5 Important Things You Need To Know About Forex!

3monkies

1. 95% of traders will lose their account within the first year of trading.

2. A majority of traders are over leveraged. Are you trading more then 5:1 leverage? If the answer is YES, pull over right now and rethink what your doing. Check your leverage now using the example below:

Real Leverage = Total Value of Transaction
Total Trading Capital

if you have $10,000 in your Forex account, and you open a $100,000 position (one standard lot), you will be trading with 10 times leverage on your account ($100,000/$10,000). If you trade two standard lots, which is worth $200,000 with $10,000 in your account, then your leverage on the account is 20 times ($200,000/$10,000).

3. The reason traders are over leveraged stems from the scary reality that their account size is too small. What are you doing to increase your account size? Working an extra job? Selling stuff on ebay? Cutting superfluous costs? Better start thinking about this seriously. If your trading anything less then a $10,000 USD account I suggest you add more funds to give yourself a chance to be successful.

4. Are you still using indicators? You know the ones with the flashing lights, pretty text and cool noises. People who use indicators to tell them information are saying to anyone who will listen…”I can’t understand what this chart says so I need something else to tell me”. If this is you, please reconsider. Remove the indicators that you are using and do this instead. If you’re using a stochastic indicator, for example, to tell when a currency is over bought or oversold try this secret method. Pull up a 4hr or daily chart and see if you can spot where the pair is actually overbought or oversold using your own indicator. YOUR MIND.

5. Back testing proves my system works! WRONG. Back testing proves you know how to curve fit your system to data that is no longer relevant. It’s like saying if I had only known the lottery power ball numbers were 12,42,61,11,56 I would of won a million dollars! While back testing can tell us a tidbit of information on how markets looked back in the olden days versus how they look today, I wouldn’t put too much value on it. The past is the past. Your Father is Darth Vader. Let it go Luke.

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