Question: Fundamentals of Forex Trading You Didn't Learn in School
Question: Fundamentals of Forex Trading You Didn't Learn in School
Answer
This is what trading should be. It should give you the freedom not to depend on the money you receive, but to be in control of it. Sometimes this is easier said than done. That's why we've picked out a few critical points that need to be reiterated for every newbie trader to read. With the current expansion of the market and the ease of access to the Internet, novice traders can read a lot of things that are not really relevant. Today we are going to show you the big picture.
"If you work for the money, you give the power to your employer. If the money works for you, you keep the power and control it." (Rich Dad, Poor Dad, Robert Kiyosaki)
Who rules the world?
Traders often miss a key element of trading: not all markets are governed the same way. With stocks, things are pretty clear. The flow of money will dictate how prices are going to be determined. But this flow can sometimes be out of the context of the free market (printing). In contrast, in the spot forex market, when money enters the market, everything mostly works as the banks have decided. Prices will always go the opposite way of traders, because that's how the big banks (i.e. Citibank, Deutsche Bank, Chase Bank, and HSBC, among others) manipulate the market .
Educate yourself and don't let the dominant thought affect your critical thinking.
"One of the reasons the rich get richer, the poor get poorer, and the middle class struggles in debt is because the subject of money is taught at home, not in school." (Robert Kiyosaki)
What is the money worth?
When we think of stocks or commodities, we think of balance sheets, assets and products that help us put a price on a stock. What traders don't always understand is that currencies act differently. So when experienced stock traders want to expand their portfolio and start trading forex, they overlook the nature of currencies today. The currencies we know today are fiat, which means that they have no value of their own like in the days of the gold standard. The value of currencies today is determined solely by the major banks.
Understand what you are willing to trade as well as the key differences between various instruments, tools and markets.
"A person can be highly educated, successful professionally, and financially illiterate." (Robert Kiyosaki)
Where has everyone gone?
When beginners start trading, they are looking for quality content and support to grow. Yet many make the mistake of following groupthink which immediately puts them in the losing streak. Why does this happen? Traders who develop a herd mentality do not rely on their own analytical skills, knowledge and experience, which is one of the main reasons why they cannot remain long-term traders. Second, if you are a forex trader and just look for the areas of the chart where everyone else is, you will soon be disappointed as the big banks will soon step in and change the price direction.
Look for traders' sentiment and avoid outdated tools that are likely to give you this type of information. Your system should tell you how to avoid the big banks, not how to get under their radar.
“Most people follow the movement of the crowd. They do things because everyone else is doing them.” (Robert Kiyosaki)
Get rich in 30 days
Your favorite YouTuber or trading mentor won't be there to hold your hand forever. You must enter the game by yourself. Yes, wealthy people have advisors to keep getting high returns year after year, but to get there, you first have to learn how to trade on your own. Even trading robots (EAs) can't help you much if you don't know what trading strategy or style you want to use.
Know what interests you. Explore your options and don't believe promises of unprecedented returns.
"There are no bad business and investment opportunities, but there are bad entrepreneurs and investors." (Robert Kiyosaki)
Who are you ?
It is a sine qua non to become a successful trader in any market. As a human being, regardless of your gender, you are prone to feeling different emotions that will push you forward or tell you that something is not the best choice for you. Sometimes, however, these emotions cause us to do things we shouldn't. We use too much or too little leverage, we trade too much, we don't sleep, etc. It's not sustainable and you, like everyone else, are going to snap at some point.
Know yourself and understand your triggers so you have control over your actions. Take the trading psychology test to learn more.
"Emotions are what make us human. They make us real. The word 'emotion' refers to energy in motion. Be honest about your emotions, and use your mind and emotions for your benefit, not against you. " (Robert Kiyosaki)