Forex trading: The truth and the lies
By DON ANETOH
Monday, May 5, 2008

FOREX market is the largest market globally being traded with daily turnover of about 2.5trillion dollars when compared with stock with daily turnover of about 20billion dollars in New York. The FX, OTC or FOREX market as it is called is a very volatile, technical and profit oriented market with high risk.

It is meant for people who can manage their greed, fear and discipline very well. While people who follow the dos and don’ts excel with smiles, those who disregard them abandon their computers in misery.

Whatever happens, it’s always advisable to follow the cycle-visit www.forexconsult.net-receive quality training, browse the relevant forex sites, open demo account and demo trade for minimum of one month and then start with risk capital (i.e. the amount you can afford to lose).

Up until 1998, the Forex market was the hidden domain of the banks and mega-wealthy. Now, the rest of us can profit in the largest market in the world.

The Internet has now made this "Private Club" available as an unparalleled opportunity for anyone in the world. Together, with today's technology and basic simple to learn training methods, individuals like you can realistically trade in the same market as the big players from your computers. With the recent development in our telecommunication industry, Nigerians have joined the rest of the world to make ends meet in this great market.

The Forex market, established in 1971, was created when floating exchange rates began to materialize. The Forex market is not centralized, like in currency or stock markets. Trading occurs over computers and telephones at thousands of locations worldwide.

Forex training
Forex requires proper and standard theory/practical training. Since forex is highly technical, the training should not be over-the-counter type. It should be designed in such a way that after the training, provision should be made for after training coaching/correspondence.

Recently, between June to December, 2007, hardly could you visit any Nigerian newspaper site without seeing various adverts on Forex seminars with very attractive wordings. Trust Nigerians, some fast ones among them duped reasonable number of the unsuspecting members of public with different system (pay into the account) only to discover later that there were no booking for such seminars with the hotel as advertised.

Now, the most annoying aspect is that even those groups of people who identify themselves as FOREX GURUS conduct seminars and training on Saturdays/Sundays. I wonder how one will learn forex without practical since there is no trading within those periods. Return on capital Forex trading can give you as high as 30% of your capital per month if one is trading at average risk control area and above 50% if trading above the recommended risk region. On the other hand, you can equally lose more than that depending on your risk management levels.

The use of automated system
In forex, there is provision for the use of software that aid execution of trade. The highly rated ones are referred to as Expert Advisor (EA). The platforms that are compatible with this system are Meta4 Trading Platform. These types of platform are highly automated than the normal platforms. Most times we use what you call Strategy tester to test the ROI (Return on Investment) of such software before actual employment.

Going by the adverts in the dailies, you will read about trading robot and most of them are not working. From information gathered, some of those gurus promise their students free CD containing trading robot and even convince them that the robot will be trading for them, while they will be doing some other things. Its all lies, good EAs are expensive and not as cheap as they are being advertised. Just watch out soon for some of the well tested ones.

The truth is that you must learn Forex (in-and-out) before thinking or using such software since they don’t have IQ. Most times you decide the parameters, like, lot per trade, stop loss, target profit, trailing stop, etc and even decide period and currencies to trade on. In other words, it’s not as easy as it is being advertised. If you must go ahead, demand the demo pack of such robots and ascertain the rate of returns. Study shows that most of those dupes don’t even trade forex but busy organizing training. Believe me, if it’s as easy as that, most forex traders will be richer than Bill Gates.

Manual trading
For one to excel in manual forex trading, the following must be followed:
Proper training must be under gone with proper demo trading or paper trading which involves visiting all the relevant FX sites.

Fast internet connection must be used. If you can afford broad band or EVDo, if not, some dial up can equally help but not all.

Emotion control. Greed and fear are one of the greatest enemies of forex. With good training, the use of stop loss, profit target and trailing stop can always be used to tackle them.
Identifying the periods to trade and when not to trade. Most successful forex traders enter the market outside the market price i.e. buy stop and sell stop even at news time. If you are already trading forex without enough knowledge of Resistance and Support (R-S), please, logout your system now and complete your training session.

Risk management- As a starter, please don’t use more than 5% of your margin to place a trade to enable you stay in the business for a long time and achieve better returns. For instance, it’s better for you to place 10 trades with $5each than to place one trade with $50 in terms of portfolio management. At most, you lose four trades and win six and your capital keeps growing.

Trading the news- Some successful FX traders trade only the news which gives them time to be doing some other things. The news can be seen on sites like, www.forexfactory.com, www.dailyfx.com, www.actionforex.com. The news can be viewed early in the morning before those events or in advance since it comes out by weekends.
• Don Anetoh (ACA) 0802-312-0434
info@forexconsult.net