Hello again! I am enjoying being a part of this community! You are really helpful. Today I am going to ask another question, What mistakes do you think you would have avoided if you had the knowledge you have now when you started trading forex, and what advice can you offer to a beginner in forex trading? I think that will be really helpful for me when I finish my break and want to start trading again!
Mistakes ? Not having a sound strategy and not having a solid risk management. You need to spend a few years of reading and researching rather than just write some questions here, to learn much more. Keep also a detailed journal when you trade. Start small because you can loose it all several times until you can get breakeven. Later you can get profitable and in the end when you are consistent profitable you have made it and can be rich from trading. All in all it is a long journey and there are no shortcuts. Speaking honestly to you. For me I spent 100 hours per week every week for the last 7 years to get my edge in trading. If you take it serious you need to do it fulltime too.
100hours a week for the past 7 years? So you spent 14 hours a day on average to learn about finance and markets? During what other time did you earn a living or pursued anything else in life or cared for a spouse or family? Sounds like utter bullshit to me. And by the way, you sound in all your comments more like someone who just fell off the wagon, I don't think you are in a position to pass on advice on finance and trading.
I had other income sources and also savings. And I am hedge fund trader now. My Sharpe is above 5 and I have a doctor degree in Quantitative trading too. What are you doing ? By the way you are very rude. You should be more polite.
I think changing your trading system all the time might be a good example of making mistakes! When you develop a good system you have to stick to that! It is simple but hard to apply. of course, you have to change your trading system when it is not a good one, but when you find something that suits you, I think you have to continue using that.
Giving trading advice or suggestions to retail traders who are into forex would be like throwing your pearls into farmyard mud.
1. Never ever never EVER open an account or trade with brokers that operate in a market-making model that trade against you and not remain risk-neutral meaning that you can only profit if they lose. There are brokers that operate in market-making model and trade against you but they remain risk-neutral by hedging against their net exposure to their clients' trade so they remain indifferent regardless of whether you win or lose. An example of such a broker is Oanda. This is VERY VERY important. If you are not able to make a profit, what's the point of trading? Trading is not playing in a casino where it's an entertainment venue and you are expected to lose. 2. Unless a currency is paying you high overnight interest that's higher than overnight charges that you pay on holding positions overnight, ALWAYS close all positions before the market closes. Never hold any positions overnight. With some currencies, overnight charges could be high and unless you are anticipating a huge gap up/down that will land you in significant profit, it's not worth it to hold positions open, incur the hefty overnight charges and deny yourself a good night's sleep. 3. Always trade minimum the standard lot of $100K USD with each transaction even by using margin otherwise it's not worth it. And there is also another reason why you should always trade at least $100K. When you trade a higher trading size, you have a higher chance of getting your trades filled better and thus have a higher chance of being profitable. It's because even when you trade with a broker that does not trade against you and do pass on your trade to be filled by their what's called liquidity broker, they operate in what's called a "A book B book" system where they still trade against clients when they think they will have a higher chance of winning against them, the clients that they placed in their "B book" and only pass the orders of those clients that are in their "A book" to be the "market" to be filled directly by their liquidity brokers when they think they have less chance of winning against them so to limit their risk and increase their profitability. They don't want to lose if they can avoid it. One of the criteria that they use to determine whether to place a client in a "B Book" or "A book" is the client's trading size. The higher the trading size, the higher the possibility that the broker will lose trading against you so it would be more likely for them to pass your order to be filled by their liquidity broker which would give you better fills, less slippages and you have a higher chance of being profitable. I wish I knew all these "inner-workings" of retail forex before I began trading instead of being mesmerized by the size of the volume of the forex market and the attractiveness of trading the most liquid market 24/7. If I had known all those before I began forex trading, I wouldn't have wasted my time doing it and would've moved on to trading other securities.
Correction: When I said liquidity broker, I meant liquidity providers. I can't believe I used that term. I must have Aphasia. LOL