Forex gets a pretty bad wrap across most traditional investment circles. Many view it as an online casino filled with marketing sharks full of hot air, or that it’s dominated by big banks leaving little opportunity for smaller retail players.
For the most part, this is actually true. There are a higher than normal proportion of sharks out to take unsuspecting customers funds by selling “the dream” and the big banking institutions do benefit from the smaller retail traders losing money in the market.
However!
That’s not to say it’s impossible to make money trading forex. Quite the contrary!
In our experience, a trader can extract consistent profits from the market provided he or she is plugged in with the same quality market information and he/she has the experience to recognise when they have an edge in the market and when to stand aside. Couple these factors with diligent money management and over the course of time it is possible to generate substantial returns from trading forex.
Market Information
This is easier than most people think. Gone are the days of a secret club of market movers, everything is now transparent and instant through the use of multiple sources such as Bloomberg and Reuters. Anyone can have a trading station identical to that of bank traders, all they have to do is pay for it (as do many of our traders).
An Edge
This is a little harder to quantify because it relies on the heavy back and forward testing as well as experience to know when a market is changing and how to ensure that the traders' edge is maintained. All strategies go through periods of underperformance, however, an experienced trader understands when this is happening and adjusts accordingly.
Risk/Money Management
Almost all education you’ll find online bangs on about the importance of money management, and that’s because it’s absolutely true. Every strategy needs to have rules by which it is governed, that’s to say that there is no room for emotions in this game. Experienced traders never find themselves in a position of holding a losing trade for no other reason than they are afraid of taking a loss, or because they’re merely hoping it’ll turn around in their favour. They have a plan and they stick to it.
Regards,
Andrew Lockwood
