2Bull Forex Blog

Forex trading using software has been growing in popularity all over the world. 10 years ago, currency trading involved either renting a seat down at the trading pit, or calling your broker to execute your trades on your behalf. In recent years, the boom of the internet has made the process of trading so much easier.

These days, one can easily trade Forex via an internet connection on his or her computer. However, online trading does not only involve the retail trader looking at live price fluctuations, but also the history of the price movement over a period of time using price charts. Charting software has been increasingly incorporated into trading platforms, and has made the Forex market very accessible to any one who is interested in trading.

With these integrated functions, retail traders can now easily look at a price chart, and execute their trades all using the same piece of software. Now, almost anyone can trade currencies just by installing the trading platform software into their computer.

Web-based Trading Platforms

Not all Forex trading platforms are required to be installed into your computer. There are numerous trading brokers who also provide web-based trading solutions for people who do not wish to install any software.

These web-based trading platforms will provide the same charting and trade-execution functions too. However, due to technical limitations, the number of platform functions you’ll have access to is limited when using a web-based platform.

If you want the full suite of supporting trading functions, it would be best if you could download and install a piece of trading platform software.

Experiment

Not all trading platforms are made equal. Some have more functions than others, and some are more intuitive to use than others. There is no one ‘best’ trading platform for everyone: it is all up to your personal preference.

That’s why I recommend that you try at least 2-3 different trading platforms before you decide on using one for good. Try both the software install and web-based platform versions, you’ll never know which one you’ll prefer until you try both.

Enclosed you will find 6 common mistakes, made by the vast majority of forex traders -make anyone of them and you will join the vast majority who lose money, so here they are avoid them…

1. Trading Expert Opinion

All the forex news you see looks so convincing and today, we have TV channels and lots of resources on the net but there only opinions. They won’t help you win. If they did, more traders would win than they did 50 years ago and this is simply not the case - the ratio remains the same. Sure, the news sounds convincing but chances are its wrong, as it reflects the views of the majority who lose.

News is discounted instantly by the market and its how it is perceived that determines the course of events. It’s a fact that - most bear trends end when the fundamentals and news is at its most bearish and markets crash, when the news is at its most bullish.

2. Trading a Forex Robot with a Simulated Track Record

You can buy these online and they tell you that you can get rich for a few hundred bucks, you won’t be surprised to learn - you can’t. Most of these robots have great track records, the problem is there simulated over past data and won’t help you make money - there not worth the paper there written on, we can all be rich if we know what happened and could trade it!

Get the right forex education and learn a forex trading strategy yourself to lead you to success. Leave these cheap, losing robots, to dreamers and lazy traders.

3. Trying to Predict Forex Prices In Advance

Prediction is another word for hoping or guessing and that won’t get you far in forex trading. You can’t predict forex prices in advance so don’t try. Act on the reality of price change and trade the truth.

Many gurus sell scientific systems that claim they have found the formula for market movement and all you need do is follow them. If however markets did move to a scientific theory, we would all know the price in advance and there would be no market. Prices move because markets are uncertain not certain!

4. Day Trading or Scalping

A fantastic way to lose money quickly - it doesn’t work and the reason is obvious:

It’s impossible to predict what millions of traders are going to do, in a few hours. Because of this, all volatility is random and you will lose - period.

Ever seen a day trading system on the net with a real time track record? Neither have I - But I have seen lots of simulated ones!

5. Placing Stops Within In Random Volatility

Another common mistake is placing stops where there almost guaranteed to get you stopped out, as there within random volatility. If you want to avoid this, make learning about standard deviation of price, part of your essential forex education.

Forex trading is all about taking calculated risks at the right time and taking a risk. If you try to restrict risk to much, you actually create it and guarantee yourself to be stopped out.

6. Over Leveraging a Small Account

You can get up to 400:1 leverage with many forex brokers and most traders think the more they leverage they use the better - but they get stopped out quickly and their accounts are soon wiped out.

If you have a small account treat leverage with respect and don’t use too much - if you do, you will soon be in the 95% of losing traders.

The above are all common forex trading mistakes and if you make them, you will lose but there easy to avoid and if you learn digest and avoid them, you can get on the road to constructing a forex trading strategy, for long term currency trading success.

Currency trading systems can make you money and they are very time efficient but you have to shop around the vast majority will wipe you out quickly. The good news is there are ones out that can make big consistent profits and to find them you simply have to check a few points which are enclosed.

Check the Track Record

Would you trust a driving instructor who wasn’t qualified and hadn’t passed their driving test?

Of course you wouldn’t, so don’t trust someone trying to sell you a system that has never been traded. The vast majority of trading systems sold have never been traded in real time and have the disclaimer below as a warning, if you see it be very cautious here it is:

“CFTC RULE 4.41 - Hypothetical or simulated performance results have certain limitations. Unlike an actual performance record, simulated results do not represent actual trading….”

big limitations and the disclaimer goes on to give you the key as to why these systems make money:

Simulated trading programs in general are also subject to the fact that they are designed with the benefit of hindsight. No representation is being made that any account will or is likely to achieve profit or losses similar to those shown”.

So now you know why they win - its hard to get it wrong when you know what happened!

so forget these systems, if they were that good the programmer would be making so much money they wouldn’t be selling them and would have at least have had the confidence to use it for themself - ask for their account statements and you will normally never get a reply

There mostly put together by marketing companies, who rely on these track records and some enticing copy to lure the unsuspecting or greed investors, who never really think about the limitiations of these systems.

Look for a real track record audited with account statements over at least 3 years.

Understand the System!

Even if the currency trading system, you need to know how and why it works and make sure you have confidence in the logic its based upon if you don’t you will have difficulty following it.

If you don’t have confidence in the logic - you simply won’t have the discipline to follow it, when it starts losing and all trading systems will suffer drawdown. If you don’t have the discipline to follow your trading signals you don’t have a system by definition.

Check the Peak to Valley Worst Drawdown

I know systems that make triple digit gains - but can drawdown by 50% or more and know other systems that have the same growth rate and can take 3 - 6 months to hit a new peak in equity.

This is NORMAL and all systems will have drawdown to various degrees and several months to recovery.

Check the drawdown and time to recovery, by assuming you join the system on the worst possible day. Can you handle it? If you can great, if not don’t invest and look for another system.

Always assume your worst drawdown is ahead of you.

Trading systems should be judged over years not months and if you compound 50 - 100% per annum, you’re up there with the very best.

Some currency trading systems can and do make great returns - but most are junk and the above tips will help you find the best and one that matches your risk profile.

Finally!

While most traders like to follow a ready made system, there are some good free ones on the net and you can also build your own - it’s far simpler than many traders believe and can be just or more lucrative than buying one.

Take time to look around and you will probably come to the same conclusion.