Forex trading is not a walk in the park

The only way to succeed is through education and risk management. My journey started with an organisation that had, as a lead trainer, Nick Leeson of Barings Bank fame. It was a great experience and he did provide some very useful information relating to risk management. I could also have bought one of the Black and Yellow blazers that his team used to wear but declined.

It was at this point that I realised that Forex Trading was like being in a casino where you were always looking for an edge. Most people consider that if you were in a casino betting on red or black you have a 50-50 chance of winning. You don't! The reality is that the odds are in the region of 48.6 because of the existence of 0 which is neither Red or Black and gives the house an edge. Also the house limits their risk for each table to typically £2000 which also gives them an additional edge and is there stop loss. In Forex there are a number of edges for the house. One of the key elements is the spread between the Buy and Ask price. This flexes and when things get volatile it gets wider to protect the house.

The internet is awash with accounts where you get access to real time data in practice accounts. These give you an opportunity to see if, even in this low risk environment, you can profit. If you can’t then you won’t be able to do it in the real world. There is also a concept that you need to trade with real money to understand the exposure. I do not believe this and suggest that you just need to calibrate your mind to gain the most from this simulation.

In recent years there has been an increase in the number of “Prop” firms (a company that provides its traders with access to capital, in return for a percentage of the profits generated). Often they don't exactly do this and I will discuss this in my next article. I do recommend that you only trade in demo accounts until you can be consistently profitable. The company named FTMO provides a free trial which forces you to take a disciplined approach. I have passed the challenge on a number of occasions but until they are consecutive wins I will assume I am not consistent enough to move on.

I have traded for 4 years and have not really made a breakthrough not loosing money but neither have I made enough for it to be a main income.

I have therefore pursued it as a personal interest/hobby and a mental exercise but have not yet cracked the code. It is clear that you should not be fooled by the euphemistic youtubers who mostly have not made a success of it but live by the code “if you cant make it fake it”.