3 easy steps to take money out of FOREX!

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You know that you can make BIG money in the Currency market (Forex) right?! So Why 49 of any 50 traders (98%) go BUST?
Here is a simple, risk free, 3 steps way to help you become 1 of the 2% that take money OUT of Forex.

Important clarification: This is not a “get rich fast” plan!!!
My goal here is to share how to become 1 of the 2% winners at Forex! Until you become one of the 2% do not (risk money or) try to make any money at all!

So what are the Currency market (Forex) basics are?

You can make insanely huge amount of money in Forex because:

  • On every $1 you deposit you can trade up to $200.
  • You can trade on each currency up or down. So theoretically each trade has 50% to make money.
  • The Currency-Forex market is very liquid so most of the time you wont loose more then you specified with a stop-loss order.
  • Globally $4 trillion worth traded each day. So no one trader or organization can really influence it.
  • You can trade Online in real time, anytime, anywhere.

So WHY only 2% of traders make Money?? what’s stand between us and the money?

  • Market Makers – Many of the broker companies (market makers) that manage our account trade against us!
  • Experience & Practice - Learning Forex basics, trading techniques, and technical analysis, is fairly easy. but without practice it worth nothing.
  • Relaying on common knowledge - Beware of relying on your Trading Techniques and Technical analysis!!! Your broker and the big firms give you the market data AND teach how to analyze it! Do the math! If you just follow your learning they will know what you are going to do!
  • Relaying on paid knowledge- Paid: Trading robots, Signal services, guru analysis, market reviews, etc.. Are all just another way for the pros to get money from us. btw, even the services that worth paying are absolutely USELESS for beginners. (beginner=trader that doesn’t make money!).
  • Professionals & firms- There are big firms with huge accounts that their trading strategy is to try and take our money. They statistics on the regular traders.
  • lack of talent – Maybe Forex is not your thing. When is the time to say quit? Can you find out without giving money to the pros?

Wherever we find money, we would also find people and firms that would try to grab as much as they can of it. Wouldn’t we do the same?
It is obvious that if trading currencies would had been “fair” each trader would have almost 50% to find money in Forex. The statistics show that only 2% of traders make money.

And by that we are getting to:

How to get money out of Forex without risking money

Its not a magic formula, if you want to buy a worthless dream go to the pros!
I am going to describe here a simple way to level up the field for beginners
(don’t forget:  beginner = trader that doesn’t make money!).

  1. Open at least two Forex demo accounts
    Opening several demo accounts with different companies will give you:

    • Access each company market data, learning material, signals, and forums.
    • Find out which is more reliable.
    • Test different trading strategies.
    • Familiarize yourself with different trading interfaces.

    I always keep one demo account for Betting, its keep me from betting in my other accounts!
    If this is your first time with Forex, start with a betting demo account. It will help you to understand the trading basics and develop trading preferences that would help you in building trading system. And after two or more Busts in the demo account it will convince you that a money management is an absolutely MUST!

    Open your demo accounts,
    Click here for Forex companies resources and listing.

  2. Learn Forex:
    There are several things that you need to know when trading:

    • How  to place different trade orders.
      When you open your demo account the Forex company usually give you several tutorial videos on how to place the different trade orders.
    • Forex fundamentals.
      These are the underlying economics that control the Currency market (Forex). You should know how the news affect your trades.
    • Technical analysis.
      This is the art of looking at the price charts and try to guess what going to happen next.
    • Money management.
      This is probably the most important skill you have to learn to be a profitable trader. It is the only thing that protect you from unknown economical events, mistakes in analysis, and wrong news.Click here for Forex Tutorials resources.
  3. Make a trading system.
    Trading system is basically a very strict Money Management combined with your trading preferences. Again – I can not emphasize enough how important it is to have and test money management system before trading. I am going to add several articles on this issue.
    You have to test your trading system! if an account go bust or the demo period has ended, send the broker an email and ask for demo extension. They will most probably grant it to you several times. and if they wont.. well there are a lot of brokers.

 

My rule of thumb of a successful Trading system is if you test it on a Forex demo account for at least 4 weeks and at least 50 trades and the evaluations are:

  • Your account is profitable (it doesn’t matter how profitable).
  • You didn’t lost more then 3% of your initial account balance on a single trade during this period.
  • At no time your account fall below 85% of its initial balance.

If any of these is not true, rethink your system and try again!

One more thing,  you need to be comfortable with your trading system. If you get sweaty thinking of taking it live, then you should test it for another period on a demo account, and then re-evaluate.
When you take it live. Try to make only $1 per week for 4-8 weeks, after you get to be 1 of the 2% winners you will know what to do next!

That’s all.
I had lost alot of money on Forex before I learned it all. In my humble opinion this is the only way for a beginner to have a real chance of making money in Forex.
Please share your thoughts!

Good luck and Please share your thoughts!

Forex Tutorials: Forex Terms review with practical Tips

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This article is not only a terms glossary, with its practical tips it can give a beginner a good starting point about what the Forex market is all about.

Forex Spot (Spot FX) trade

Forex spot trade refers to a current trade of the currencies in main Forex market. In oppose to the other trades types like Forex Options and Forex Futures that mostly refer to buying a contract to buy or sell currencies pair.

Trading days and time

The Forex market can be traded from Sunday 5PM EST thru Friday 5PM EST.

Tip: The fact that you can trade 24 hours a day doesn’t mean that it’s the most advisable.

Currency pair

All the currencies are traded in pairs, so if I want to trade Euro against the US Dollar this pair is called EURUSD. The quote price is for the pair itself and is the price of the first currency (in this case Euro) in the second currency (US Dollar).

Ex: if the EURUSD ask is 1.3055 then each Euro costs 1.3055 US Dollar to buy.

PIP

Pip – ‘percentage in point’ is 1% of 1% which is 1/10,000 of the currency pair price.

Ex: the difference of 1.3055 to 1.3075 is 20 pips.

PIP value

Pip value is the multiplication of the position size and 1 pip. It is used for fast calculation of the gain or loss on a position by the pair pip changes.

Ex: if our position equal to $100,000 1 pip value would be: $100,000*1/10,000 = $10. The pip value is $10 per pip. So if our position moved from 1.3055 to 1.3075 we made 20 pips which is 20*$10=$200.

Long position

When you Go/Buy/Open Long position on a currency pair it mean you buy the first currency and sell the second.

Ex: Open Long 10,000 on EURUSD mean buy €10,000 and sell its worth in US Dollar (about $13,000 today).

Short

When you Go/Sell/Open Short position on a currency pair it mean you sell the first currency and buy the second.

Ex: Open Long 10,000 on EURUSD mean sell €10,000 and buy its worth in US Dollar (about $13,000 today).

Market Order

A market order is to buy or sell a currency pair in the price that is available when the order is filled.

Slippage

In market order, the difference between the quoted price at the time of the order and the actual filling price called slippage.

Take profit order

Take profit order can be attached to an open position or a new order. The take profit order would close the position after a specific gain would be reached.

Stop loss order

Stop loss order can be attached to an open position or a new order. The stop order would close the position when the specified loss would be reached. It meant to limit the amount of lose if the currency goes against you.

Tip: Forex is a fast moving unpredictable market; stop loss on every order would protect your account more than anything else. Think of it as a safety net you can do without it 50 times but if you’ll need it and it won’t be there your account will be dead or seriously injured.

Trailing stop loss

Trailing stop loss order is the same as a stop loss order with one change, it follows the position gains.

Ex: if you had set up 30 pips trailing stop lost level. The position gained 50 pips and then started to lose; the trailing stop loss would close it when you are still having 20 pips gain.

Spread

The spread is the basic commission that the broker charges the trader. When you get a quote from the trader you get a buy price and a sell price. The difference between them is called the Spread. The spread might be fixed or change according to market volatility.
Example of spread: If a spread is 2 pips and you long on the EURUSD then you would need The EUR rise by 2 pips before you can sell and breakeven.

(Extra) Commission

Usually when trading Forex the only commission is the spread as mention above. Some brokers have additional fixed commission for trades less than a certain size.  The standard sizes (Lots) are described below.

Tip: Make sure that your broker doesn’t charge you extra commission for trading Micro/Mini Lot. Trading in these Lot sizes is a highly recommended for learning the Forex market.

Standard Lot

Standard Lot is 100,000 units of the currency you had founded your account with. If the currency is Euro then it a standard Lot for this account is €100,000.

Mini Lot

Standard Lot is 10,000 units of the currency you had founded your account with.

Micro Lot

Standard Lot is 1,000 units of the currency you had founded your account with.

Leverage

Some brokers let you place trades of up to $400 on any $1 in your account.

Tip: Using high leverage is the fastest way to lose all your investment.

Interest rate differential

The difference of interest rate of two currencies in a currency pair. For example if Euro has an interest rate of 6% and the USD has an interest rate of 4%, the Interest rate differential would be 2%. So theoretically if you would go Long on EURUSD you would be gain 2% annual interest on you trade. If you would go Short on EURUSD you would pay 2% interest on your trade.

Rollover earn/charge

The broker might pay/charge you the interest rate differential for keeping a position open overnight. Mostly rollover is applicable if a position is open in a specific time of the day usually 5pm NY or during the no trade time in the week end.

Tip: Each broker makes its own rules about rollovers. Read the broker’s terms because most of the time considering rollover the trader gets the short end.

Interbank market

Refers to the top level Forex market where banks all over the world trade currencies between themselves.

Market Maker broker

This type of broker acts like a mini currency exchange. The traders trade with the broker in the prices that the broker provides. The broker can then choose if to keep a position against the trader, fill the position against a clearing bung or the interbank, or fill it against another trader.

Tip: Because that this broker can hold a position against the trader, it is also true that the broker can profit from trader lost. There were many complaints on price manipulations and execution time manipulation against this kind of brokers.

ECN Broker

This kind of broker directs all of its trader’s orders straight to the interbank market. There is a minimum trade size, so many of the ECN brokers direct the orders to secondary interbank like market.

Tip: ECN usually has additional commission except the spread.

Dealing Desk

Dealing desk is where the trader’s order is received by the broker and the broker take action to fill them or reject them. You won’t find dealing desks on ECN because the ECN broker direct all the orders outside.

No Dealing Desk Broker

Usually refers to a market maker broker that directs all its trader’s orders to the best clearing resource it has.

Tip: check that it doesn’t have a software dealing desks.

 

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First rule of making money…Dance for you | About

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Some time ago I realized that I am like a dancing monkey. It didn’t matter that I had a good job with a nice paycheck. My expanses grow as fast, if not faster then my paycheck. I took more and more job responsibilities, earned more and more money spent more and more money and saw my family less and less.
I always felt an urge to work more, earn more and this is exactly what I did. This urge, this dancing monkey urge came whenever I got my retire found report, whenever I got my monthly credit card reports, whenever I got my utility bills, whenever I thought about my future, whenever I thought of buying an house.
I danced for money, made my employer richer.

I thought to myself why can’t I take my money and pay some one to make me richer. Something like the credit card companies. They are actually making money dance for them and earn them more money! They throw money (that they borrow) at us, and then send the bill-collectors to collect it back. and pocket the difference of interest!

This is not the case with me. If I will throw money at anyone or anything, I would probably won’t see it again!
Another moment to think and I realize that This is what I did, I throw money at things that would never pay back! The luxurious car, the extra-smart smartphone, traveling business class, the designer clothes.. and so on.
AND YET ONE MORE moment and I realized that this WAS NOT my worst sin of throwing money. The fact that I had leased my car, the fact that I bought on credit (card), the fact that I paid for a cell phone monthly plan that I barely used. These where the real throwing money that wont come back.

With these realizations, I set up two goals:

  1. Lower my urge to dance for other people money by decreasing my expanses!
  2. Making my own money dance for me and make me richer!

This is what this site is all about.
This is my on going quest to have enough money dancing for me so I could relax and enjoy the show.