. It showed that to win at forex trading you don’t’ need to work hard but work smart and get the right forex education, rather than knowledge for knowledge sake.

Perhaps the most important point that you can learn from the experiment is:

If you read the writings and interviews with formal turtles, they all stress that the system was easy to learn, the hard part was following it with discipline.

This is a common problem for any involved in trading.

It’s hard to continually execute your trading signals with discipline, when you are in a period of drawdown and losses. This is why it is so vital to have the knowledge and confidence in what you are doing to hold your discipline.

THE REAL KEY TO SUCCESS

Is inner understanding of what you are doing, to enable you to have the confidence to execute your trading strategy with discipline.

Today, many traders simply don’t want to do this - they want to follow a guru or expert and think they can give them success with no effort and of course they lose.

Dennis knew that for his disciples to trade successfully, he had to teach them how and why the method worked, so they understood what they were doing and could hold their nerve.

The fact is currency trading success looks easy to achieve but it eludes most traders, because they can’t hold their nerve and trade with discipline.

While the turtle experiment took place over 20 years ago, the lessons it can teach us are as valid today as they ever were.

Forex trading for beginners looks straightforward to most newbie’s - but the turtle lesson shows us, not only what you need to do but give any trader inspiration in their trading career with the success that they achieved.

This story inspired me to trade and hope it inspires you to.

Using forex charts and technical analysis is a great way to enjoy currency trading success - the problem is most traders fall victim to common myths and join the 95% of losing traders. Here we will look at the forex chart myths to avoid.

1. Do Not Try and Predict!

Probably the most common error of all is when a forex trader tries to predict where a price is going to go to next and it’s doomed to failure - Why?

Because if you predict you are hoping and guessing and you will find your predictions are about as accurate as your horoscope.

You don’t get anywhere in life by predicting and certainly not forex trading - you need to trade the reality of price change.

2. Trade Valid Data

If you want to trade successfully you need to trade the odds and you cant do that in forex day trading because the time period is to short for the data to be valid. It doesn’t matter how good your forex trading system is, apply it to day trading and you will lose.

3. Complicating a Trading Plan

It’s a well know fact that simple trading systems work better than complicated ones as they are more robust in the face of ever changing brutal market conditions. Add to many indicators in and your system will have more elements to break.

So remember keep your currency trading system simple and profitable.

4. Not Buying Breakouts

Most traders like to buy low and sell high and this is a by product of trying to predict. Traders simply don’t like buying trends in motion when they have missed a bit of the move - well if you don’t, you will never catch the really big trends and will lose.

It’s a fact that most major moves start from new market highs NOT market lows - so you need to forget buy low sell high, as a way to make money and think- buy high sell higher.

5. The Markets Move To a Scientific Theory

Many traders believe that as human nature is constant there must be a repetitive scientific formula that markets move to and they fall for scientific theories such as those sold by discipline of Gann, Elliot and Fibonacci and they lose.

Why?

Because its pretty obvious that markets don’t move to a scientific theory as if it did we would all know the price in advance and their would be no market!

This is really common sense but you would be surprised at how many traders base their forex trading strategies on scientific nonsense.

6. No Indicator works all the time

This is obvious however you would be surprised at how many traders simply think buying dips to a moving average is a great way to make money! Always use a combination of 2 or 3 complimentary indicators and it’s always good to use support and resistance lines as well, when generating a trading signal.

7. Using Indicators Incorrectly

We just gave you an example of using an indicator in isolation and also buying a dip to a moving average is incorrect usage - Why?

Because it’s a lagging indicator and cannot confirm trades - you need to combine it with a leading indicator.

Another example is traders who set stop losses at the outer bands of the Bollinger band - this is not a good idea, because it’s a volatility band that changes all the time, may move your stop to far away and cause you a big loss.

The above are common errors and if you make any of them you will lose. Forex charts are a great way to make money, charting is simple to learn, time efficient and works so learn how to use your forex charts correctly, by avoiding the above errors and you can enjoy long term forex success.

Successful Forex trading requires you to understand your strengths and weaknesses as a retail trader, so you can best exploit your strengths and avoid the weaknesses.

Weaknesses
The weaknesses of retail traders are:

Time: Compared to (full-time) institutional traders, you’ll have less time to analyze and track market price movements without sacrificing a large part of your social and/or work life.

Capital: Most retail traders don’t have sufficient capital to affect market prices when trading, and are thus price takers.

Knowledge: Retail traders generally have limited access to the latest economic news and happenings around the world. By the time retail traders receive news reports, the institutional traders would have already heard about it, and would have already placed their trades before the retail traders can act.

Cost: Transaction (i.e. trading) fees are the highest for retail traders.

Strengths
The strengths of a retail trader are:

Risk: Unlike the institutional traders, retail traders are not pressured meet profit targets set by upper management. This gives retail traders the luxury of cherry-picking the best trade setups with the lowest risk-to-reward ratio.

Time: Similar to the previous point, retail traders can take their time to identify the best trades. There is no pressure to make profitable trades every single day.

Slippage: A retail trader’s trades are generally not large enough to affect market prices, and so there will be little slippage when placing trades.

Summary

Generally, retail traders are at more of a disadvantage than institutional traders. However, if you plan your trading strategy according to your strengths and weaknesses as a retail trader, you chances of being consistently profitable will be much higher. This is because it’s harder for the institutional traders to work around their weaknesses – their bosses are constantly breathing down their necks!

As a retail trader, you don’t have to answer to anyone but yourself. All you need is to plan your trading strategy according to these strengths and weaknesses, and you’ll be able to limit the effect of these weaknesses.