Getting Into Forex

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The first think you'll need to do is at least learn the basics. More to come later on.

TLDR

  • Forex is putting a dollar value to the rise/fall of currency pairs.
  • Forex isn't for everyone.
  • Go to BabyPips and study - and watch the videos in the YouTube link.

You can do the cTrader and BabyPips courses and be ready to trade after. One of the best things to use is the Forex Hero site - their app is golden and free on Android and iOS. The recommendation is to use a demo account until you have a strategy you're comfortable with then go live. By "go live" I actually mean opening a small account with a broker (cent account) and earn a small amount for 3 months before going with a larger account or prop firm. While learning a concept runs at difference speeds for each individual, the suggested timeframe is:

  • 3-6 months of demo. More if needed. Less if you think you're ready.
  • 1-2 years of a small live account.

If after that timeframe if you find you're not progressing - get out of trading. It makes no sense to keep throwing money at it and not progressing. If you find that you're the slower learner, then continue to use small accounts (micro) with USD$10-$50 depending on your budget. Once you're able to gain pips, you can move up to a larger account.

Added Links

Here's some links that may help more. There may be some duplicates.

Longer Version

Information about Forex can be found on INVESTOPEDIA. A very good site for quite a lot of info. I’ve butchered the information that I recall from my own research and added it here. For something more comprehensive please see the linked articles.

https://www.investopedia.com/articles/forex/11/why-trade-forex.asp

https://www.investopedia.com/terms/b/brettonwoodsagreement.asp

The term FOR EX is a shortened form of Foreign Exchange. If you’ve been to a bank or other place and traded in your home currency for some other currency that’s Forex. If you’ve received money from overseas that was in another currency, and it had to be converted to your home currency – that’s Forex.

Forex is simply the exchange of currencies.

A BASIC SYSTEM

Here's one of the most basic systems I can think of. And is the basis of what I do. Use a couple MAs and RSI. If you want to find and purchase TDI you can do so - there are also free TDI versions available online.

Disclaimer that this is basically a strategy used for scalping. The principle can be applied to longer term trades though.

Open a chart with a 50 EMA and 200 EMA. Switch between the 15 minute, 1 hour and 4 hour chart. Note that the lower MA is basically equal to the higher MA on smaller timeframes. That's to say - the 200 EMA on the H1 is the same as the 50 EMA on the H4. With a certain cluster of MAs you can tell where price is on a higher timeframe without switching to it.

Look for price action, candle formations, patterns or support/resistance levels. Let's say you have an engulfing candle on the low or a double bottom formation. You get that on the H4, D1, W1 or MN timeframe. You drill down to the lower timeframe and trade long (buys) until price has reached another level or MA before you get out. Do your confirmation of a break/trend/move on the higher timeframe - enter on the smaller timeframe.

Something else would simply be...identify the trend. Is price going up or down? OK. Did it bounce off an MA or a level? Enter on the next bounce.

I mean - you could complicate it more by using fibs and QT and such - but that's just to keep it simple. And you can actually win with something like that. There was another very simple strategy which I saw....

Use Heikin Ashi candles on the D1 with a 20 SMA. If price is below the SMA - prepare to sell. If it's above the SMA - prepare to buy. You'll confirm your buy/sell entry if the Heikin Ashi candle is red or green. Red and below the SMA is a sell. Green and above the SMA is a buy. Then you'll switch to another type of chart and use other confluences for your entry. You can't get much more simple than that. Unless you're going to do a simple MA cross.

STATISTICS

Another thing I was obsessed over in the past was stats. I actually had an account where I had zero losses for 3 weeks straight. Decided to stick it out and do that - but it takes a toll when you have a job other than trading.

Stats are nice to look at - but in the end you really want to look at 2 or 3 things.

  1. Pips.
  2. Percentage.
  3. Balance.

Where pips are concerned, it actually is possible to have a negative amount of pips and a positive percentage or balance. Imagine having a 30 pip (300 tick) win with a 0.30 lot size - about $300 win - and then have a 1,000 pip loss (10,000 ticks) with 0.01 - that's about $100. You're ahead with percentage and have increased your balance - but your pips are in negative by -700.

At the end of the day - ensure you're ahead. Do what is needed for you to push forward.

MENTALITY

Yes - you can make 100% or even 1,000% profit in trading after 1 week or 1 month. But that's very high risk unless you have a large enough account.

1% of $50 is $0.50.

1% of $500 is $5.

1% of $10,000 is $100.

If you can grow your account CONSISTENTLY by a small percentage each month for 3-6 months - you're well on your way to making money in trading.

Get in with a demo account to LEARN about the market - develop a strategy or adopt one - use this strategy for a minimum of 3-6 months to see how it works for you. Once you're comfortable with the strategy - move to a live account. Some brokers offer "cent accounts" where you earn very little, but it's actual market conditions. Some demo accounts are not subject to gaps, spikes and other movements in actual market conditions. A real account as well - regardless of how small - affects your psychology differently. Trade that small account for another 3-6 months and grow it consistently successfully. I've attached an Excel file where you start with $50. At the end of one year you should have over $600 - and that's at 1% per day.

Based on how this is - the file will probably be at the bottom of the post. It's called "1YEAR CI Calculator.xlsx" - it's an Excel document to help you project your profits once you have a system in place.

If you don't make your 1% per day - it's fine. If you make more - you're ahead and can take it easier. Do what you're doing consistently for 3-6 months to solidify the method you're using. Once you've done so, you can add more to your account and keep with the strategy.

Note that with a small account you can't open anything smaller than 0.01. The risk is higher with a small account. Your calculation of the lots to open - based on your strategy - should be around 0.01 for every $100 you have. You can scale upward from there.

If you want to take risks with certain types of over-leveraging on a small account, you're free to do so. Just bear in mind the risks. It's better to have consistent performance than to take large risks and lose.

For the persons that have looked at the account - yes I did heavily over-leverage at certain points based on the account size. I wouldn't have grown it so quickly otherwise. As the account grows however, the risks should go down. One of the things I've done - and I do not recommend this or put it here as advice - is to take a larger size position - like 0.10 for example - and then close it after it goes in profit by say....+$5 or $10. I do a partial close at this point of 0.08 or 0.09 and leave the remaining position of 0.01 or 0.02 to keep running. This is only done on entries that I can either sit and watch or those that match my entry rules by 85% or higher. This reduces the overall risk and gives me a boost to the profits and percentage. It increases my drawdown however, but that's inevitable with a small account.

Once you get your account larger - stick to the rules you have and the estimate of 0.01 lot to every $100 in your account. Meaning you can take a maximum of 0.10 for a $1,000 account and 1.00 for a $10,000 account.

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