One phenomenon that derails amateur Forex traders time and time again is method complexity syndrome. They research a trading method, buy it and the minute they receive it, they jump ahead to what they consider to be “the guts” of the method. In doing so, they completely ignore all of the other aspects of trading, including risk management, discipline, and psychology.
They get into the “guts” of the method only looking for that big, mysterious, slap-your-forehead, jaw-dropping “secret” which will suddenly unlock the mysteries of the Forex universe and make them Master and Commander of every Forex pair. All too often, they find themselves completely disappointed or the “guts” reveal something they’d already heard about (but had not practiced). Amateur traders will then dismiss the method as ‘too simple’. Read more... (417 words, estimated 1:40 mins reading time)
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Forex trading: Why most amateur traders fail
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Here’s a typical trade scenario:
Let’s assume the current bid/ask quote for the EUR/USD is 1.3802/05 and you want to take a long (or Buy) position because you believe the Euro will gain on the Dollar.
We’ll also assume that you are only buying 1 Standard Lot.
When you buy this pair, you are actually buying 100,000 Euros for $138,050 US Dollars. Using leverage, at 100:1, you would need to have an initial margin deposit of $1,381 for this trade to take place. Read more... (228 words, estimated 55 secs reading time)
Forex trading takes place through major banks, market makers, and brokerage hourses around the world, who together create a marketplace for trading currencies on a near 24/7 basis.
The Forex market is always “open”; it’s the 7-Eleven of the trading world and is the largest financial network in the world with daily average turnover totaling trillions of dolaars.
It is also a growing market, as more traders turn to foreign currency trading and away from stocks. Read more... (583 words, estimated 2:20 mins reading time)
