Forex Trading Myth

Forex Trading Myth

Chitika   Maret 27, 2018

Somebody asked me...

STRANGER: Can I actually replace my full-time job with income from Forex trading?

ME: Yes. How much is your job salary?

STRANGER: $50,000 a year. Can you show me how?

ME: Your freedom depends on how much you are willing to invest. How much you are planning to invest for your initial fund?

STRANGER: $200 only. It's too risky.

ME: Ok. But it will take you 11years or more to earn $50K per year with that kind of investment, if and only if you can consistently earn 5% a month. That's on compounded . (Boom)

The Myth 

Many traders have been dreaming that they can really achieve their dream life with just a $200 of investment. They think that it's a magical get-rich-quick scheme that will give them unlimited income with a few dollars.

The Reality 

This kind of mentality makes them trade with large lotsizes with a very small fund on a live account. They usually ended up disappointed. To achieve the freedom that you've been dreaming of, you have to plan for it. Learn Forex trading at least how to earn safely and conservatively if you have a job. It is possible to earn 50% a month or more (believe me, I have friends who earn this much trading Forex fulltime) but you have to invest a lot of time and money before you can come up with the best trading plan that you have longed for. Since you are having a 9-5 job, you have to be realistic on your plan. Aim for at least 5% a month safely (very doable).

If you want to replace your job income with trading income, do the math. If you earn 5% a month with Forex trading, you need to have at least $85K fund to earn $4,250 a month, or $51K a year.

If you are only willing to invest $200 for this, you need a good consistent system that can make you earn 5% a month to make $85K money in 11 years.

So how much you are willing to invest?

PS It will take you more than 11 years to earn the dream fund if you will withdraw some profit along the way.

To Use Or Not To Use Stop-Loss

To Use Or Not To Use Stop-Loss

Chitika   Agustus 25, 2017

This has been dabateable since the beginning of Forex Trading.

Some traders say that not putting an SL is a suicide and some say that putting an SL, either visible or mental SL, is more dangerous to your fund. 

Why traders have different point of views on this? This is actually because it depends on the experience of the traders and therefore also depends on the kind of strategy that they have been using. Most likely some traders had a bad experience for not using SL that's why they are saying not using one is a no-no. On the other hand, some traders had a bad experience in using SL so they promised themselves not to use it anymore.

Another reason for this, maybe some traders became successful (short-term or long-term) on not using SL. Of course, this is debatable again to some traders. They would say that success will not last for a long time. But if you haven't experienced what the successful non-SL traders have experienced, you are not in the position to tell that what they are doing is not proper. They know a trick that you don't know.

On the other side, to those who are in dispute to those who are using SL. If they are successful, it means they know something that you don't know on how to use SL.

Opinions of traders are limited and based on what they already know and what they think they already know (There'a a difference actually hehe). It is also limited to what they have experienced.

So next time you heard a strategy from another trader and you think there's something wrong to what he is doing, do not be quick on judging, bashing, harsh comments, etc. "Respect" is the first keyword that should be in your mind. Respect on others' strategies may lead you to learn new tricks that you never thought possible. Respect promotes collaboration. Collaboration delivers quick success. 

PS - On trading with or without SL, both are equally risky if you don't know what you are doing.

What Is Forex Money Management?

What Is Forex Money Management?

Chitika   Januari 11, 2016

If you are a serious Forex trader and want to trade successfully over a long term, you need to understand what money management is and the tips related to that. Money management in FX trading online is an important issue for every trader in Forex market and even if you win a lot of profit in your trades without a good money management technique in place, your losses will nullify the profits you make at the end. That is why it is very important to understand what is Forex money management technique and how to manage the money you trade in Forex. 
You need to manage your money when trading. The goal in forex is to make profits without risking all your money. There are a number of money management.

No money management. Some traders don’t use money management; it some cases, it’s part of their strategy. Never recommend this, especially if you have limited funds. You could lose your entire deposit or even end up being bankrupt.

What is Forex Money Management?
Money management in Forex is a way by which FX traders control the flow of money in and out of their pockets. It is simply the skills on managing your Forex account and includes proper risk management techniques.

Forex Money Management Tips
There are several popular rules that answer the question what is Forex money management and they are explained below:
Risking only a small percent of the total amount of money you have– The whole idea behind the Forex trading process is to survive and survival comes first after which comes the money making. The main formula is not to put the money into trade which you cannot afford to lose. The traders should always take out the risk capital from the total money they have and they should put it only on the trade. Such money is specifically designated for trading online and is not meant for the basic essentials of your living.

Cut Losses– Use stop losses in a disciplined way. Secondly you should allow the profits to accumulate when you are in a winning position. Some experts in trading online say that “In trading, it is not what you make, profits always take care of themselves; It is what you try to cut your losses which matters a lot!”

Avoid too much Leverage- Most of the online brokers today offer a facility of leveraging and offer leveraging ratios as much as 500:1. This implies that you can control $500 worth of an asset with just every 1 dollar you place. The result can lead you big profits if things are in favour of you but if the results are against it can deplete all your account in just one sharp market move.

The idea behind every move you take should be keeping all the potential losses in mind. Leverage maximizes the chances of your profits but also maximizes the chances of your losses and therefore too much leverage should be avoided.

Quantify your risk capital. Many of the important aspects of money management proceed from this key value. For example, the size of your overall risk capital will be a factor determining the upper limit of your position size.


You might consider it prudent to risk no more than 1% of your overall risk capital in any one trade.

Thus for every smart Forex trader it is important to understand what is Forex money management and should learn and apply the techniques related to it.

We put a lot of emphasis onto this as many people believe all the ads that can be found on the Internet. These ads tell them that thousands and thousands of dollars can be earned via Forex within days. While this is not a lie, it simply doesn’t apply to beginners. You really need to have a lot of knowledge and experience on Forex trading in order to be able to make large profits. In fact, any profits at all!

So make sure you take some time to learn what foreign currency trading is all about and test your skills via one of many free demo accounts available on the market.