2Bull Forex Blog

While forex brokers appear to offer you a lot of advantages in your quest for forex profits, it’s a fact that many of them can simply help you lose. To understand why, read on…

Leverage

You can 200 or even 400:1 leverage and traders are tempted to use it all, over leverage there account and a small move wipes them out. The fact is new traders leverage up so high, they are guaranteed to lose.

You simply shouldn’t use it all, as more leverage means more risk. Leverage of 10 or 20: 1 is enough on most accounts.

Linked to over leveraging is another fatal error.

Small Initial Deposit

Many forex brokers will take just 50 dollars and this is the equivalent of flipping a coin.

Normal volatility will wipe this out quickly. No forex traders should really consider less than a $1,000 and $5,000 is better. If you want to win in a game like forex, you need to take it seriously and have a cash reserve.

Broker Research

Well broker research is not going to help you win and many of the so called freebie beginner guides and critical information to help you trade you can find online for free and is the usual cut your losses run your profits, have a plan, have discipline etc

Never choose a broker based upon support services like this.

Demo Accounts

A good idea to learn how to use the forex trading platform and that’s it.

They won’t indicate if you can win at forex trading or not as there is no pressure as any real money is on the line.

Never assume because you win with a demo account, you will win in real time.

You should only choose a broker based upon the following points:

- Tightness of spreads. This is your cost of doing business and is added to any loss and deducted from any profit, so cheaper the better.

- Trading platform. The ease and reliability of use is all you are looking for. It’s your link with the market so must be reliable.

- Security of funds. Look for brokers who have been around a while and are secure. There is no point in trading with a broker who is likely to go bust.

Today forex brokers offer better services than ever and most are market makers.

This means your trade is on their book and when you lose they win. 95% of traders lose, so that’s a lot of money they can make. Now don’t get be wrong this is a GOOD thing, as it enables them to offer some great services, low rates and superb trading facilities.

It’s up to you to get in the winning 5% and that means being sensible with leverage, your initial deposit and standing on your own two feet, with your own forex trading strategy. Keep in mind the broker doesn’t cause a trader to lose - the trader does it all on his own.

So use these great services wisely and get in the winning 5%, that’s your challenge and if you can do this you can enjoy spectacular forex trading success.

I have taught traders for 20 years and have always told them to study the “turtle” experiment which took a group of traders who had never traded before and turned them into traders who would make hundreds of millions of dollars, after just 14 days study…

The experiment was devised to show that anyone could learn to trade with the right mindset and education and was conducted by world famous trader Richard Dennis.

Dennis got a group together and was careful that he choose people from all walks of life, varying ages and both men and women. The group included an actor, a couple of professional card players, a woman auditor, a boy just leaving school, an actor and a security guard.

This diverse group were then taught a simple trading system.

Dennis taught them a simple system based upon strict money management rules and long term trend following and he didn’t just ask them to follow it. He made sure they had confidence in it, so they knew how and why it worked and gave them rock solid confidence in it.

They started to trade and within 4 years had made $100 million dollars and went on to become legends - so what can you learn from them?

1. It’s a fact anyone can learn to trade and be a success they did it and you can to.
2. Simple trend following systems work and are easy to understand
3. It doesn’t take long to learn and your education sex or age is no barrier
4. You must accept responsibility and learn your system to have confidence

The other point you can learn from them we will dwell on in more detail, because it’s the point where most traders have a problem and that’s with discipline.

Trading is as much about having the right mindset as method and Dennis drilled discipline into them, by giving them all the information and making them learn the system so they would have the confidence to trade through long periods of losses until they hit a home run.

Don’t believe anyone who tells you, you wont lose for weeks or even months at forex trading you will, even the best traders do and you will to. This is why you need discipline to take loss after loss sort term while the market makes you look a fool and preserve your equity with strict money management, until the market breaks in your favour.

If you can learn one thing from the turtle experiment its how important discipline is to a trader.

Its clear the trading system could be understood by anyone - but it needed the right mindset to apply it.

So if you have the right mindset and a simple trading system you can win and focus more on mindset as this is the hard part the system is the easy part. Make this story part of your essential forex education and you will see the potential of forex trading as a vehicle to seek financial freedom and how you can achieve it too.