I created this blog with the aim to publish and discuss concepts, methods, tools and insight as related to making money on the spot foreign exchange (FOREX) market. I have been trading the FOREX market for two years now. There seems to be a lack of basic understanding of how to trade profitably in this market, and I believe that the lack of such basic understanding is the reason why a larger proportion of traders who try this market end up quiting at a result of losing a fraction, and in some cases, all of their capital.
A new trader typically starts by opening a demo account using non-real money, and learns about methods and tools to trade. It is my opinion that a new trader needs to first understand some fundamental concepts, and appreciate their critical role in being successful in trading in general and FOREX trading in particula. The lack of sufficient and deeper understanding might be the fundamental reason why only a small fraction (10 to 20%) of the traders become winners and therefore stay and thrive in the market. Their wins come from the other traders (includinbg 8 out of 10 of newcomers who end up quiting). There is a continuous flow of new comers in trading.
A pre-requisite to be successful as a new comer to this market is that you must understand some key concepts and appreciate their importance.
Example of such which I will discuss are:
1. Margin
2. Leverage (Margin and leverage are two different things)
3. Effect of randomness, and the importance of not getting fooled by it.
4. Expected return, and some of its implications.
5. Managing your balance, and its growth.
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