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Forex Spread Betting – The Missing Link

“You can get rich with forex”. That’s the message we see so often from purveyors of phoney forex trading information and software, who don’t actually trade themselves.

The tragedy is that not only is this a lie, in the sense that the information being sold invariably will not make you rich, but the victims of it are usually people desperate to replace a lost income and who simply cannot afford to throw what money they have left down the drain, or worse still, get into debt they cannot repay.

Why do these forex systems not work? Briefly, because the forex market is manipulated and yet volatile at the same time. Yes, we know it’s supposed to be so huge that nobody can manipulate it, but the fact is that it’s dominated by no more than around 20 multi-national banks, who have thousands of experienced, market-hardened forex traders working for them round the clock.

These traders make returns for their employers of around 30 per cent a year. This is a truly impressive return, especially now, when interest rates on deposit accounts give hardly any return at all. But compare it to the fantastic claims made by forex information sellers – typically that you can start with a few hundred and be making thousands a week within a couple of months.

If the market-hardened traders working for multi-national banks and who have all their millions to trade with can’t make such proportional returns, what hope has the newcomer, unused to trading in the financial markets?

Well, there is some hope, actually, and the missing link is this: day trading.

Everyone purchasing information or software promising to make them rich from forex is directed towards day trading. That is quite simply insane advice. The traders who actually succeed in making money from trading forex seldom do any day trading, i.e. opening and closing a trade the same day.

Nearly all successful trades in the forex market last at least a week or so, often several months. The main reason for this is the volatility in the market. When all the indicators and all the latest news says a currency pairing has to go up, it may well go down 50 or 100 points before it goes up. Or it may go up 20 points and then go back down 50 points before resuming its upward course. That’s just the way forex is – you can’t do anything about it.

But if you’re trading with just a few hundred, or even a few thousand, and have tight stop loss levels of just 20 or 30 points, as instructed by all the so-called experts selling phoney forex courses, then you’ll end up losing all your money. You may have one or two successes but they will soon be eclipsed by the losing trades that you will inevitably have.

Successful forex traders have learned how to cut out this weakness. They trade will sufficiently large stop loss levels, so they can withstand the volatility in the market. This means they have to have at least a couple of thousand in their account, and trade at no more than one dollar (or pound, or euro, depending on their own currency) per point until they have thousands more in their account.

They also take a long view. They disregard any short-term signals, which are completely unreliable anyway, and have their trades open for at least a week, and more usually several weeks.

Of course this is a simplified explanation of how to really profit from international currency trading. You really need an experienced and successful trader to copy, and you can do this quite easily, and not too expensively. And don’t take any notice of the wild claims of the sellers of forex information, who you will find don’t actually trade themselves, but make money selling their phoney “information” that doesn’t actually work.

You’ll find that there are far more profitable financial markets than forex. Just go to our home page and complete the form for your free mp3 interview with Vince Stanzione, Secrets of Successful Trading, to find out more.

Philip Gegan

International Currency Trading – 3 Golden Rules

International currency trading, or forex, is back in favour again as the recession forces more and more people to search for other ways of making a living. Unfortunately many of them will end up losing money and making matters worse for themselves and their families.

These people invariably trade by way of spread betting. If you are thinking of doing the same then here are three golden rules to help you avoid the fate of the 95 per cent who fail.

1. Open a demo account first, and keep to that for two or three months

One of the most useful things online foreign exchange brokers provide is the demo account, where you can practise trading in forex without risking real money. You should take advantage of this and run one for at least two or three months, trading with it every day, before you open a real account.

Treat the “make believe” money as if it were real. Of course, it’s fun to be trading with big numbers, and many traders start trading at $10 or $20 a point just to see how “quick” they can get “rich”. But remember that at this stage it’s not how much “money” you make or lose that matters, it’s the number of points you earn.

Select just two or three currency pairings to trade. Don’t try to master every currency there is to choose from in a matter of months – you won’t do it. Keep to those two or three and get to know them intimately. Study the charts, but also keep informed of news and developments that will have an impact on the price. This takes some dedication that most people, who ultimately fail, just don’t have.

2. Avoid small stop losses

International currency trading is subject to great volatility. The market frequently doesn’t react as it “ought” to react. Often news, whether good or bad, has already been leaked and the market has “discounted” it by the time it breaks.

At other times the market behaves in an extreme manner, shooting up or falling by a hundred points or more in just minutes. It can have “reversals” at any time before resuming its previous course. All the charts and indicators now available will be of little help in trying to predict all this.

Amazingly, many of the so-called experts selling their courses and information, robots and other software on making money in forex instruct their students to set up tight stop loss levels. This is meant to protect against large losses when the price suddenly moves against you. Whilst you prevent a single large loss, the trouble is that you tend to collect several small losses very easily, and these add up to a very large overall loss.

You can only survive by having realistic stop loss levels. Your risk on each trade is therefore large, even if you are staking only $1 a point. This, unfortunately, is a fact of life which we can’t change. All we can do is act in accordance with the third golden rule, which is . . .

3. Learn currency trading from a successful financial trader who is willing to teach you

You’ll learn that the only people who make money through day trading forex with a spread betting account are the big banks and financial institutions who have countless millions to trade with. The forex market may be the biggest market in the world but it doesn’t mean that it isn’t manipulated. It is dominated by the world’s 20 or so largest banks, and it is their traders who make the money at the expense of small traders, mostly new to forex.

You’ll learn that the smart way to do international currency trading is not through spread betting (unless you too have millions to trade with) but through other methods such as covered warrants, where you don’t get stopped out by the volatility. Warrants may not be as fast as spread betting, but you stand a far better chance of making money with them.

To learn more, just go to our home page and complete the form for your free mp3 interview with Vince Stanzione, Secrets of Successful Trading.

Philip Gegan

So You Want To Learn Currency Trading?

The whole world wants to learn currency trading, or so it seems sometimes from the numbers buying the courses, the “robots” and the information on forex, and signing up with a forex broker. Most of them are going to fail, we know, but a minority will succeed in making regular profits.

Let’s have a look at just three things that every newcomer to forex should have if they are to stand a chance of success in this treacherous market.

1. A Demo Account.

This is available from almost any foreign exchange broker. You can have as many as you want but one should be enough, with funding of $10,000, usually, of make-believe money.

Treat this as if it were real money, if you want to really learn. Of course you can have some fun trading it at $20 a point to see how much “money” you can make in a day, but, really, you should use it to learn, and to do that you have to pretend it’s your own real, hard-earned money.

Don’t trade everything. That’s what losers do. Pick and choose. Study your currency pairings and keep them to just two or three. Get to know everything about them intimately. Then when you see a chance for profits, jump on it. That’s what the professionals do.

The objective is very simple – to show a consistent profit from one week (or month) to the next. You can learn to do this trading at no more than $1 a point. Over 95 per cent of newcomers to currency trading fail to do this, and most of them will have skipped or severely shortened the period when they actually learn currency trading by way of a demo account. Don’t let this happen to you.

2. The Simple Moving Average

The simple moving average is the only indicator, out of the dozens available, that most highly successful financial traders, like Vince Stanzione, use. It is usually used in double format (though you can use more), e.g. a 5 day moving average and a 75 day moving average. When the shorter moving average crosses the longer one it is often a signal – to buy (or close a short position) if moving up, and to sell (or close a long position) if moving down.

Just make sure you learn this aspect of currency trading thoroughly. Decide early on which currency pairings you are going to profit from and keep to those. Work out which two lengths of simple moving average give the most reliable indication of imminent moves in price, whether you’re day trading the currency market, or trading longer term.

3. A Mentor who is a Successful Currency Trader

This is your third vital ingredient, and is to be differentiated from someone simply selling information or software on how to get rich in forex. I mean someone who actively trades in the foreign exchange market and can prove that he has made consistent profits.

It’s a mistake to think you can succeed on your own. Even the most successful traders have invariably had expert guidance at important points in their career. You’ll know here I’m referring to Vince Stanzione, who has made his millions in the financial markets.

To learn currency trading properly is a most profitable and worthwhile activity undertaken by a tiny minority of traders in the currency markets. Make sure you become one of that minority.

Just go to our home page and complete the form for your free mp3 interview with Vince Stanzione, Secrets of Successful Trading.

Philip Gegan

Day Trading the Currency Market – A Word of Warning

My views on day trading the currency market are well known to anyone who has read a few blogs here. But since the forex industry – selling information, systems, “robots” and brokerage services to new forex traders as opposed to actually making money by trading currencies – is still going strong with no sign of going away, then allow me to issue a fresh warning.

All the glitzy sales pages have pictures of swimming pools and sports cars, illustrating the wealth you can expect once you’re a successful foreign exchange trader. And it’s so easy anyone can do it. Well, there are a few sharks lurking in the swimming pool and the sports car has a worn brake lining.

If you want to day trade the currency market you have to do it in one of only two ways – spread betting or fixed odds betting. All winnings are tax free in most countries, just as losses can’t be deducted for tax purposes. This is a major selling point for the purveyors of forex information.

Taking fixed odds betting first, this is where you go to a web site like betonmarkets.com and place a bet, for example, that GBP/USD will be lower than its current level at close of trading on a particular day. You can select the current day if you want to keep to day trading.

Fixed odds has the advantage over spread betting in that you can’t be stopped out before the bet expires, so if you’re right in your prediction it doesn’t matter about the volatility in the meantime. But you’ll see presently that this is pure gambling and in the long run the bookmaker always wins.

Spread betting involves a spread of, typically, two to six points, stop loss levels and probably limit orders. This is what nearly all newcomers are directed to do by all the forex systems and robots out there. But day trading the currency market on a spread betting account is a sure way to lose all your money just as much as fixed odds betting. And here’s why.

The currency markets are extremely volatile and are dominated by the really big players. We’re told that forex is a huge market – over $3 trillion per day being traded by traders from all over the world 24 hours a day – and it’s just too big to be manipulated by anyone. That’s not true. It’s huge all right, but it can be and is manipulated by just a few big players.

Apart from a few private traders who have proven spread betting strategies and who often trade under the mentorship of an expert, private forex traders have generally limited capital and last only a few months before they lose all their money. There’s a rapid turnover of new traders as there are always people new to forex arriving, ignorant of the dangers and thinking they’ve found the new El Dorado.

The rest of the forex market consists of professional traders acting mostly on behalf of big banks. There are in fact only about 20 huge banking corporations that, through their employee traders, dominate the market and can cause rapid and large fluctuations in the prices. Their actions often cause movements in price that defy the charts and indicators everyone else is relying on.

The result is that small, private traders frequently lose money on trades that should have been safe and profitable. Even experienced, professional private traders are frequently caught out. To ride out the volatility you need massive stop loss levels of the size that traders with a limited amount to trade with, and therefore to risk, simply cannot afford.

The currency market is like an ocean in a storm. The huge liners can sail through it and hardly notice there’s a storm going on, but the small yachts and dinghies get tossed around and overturned very easily.

There are much easier financial markets to trade. Trading stocks with covered warrants and Exchange Traded Funds may not sound very exciting, but it’s much easier to make money with them, even if you usually have to wait a few weeks, rather than a few hours. And if you must stick to trading the currency market then your best bet is to find someone who is an expert financial trader himself and see if you can copy his trades and methods.

Someone like Vince Stanzione. Just go to our home page and complete the form for your free mp3 interview with him.

Philip Gegan

An Online Currency Trading System that Works – Does One Exist?

Why should I even have to ask this question? Because not only are there dozens of different systems out there, but there is a rapid turn-over in that  new online currency trading systems are regularly coming onto the  market as the old ones, having been sold to death, are quietly withdrawn.

The truth is these systems make money for the people who sell them, both the original creators and their affiliates, and that, above anything else, is what drives them. There’s an insatiable market for these currency trading systems comprised mostly of people who have lost their job or face financial hardship and are desperately looking for an alternative way of earning money. So let’s take a look at what these systems are.

An online currency trading system can be anything from an expensive trading robot that makes all the trading decisions for you and implements them on your trading platform, down to a system devised by some remote trader that he posts in an online forum for anyone to download for free.

Most sellers of currency trading systems are affiliates who don’t actually know anything about financial trading. They cynically use the fact that over 95 per cent of new currency traders fail and lose all or most of the money in their account to try and persuade you to buy their particular system so you yourself can avoid that fate.

But what are the chances of anyone buying such a system avoiding the fate of the 95 per cent? Most of the people who fail have bought one or other of the systems on the market, so how do you know the system you’ve bought is a good one? The fact is that online currency trading requires not only a sound system but also the self-discipline to follow the rules to the letter.

Few people have this most desirable attribute. This works to the benefit of the sellers of these bogus systems, who invariably use a Money Back Guarantee to clinch the sale. The buyer feels more comfortable about parting with money he can ill afford by telling himself he can get it back if the system does not work for him within 90 days or so.

What usually happens is that after a while, when the system has not been bringing in the vast profits promised or, most likely, it has been losing money, the new trader tries to “catch up”, i.e. get his losses back on one or two trades on which he risks much larger amounts than the system tells him to. It’s very tempting to do this, and most new traders succumb and end up losing a big chunk of their money in one day.

As the terms of the guarantee require a record of trading to be produced with any refund request, the Guarantee itself is voidable on the part of the seller of the system who, of course, knows this is likely to happen and he therefore probably won’t have to honour his Guarantee.

So how can you, as someone new to fx online trading, avoid this fate? First, ask yourself whether you really need a “system”. This applies particularly if the system tries to tell you that you can make regular profits from day trading foreign exchange using a spread betting account. If it does then stay away. It’s almost impossible, especially for newcomers, to profit from day trading forex in this way. The market is simply too volatile. You need to be able to risk thousands to ride the volatility, and even then success is by no means assured.

Secondly, ask yourself how likely it is that the system you choose actually works at all. There are so many different systems, but still the success rate in forex remains abysmally low.

There is an easier option, which is to find someone who has been successfully trading the financial markets (not necessarily the currency markets) for years, and seek to copy what he does. Such people rarely trade forex. Finding one is not so difficult. Just go to our home page, fill in the form, and click on Submit.

Philip Gegan