Forex strategy - Advantages to the retail FX trader
Among the advantages to the retail fx trader in trading off fundamental data is that the information is readily accessible through sources such as Bloomberg and Reuters, and that the retail trader can actually act faster than the banks and hedge funds.
Forex Signal
False
You are wrong in thinking that you can make money in FX as a single investor over the long term.
You are getting fucked by:
1) Black boxes with HFT systems 2) Your broker which is most likely a market maker, hence taking the other side of the trade.
FX retail trading is for suckers. You'll win some here and there, but you will eventually lose every dime you put up. The way they leverage and margin almost guarantees your failure. Some of these shops leverage you up multiples of 100 times and the slightest move against you has them margin call you out of the trade.
The old 95% rule comes into play here. That is 95% of retail forex traders will fail. The other 5% last because they have a clear plan abd developed the psychology to execute the strategy. It's not easy but it is possible.
That being said if you like trading and possibly wantto be a trader in th future you should open an account. Just be prepared to lose all your money. Think of it as a fee for the experience.
The trading forex is very interesting, so, the practice in very important, you can learn currency trading online about forex
the only advantage you have as a retail FX trader over price-taking banks and hedge funds is that 100k can be filled a lot (pun intended) faster and cheaper than 100MM.
I've been trading equities a long time (personally, and more recently, professionally) and I have had a number of different types of accounts with different strategies in mind.
That said, the fx market sounds so enticing. You may trade nearly any time of the day or night, there is typically an actively traded market in any currency, and you can make a boat-load in a very short period of time. However, you can also lose a $hit-pile in short order as well. I did have a colleague a number of years ago who had a girlfriend who was in the currency markets in some way. He said she'd trade the fx market weekly and typically make anywhere from $5 - 1500/week.
Who knows the validity to the claim. I just know that I looked into trading on the FX markets but common sense steered me otherwise.
I never understood why so many people think consistently returning in the FX market is so impossible. I have been trading the FX market for almost 4 years (i started trading senior year of high school) and yes I will admit it took me a while to get consistent but my point is it is very doable.
The biggest thing I notice with novice traders is they open up an account and then just risk it all and then when they lose all their money they blame it on the market and don't take any responsibility. That's why consistently profitable traders have specific risk parameters which will prevent them from blowing up there account. In my case, I only risk 1% of my account per trade.
To be completely honest, FX trading is easy. People overcomplicate things by adding a thousand different bullshit indicators on their charts and then they complain that they lose money when there MACD or RSI indicator doesn't work. My biggest recommendation to all FX traders is to delete every indicator on their charts and learn how to read the market with simple price action, trend lines, and support and resistance. Once you have mastered reading the market you'll realize that the simplest trading strategies are the ones what will be consistently profitable.
Fast forward 3-4 years and I am now consistently returning about 4-5% a month while only risking 1% of my account per trade. I am up about 32% since the end of the summer and around 10% on the year. If anyone has any questions feel free to ask away.
Krash,
If you're making money in the FX markets, by all means, keep doing what you're doing. Not trying to be offensive, but you did say you were fairly recently out of high school. Think it is literally FANTASTIC that someone your age would be interested in trading currencies of all things.
That said, someone with as little true trading acumen as you have, you haven't experienced some of the unexpected hedging that goes on in the equity markets from other major markets around the world that can make a call go south in a hurry. You haven't experienced any major black swan events if you're fairly new to FX trading.
I truly wish you well. I hope you make a mint. Perhaps if I had as much on the ball at 20 years old as you do, I'd be sponsoring my own blog by now. Just be safe. FX can get dangerous quickly.
Seems like you hit pretty much everything on the head with your response (even with my age haha). Your right as a 20-year old I really haven't experienced any crazy events except the unpegging of the CHF a few years ago. Even though I am only a few years out of high school I know that I have already developed a skill and an edge with FX trading that many others fail to develop.
That said, I do acknowledge that I only really have trading experience on the retail side of things and I would say that is my biggest weakness. That is why I am trying very hard to secure a role on an FX desk at any type of institution.
But as mentioned in my first comment, I have a strict risk management system in place and at this point, I know exactly what type of trade setups to look out for and to take. To be honest, I know how to pitch my trading and my system very well and I wish more people would take an interest in FX because a lot of people are missing out.
All that said, if you have any other questions let me know.
Krash,
Good for you. Don't know that there is any "fool-proof" strategy out there, but do know that many work a majority of the time. One simply needs to know what markers to look for in order to avoid major downfalls.
I, too, have a strict risk management style, but my system is associated with equities. Perhaps it would/will transfer easily to FX, but I've seen firsthand some debacles over the last 10 years with others in the FX markets. With equities, one may buy and hold if there is an upset in the biz model. On the FX market, when a currency goes down, it tends to feed on itself all the way to the cellar before bouncing back, if it does.
Just my perception. Congrats again. I feel you pain trying to translate retail profits into a job on the streets. I've been trading for more years than you've been alive, had a margin account for nearly as many years, brokerage account for ~ 15 years, etc. etc., but the big boys love those guys with the ivy league educational backgrounds. Supposed I was born with some brains, but not silver spoons or inside tracks.
Such is life. The Good Lord has been very good to me and mine for many years now anyway, just no fabulous wealth. Probably a blessing in disguise!
This guy knows what's up +1. To add on to this, most retail trader use a hilariously low time-frame because they are looking for pips instantly, and wonder why they get slammed on minutes later. There is no solid demand, and supply levels during the day. The black-boxes, HFTs, whatever are literally designed to knock you out intraday.
Best advice I can offer to new ones is to find a very high time frame setup (at LEAST 4 hour candles), line up supply/demand levels based on previous price action, and be patient for the best entry you can get.
On my most successful trades, I've started out on the monthly > weekly > daily > 4h, THEN I zoom in to see if I can get a better entry. Set my stops strategically, and check it once every day or so.
Is it safe to use moving averages
I used to work in retail FX trading (GAIN Capital), so I'm happy to shed some light on this issue. Firstly, I'll echo what Capitalist and krash11554 wrote: it's certainly possible to make money trading forex and contracts for difference.
FXCM (a leading broker once upon a time), published a great study on this exact subject a few years ago. It found that most trades conducted by retail clients were winning trades. However, the size of the average loss was significant larger than the average win. If I'm not mistaken, I believe the ratio was around 3:1. Needless to say, the average retail trader lost money. While most retail traders lost money for this simple reason, there are a small cohort of traders who consistently make money. Given the kinds of returns that are possible with (prudently managed) leverage, these traders are "raking it in".
With regards to translating your success as a retail trader to an institutional job, you have to consider the perspective of an employer. An Ivy League/Tier 1 college graduate is very hard working, great at following instructions and is (generally speaking) afraid to rock the boat. You can see this kind of profile is very attractive for any employer.
Someone who self-identifies as a trader (particularly one with a successful P&L) is financially independent, knows what they are doing, and is generally resistant to following instructions. In a corporate setting, the last thing you want is someone who is financially independent (or someone who can easily become financially independent). This is why having a successful track record actually hurts you when job hunting. Instead of a large institutional broker, you are much better off looking for roles at a hedge fund with an "eat what you kill" culture.
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