Author: FTUK

12 Frequently Asked Forex Trading Questions

Posted on by FTUK

Forex trading is a huge topic and there is always something new to learn. Knowledge is power, especially when it comes to the complexities of the foreign exchange markets. If you are just embarking on your first steps in your forex journey, then no doubt you will have many questions. Here are the answers to some of the most common forex trading queries.

What is forex trading?

Let’s start with the most basic question first of all. Forex is a portmanteau word for foreign exchange and refers to the conversion of one country’s currency into another. Forex trading is the process of buying and selling currency pairs on the foreign exchange market with the aim of making a profit.

This is possible because the value of currencies fluctuates in line with market forces, meaning that it is possible to sell a currency at a higher price than you bought it for.

Can anyone trade forex?

Yes, anyone with a computer and an internet connection can trade forex. You will need to source an online broker and open an account, but you do not need to invest large sums in order to do this. Some brokers will require more start up capital than others, so shop around and find one that is suited to your price bracket.

When selecting a broker, research carefully to make sure that they are reputable and well regulated. The broker will take a fee, usually on a percentage basis per trade, so find out what their fees are and how their system works. Look at other services they offer, such as customer support and evaluation programs.

What’s the quickest way to learn forex?

There are lots of free online resources available, including ebooks, webinars, articles, and podcasts, that you can learn the basics of forex trading from. It is helpful to read widely and understand some of the geopolitical factors that influence the value of currencies, such as inflation and interest rates.

You will also need to know how to use some technical analysis tools, such as line graphs and bar charts, so that you can understand price action and identify the best times to buy and sell currency pairs.

How do you develop a trading strategy?

A trading strategy can be formed by studying market trends and setting rules for when you enter and exit your trades. This is usually achieved through a combination of fundamental analysis and technical analysis tools.

What is the difference between technical analysis and fundamental analysis?

Technical analysis refers to the process of analysing historical price patterns and statistical trends to work out probable future trade outcomes. Traders use a range of tools, from basic bar charts to more complex Bollinger Bands and moving averages based on mathematical formulas.

Fundamental analysis refers to the wider economic and geopolitical factors that can influence the markets and cause fluctuations in currency price. These include interest rate rises, inflation rates, employment statistics, and events such as elections, wars, and natural disasters.

What is leverage?

Leverage is a finance that is provided to forex traders by a broker. Many brokers offer high leverage, meaning that you can trade with more money than you actually have invested into your account.

This allows you to command larger positions than you would otherwise be able to afford. This brings you the opportunity to make larger profits, but it also carries greater risks.

Why is risk management important in forex?

All forex traders must understand and manage risks in order to protect themselves against making damaging losses with their trades. This can be done by working out how much money you can comfortably afford to lose, and investing accordingly. You should never trade with more than 1% or 2% of your total capital per trade at first.

It is also important to use risk management tools such as stop loss orders, which automatically exit a trade once a specified market price has been achieved. This can protect you from making unaffordable losses.

What are the best currency pairs to trade?

Novice traders are advised to start with the major currency pairs which have high liquidity on the market. This means that they are always in demand and are easier to buy and sell.

The major currencies include the US dollar (USD), the Euro (EUR), the British pound (GBP), the Japanese yen (JPY), the Canadian dollar (CAD), the Swiss Franc (CHF), and the Australian dollar (AUS).

There’s plenty of advice to be found online about which of these pairings work best, but as a rule of thumb beginner forex traders should always include the USD as one of their currency pairs. The USD is by far the largest and most popular currency in the world, and is regarded as a ‘safe haven’ currency that is unlikely to suffer significant and permanent loss of value.

What is the best time of day to trade?

The forex markets are global with no centralised market. This means that they operate virtually 24/7 so there are always trading opportunities somewhere. However, the major trading centres of New York, Tokyo, Sydney, and London trade in overlapping sessions rather than simultaneously.

The most active times of day are at the beginning and end of each trading day, when the sessions are crossing over in different time zones. In the UK, this is the hours between 8am and 9am, and between 5pm and 9pm. The London markets are open between 8am and 4pm.

How long does it take to start making a profit?

There is no definitive answer to this question, because it depends on how much time you have to devote to trading, and your level of knowledge and skill. The amount of capital you are trading with will also affect how much money you are making.

If you have no previous knowledge or experience or forex trading, you can expect it to take at least 12 months before you are making consistent profits. Bear in mind that even the most experienced traders only take a profit on about 50% of their trades, and it does take a lot of time and patience before you will reap the rewards of your labour.

Is it possible to combine trading with a full time job?

Yes, in fact the majority of people trade forex part time, as a side hustle to their main source of income. This is an ideal way to start, even if you eventually want to make trading your full time career.

It usually takes at least several months to develop a successful trading strategy, and it can be a process of trial and error. Therefore if you attempt to rely on forex trading for your sole source of income too soon, you will struggle and this can affect your performance.

With a sound trading strategy and the discipline to stick to regular trading hours before or after work and at the weekend, it is very possible that you will be able to supplement your main income with profits made from trading.

What is meant by trading psychology?

Trading can be an emotional rollercoaster for the unwary and underprepared, and this can lead to bad trading decisions. All humans have a primal need to accrue wealth and security and guard themselves against loss, and so when we engage in trading it can arouse strong feelings of fear and greed.

Greed can drive a trader to make risky decisions, such as holding on to a position for too long or opening too many positions at once. On the other hand, fear can hold you back and lead to overly cautious decisions. Poor outcomes can lead to a downward spiral of revenge trading in the hope of recovering losses.

Therefore, before you begin live forex trading it can be useful to find ways of keeping your emotions in check, so that they are not interfering with your decisions. Always stick to your trading strategy even when you are under pressure, and be aware of your own particular personality traits.

Impulsive people who are quick to anger may benefit from learning some mindfulness techniques. These can you help to see situations in a more neutral and objective light.

Forex trading is a steep learning curve, and it does take a lot of focus and discipline to be able to make money. However, most successful traders are just regular people who have put in some hard work and stick to a tried and tested trading strategy.

There is no need to have a background in finance or a degree in economics to become a good trader. While it is important to learn as much as you can about forex and use your knowledge well, trading is also about emotional intelligence and self-control.

If you are looking for a one step funding prop firm, please get in touch with us today.

Seven Steps To Solid Risk Management In Forex Trading

Posted on by FTUK

The world of forex trading is exciting and potentially lucrative, but it’s also a fast moving business, and traders need to be prepared for every twist and turn in the road. One of the cornerstones of a successful trading strategy is sound risk management. The most consistent profits come to those who manage risk carefully rather than take chances.

It is impossible to avoid making losses occasionally, and even the most experienced traders accept that losses are inevitable. However, smart trading is all about mitigating against the risk of losses, and that starts with solid risk management.

This may seem obvious but a lack of planning and preparation in this area is the downfall of many a newbie trader. Here are seven steps to building an effective risk management plan that will help to maximise your rewards and minimise your losses.

Understand the nature of risk in forex

First of all it is important to define what is meant by risk. The forex markets are highly liquid, meaning that currency pairs can be easily bought and sold and there is a high amount of trading activity. It trades almost 24/7 and has a daily turnover of about $6.6 trillion. This liquidity also influences how volatile the markets are.

Volatility in forex is the measure of how far the price of a currency pair fluctuates. If there are sudden sharp upswings or downturns in the market, it is said to have high volatility. If there is not much fluctuation of price, then the markets have low volatility.

The higher the level of volatility in the market, then the greater the level of risk, because drastic unexpected price movements significantly increase the chances of making a losing trade (and of making a profit). There are several different factors that can increase market volatility, so it’s important that you understand what these are and how to monitor them.

This will help you to take calculated risks that are based on probabilities, rather than guesswork or ‘instinct.’ Forex trading is not so much about natural talent and no one has a ‘gut instinct’ about a good trade: your decision making must be based on objective and well researched information at all times.

To protect your assets you need to be able to manage risk well, and have the emotional maturity and discipline to stick to your strategy in the face of rising panic. This can be easier said than done, because you will find that forex trading brings about intense emotional states such as fear, greed, anger and anxiety.

Even if you consider yourself to be immune to subjective influences, it is very easy to be taken by surprise or to make decisions based on unconsciously biassed thinking. When you are about to act in haste, put your ego to one side, and learn to step back and refer to your risk management plan. Without further ado, let’s look at how to put together a solid strategy.


Know your risk tolerance

The first step is to work out your risk tolerance. This means determining how much capital you are willing to risk on each trade. Newer traders are advised to risk no more than 1% or 2% of the total value of their account per trade. This will protect you from damaging losses while you are finding your feet and gaining experience.

The level of risk is also determined by how much capital you put into your account in the first place. This should always be disposable income or savings rather than money that you need to pay for life’s essentials.

Be realistic about the amount you can comfortably afford to lose and don’t stretch yourself beyond your means, because this will put you under too much psychological pressure and could lead to biassed and unwise decision making.

Use stop losses

Stop losses are tools that allow you to set in advance a price point at which a trade will exit the market. This will help you to avoid incurring damaging losses if the markets move against your expectations. No one can be right 100% of the time, so a stop loss acts as a kind of safety net should your currency pairs be caught up in market turbulence.

A stop loss will be automatically triggered once the predetermined price point is achieved, removing the temptation to hang on in there and hope for a change of fortune. Sometimes, you just need to cut your losses and run. We can all make wrong calls, especially when we are under pressure, so a stop loss removes temptation and contains the damage.

The stop loss order can be adjusted after the position has been opened, but most of the time it’s best to leave well alone unless you have a very sound reason to make a change that is aligned with your overall trading strategy.

Inexperienced traders often either exit a trade too early and fail to maximise on a profit, or hold out for a bigger profit, only for the market to turn and send the profit nose diving into a loss. Therefore stop losses are recommended as a standard risk management tool for all novice traders.

Be cautious with leverage

One of the reasons that so many people are attracted to forex trading is the high amount of leverage available. This is money loaned by the broker that allows you to trade with far larger positions than you would otherwise be able to.

It’s possible to open an account without a fairly small amount of capital and control positions many times the value of your deposit. For example, if the broker offers leverage of 100:1 then for an investment of $1,000 you can control a position to the value of $100,000. Some brokers will offer much higher leverage than this.

However, as you have probably already realised, these potentially higher rewards come with a higher risk. The best strategy is to start small because leverage is the most inherently risky aspect of forex trading. A leverage of 5:1 or lower is considered to be a manageable amount for new traders.

Before you start live trading, always test out your strategy on a demo account first. This will give you a chance to get familiar with the user interface of the trading platform and give you a taste of how well you can stick to your trading plan without any risk attached.

Keep up to date with economic events

The forex markets are influenced by a range of political and economic factors that affect the value of currency pairs. In particular, follow the news for reports of interest rate rises or decreases, inflation rate changes, unemployment levels, and the consumer price index. These are all indicators of how well an economy is doing.

Geopolitical events such as elections, wars, and natural disasters also affect currency value. This information should guide your choice of currency pairs and alert you to any potential market volatility, and is referred to as fundamental analysis.

Apply some technical analysis techniques

Technical analysis tools will help you to understand the dynamics of the market and make well informed decisions about future probabilities. This in turn will help you determine price points at which to enter and exit the market. Even technical analysis is not an exact science and you will need to make judgement calls based on fundamental analysis as well.

However, they are an essential tool to help measure risk and stack the odds of making a profitable trade in your favour. Line charts and bar graphs are straightforward to understand and will enable you to analyse historic price patterns and gauge probabilities for future movement.

There are many more complex technical strategies and tools that you use, so it’s worth investigating what these are and adopting ones that you feel confident about using. However, it’s still possible to be a profitable trader without a complex technical strategy, so don’t be daunted if this area is not your forte.

Learn to accept risk and deal with losses well

Finally, even experienced traders who have honed their risk management skills over several years still experience losses. It’s important to understand that it is not possible to eliminate risk entirely, and successful forex trading is all about minimising risk.

Good traders use losses as learning opportunities to see what might have gone wrong and what can be done to improve the situation next time. They do not regard losses as a sign of failure or react with shame, fear, or retaliate with revenge trading. They simply accept the loss as a business expense, take note of any points for future reference, and move on.

By adopting a similar approach and learning how to build your own effective risk management strategy, you will always have some degree of control over the outcome of your trades and will be well on your way to making steady and consistent profits.

If you are looking for a one step funding prop firm, please visit our website today.

Why Karen Horney Should Be At The Top Of Your Reading List

Posted on by FTUK

Why Karen Horney Should Be At The Top Of Your Reading List

Embracing your inner bookworm will really help you develop quickly as a forex trader and you’ll find that there are countless books out there, all written with the aim in mind of helping you reach the very pinnacle of success on the trading floor.

 

However, reading widely and enjoying a large variety of books will help you build the skills you need even more quickly and efficiently, so don’t just feel as though you need to stick to trading volumes and nothing else. You’ll be doing yourself a serious disservice if you adopt this relatively blinkered approach to learning and honing your craft.

 

Books on philosophy and psychology, in particular, should take pride of place on your bookshelf and you might well be pleasantly surprised to find just how effective they can be for self-growth and self-awareness, both of which are attributes you’ll need in abundance if you do plan on becoming one of the top traders of your time.

 

One author of particular interest for traders is Karen Horney, a neo-Freudian psychologist from Germany who, aside from receiving acclaim for her theory of neurotic needs and her research on feminine psychology, made significant contributions to the fields of self-psychology and how self-analysis and self-help are linked to mental health.

 

It’s this latter field of interest that traders are likely to find especially useful since trading success largely lives and dies by your ability to look inwards, to self-reflect, to ask yourself the hard questions and make changes where changes are required.

 

Gaining a deeper understanding of who you are, what your strengths and weaknesses are, what your skills, attributes and personality traits are will certainly make you a better trader and even potentially a better person – so if you haven’t come across Karen Horney before, perhaps now’s the time to grab yourself a copy of Self-Analysis or The Neurotic Personality of Our Time and see where you end up.

 

Horney’s argument is that our real self isn’t something permanent or fixed, but rather a set of “intrinsic potentialities” that cover everything from talent and temperament to our predispositions and capacities. All of these come down to our genetics, of course, but in order for them to develop they need to be nurtured in a positive, favourable environment.

 

While we cannot learn to be ourselves, we can certainly be influenced in one direction or another and the true self can be actualised through the way in which we interact with the external world… which essentially means that there are countless different ways in which we can develop.

 

To Horney, our real self should be viewed as the “alive, unique, personal centre of ourselves”, in which we can discover the true meaning of life… which is simply “to be ourselves fully and completely”.

 

The true self should be our main driver, allowing us to focus only on those activities that are inherently and intrinsically satisfying, so much so that we need no external validation for justifying or explaining what we do.

 

When we lose our true selves, we find ourselves floating in the ether without a centre of meaning to anchor ourselves to, without any meaningful direction, without any sense of value.

 

The end result? We find ourselves under the control of our neurotic solutions, leaving us incapable of adapting and leaning towards a tendency for excessive negative or obsessive thoughts and behaviours.

 

Horney’s theory of neurotic needs suggests that neurosis develops from the basic level of anxiety that arises from our interpersonal relationships as children, where experiences like isolation, lack of respect for needs, lack of guidance, injustice and discrimination, excessive admiration, overprotection, lack of warmth, hostility in the home and so on contribute to our neuroticism.

 

Our neurotic needs (which include the need for affection and approval, the need for personal achievement, the need for perfection, the need for power, the need for prestige and the need for personal admiration) can all lead to different types of behaviour that can have an impact on our lives.

 

For example, if one of your neurotic drivers is for prestige, power or achievement, you may unwittingly find yourself engaging in behaviours that are perhaps exploitative or even aggressive. Or if you have a need for affection and approval, you may engage in compliant people-pleasing behaviour to make sure that other people like you.

 

Interestingly, research even shows that people with high neurotic needs are often more likely to experience negative emotions, which can increase the risk of depression, anxiety, irritability, anger and emotional instability.

 

This is something to really bear in mind if you’re keen to make a real success out of trading forex, as the ability to regulate your emotions, see the bigger picture and trade with a clear head is an absolute must and a skill that all the top traders will nurture over time.

 

As soon as you let your emotions take control, you’ll start to see your trading performance suffer, so understanding where this instability comes from is your first step towards becoming its master, rather than its slave.

 

Self-discovery

 

This is where the quest for your true self really begins. According to Horney’s theories, once you embrace the idea of self-realisation, you can use the new insights you gain into how you really think and feel, and what you really believe to assume real responsibility for yourself, determining your own values and your own goals and aspirations for your life.

 

From there, you’ll make decisions that serve you in a healthy way and you’ll shy away from anything that could potentially steer you from the path of pursuing your true self. You will find the centre of gravity within yourself and this will allow you to say no to anything that will get in the way of your selfhood.

 

The real self vs the idealised self

 

Horney goes on to identify two different selves… the real self (also referred to as the possible self) and the idealised self (or the impossible self).

 

The real self needs to be nourished and nurtured in order to be realised and it’s very easy to lose touch with it, while the idealised self can never be realised because it’s a projection, a defensive strategy that allows us to cope with feeling undervalued, unloved and unsafe.

 

But there’s a third self that you need to know about and that’s the despised self… how we perceive ourselves when we are no longer able to meet the unrealistic demands (or our ‘shoulds’, as Horney termed them) that we continue to put upon ourselves, which ultimately gets in the way of us achieving our full potential.

 

And then there’s our actual self, which brings together all our strengths and weaknesses, the defensive strategies we fall back on and what we do to promote healthy growth that all come about as a result of our intrinsic nature and personality, and the environment in which we find ourselves.

 

When our real and actual selves come together in a linear fashion, without disparity, we have a clear sense of identity, of who we are. But if the two divert from each other, it can lead to confusion.

 

To tackle this, you need to let your idealised self go and truly accept yourself for who it is you really are, thus diminishing your despised self and increasing your chances of really getting to know your true self at last.

 

Underlying all this, of course, is the need for self-acceptance. Once you reach a certain level of self-awareness in your pursuit of the true self, it is inevitable that you’ll see (if you’re really being honest with yourself) that there’s still a huge amount of room for improvement, even if you have made significant inroads and progress. Old habits are hard to break, after all!

 

The key here is to embrace your true self not as you want it to be or what it could be in the future, but what it is right now… the actual self, in whatever form that takes. So, too, is it important to recognise that you may never entirely resolve your central inner conflict and it’s likely to be something that you’ll have to work on for the rest of your life.

 

However, this is something that the most seasoned forex traders will tell you is absolutely the case if you do want to make a truly successful career out of trading currency pairs.

 

You never finish growing or developing as a person or a trader and both life and forex alike are about the struggle and the striving, the development and the growth… and in order to facilitate this, self-analysis is absolutely essential.

 

Nonetheless, it certainly rings true that the more transparent you are and the more honest you are with yourself, the more freedom you’ll ultimately enjoy.

What Is Behavioural Finance Theory?

Posted on by FTUK

At the end of the day, people are the driving force of economic markets.

 

This can be either directly through individual traders, investment groups and proprietary firms, or the ultimate human hands behind the methodologies and algorithms that assist the myriad of trading technologies seen throughout the market.

 

This is also why prop firms will evaluate new traders and find ones that not only make successful investments but do so using an appreciation for risk and a strong overall market knowledge.

 

None of this is new, of course, and even early classical economists such as Adam Smith would explore the connection between psychology and economics, long before the term behavioural finance was even coined.

 

To understand the market and how it has changed over the years, it is important to look at behavioural economic theory, its core fundamental aspects and why for over 60 years it proved to be incredibly controversial amongst economists before being embraced once again.

 

Behavioural Finance Vs The Economic Man

 

Behavioural finance theory is perhaps best explained in contrast to more empirical and utilitarian theories that dominated economic discourse from the dawn of the 20th century until around the 1990s, often grouped under the name Homo Economicus (Economic Man).

 

The economic man theory, first suggested by utilitarian philosopher John Stuart Mill, is a hypothetical person who makes decisions based on a perfectly rational perspective and a narrow sense of self-interest, seeking maximum utility for each purchase as a buyer and maximum profit as a seller.

 

In the stock market, an economic man is someone who makes decisions based on an entirely consistent rationality and an interest only in maximising their own investment, which for traders is almost always maximising ultimate profit.

 

Whilst it can be helpful in the construction of mathematically-focused economic models, it does not accurately reflect investment behaviour or the market itself. Investors do not always make decisions based on rational criteria and either through bad data or bad interpretation can make irrational decisions.

 

Even taking into account that someone can make entirely rational decisions and still lose a trade, there are almost no investors that are truly rational actors, and everyone on the market floor has their own biases and limits, both of which can lead to errors.

 

Behavioural finance theory takes this into account, and works under the assumption that every trader is not an “economic man” but instead may have a set of cognitive biases, gaps in their knowledge or be influenced by a range of sociological and psychological factors.

 

Whilst the psychology of finance and economics had been explored before this, the big turning point for the field was the Nobel Prize-winning work of Daniel Kahneman and the late Amos Tversky in what they described as “prospect theory”, an evolution of Adam Smith’s loss aversion theories, in 1979.

 

Ultimately, behavioural finance theory is the idea that everyone who participates in financial markets is human and subject to the same foibles, flaws, bad days, brain fog, biases and fallacies as everyone else.

 

Assuming that people are perfectly rational and entirely selfish is why so many traditional models of economics fall apart when applied in practice.

 

Instead, it can be far more beneficial for both analysts and traders to explore not necessarily the rationale behind market movements but the biases, fallacies and irrational heuristics that could cause the market to move in unexpected ways.

 

Core Concepts Of Behavioural Finance

 

Because behavioural finance explores how psychology affects trading decisions and whether these decisions can be made better, there are a lot of different concepts to explore in behavioural finance, and likely far too many to be able to cover in depth.

 

They can, however, be separated into two distinct groups of concepts, which themselves can be separate and sorted as well:

 

● Heuristics – These are the mental shortcuts we use to make decisions when we do not have the time to gather and review our options. These can themselves be divided into heuristics focused on searching for information, and other mental effects.

● Biases and Fallacies – A bias is a weighting towards a particular decision, whilst a fallacy is a fault in our decision-making that ostensibly appears plausible.

 

What Are Search Heuristics?

 

Search heuristics are the shortcuts we use when gathering information that leads us to make a decision, often a necessity as carefully weighing up each option is often an impossibly slow option, especially when trading in a volatile market.

 

There are many different types of search heuristics, and a combination will apply to nearly any decision, but there are three in particular that affect financial decisions the most.

 

The first is elimination by aspects, often simply known as the “process of elimination”. This is a decision-making technique where a group of options are compared based on a quality about them that matters the most, with those that do not meet the requirements progressively eliminated.

 

After the first search eliminates options, the search is refined according to the next most valued quality until a clear winner emerges. This can be seen when comparing investments with enough similarities, such as an angel investor looking at startups to invest in.

 

Another common heuristic is “satisficing”, which is the opposite of elimination, where the first option that meets a minimum threshold is chosen because it is “good enough” at the expense of finding the best answer.

 

Other Cognitive Effects And Mental Shortcuts

 

There are a lot of different mental shortcuts that affect decision-making, especially in the unique world of financial markets, although some of these are often discussed in other contexts as well, particularly the first concept in this section.

 

Herd behaviour, or herd mentality, is the idea that people make decisions based on what everyone else is doing and follow the consensus. This is often a reason why a stock can rise and fall so quickly, as when a few people buy in or cash out, the rest will tend to do the same.

 

Another common mental shortcut is anchoring, which is how success and failure are often perceived as relative to a set mental reference point, which on the stock market tends to be whatever price it was bought for.

 

This often leads to traders often being reluctant to realise a small loss in a difficult market decision despite that being the rational decision, or conversely selling too early in a surging market.

 

As well as this, there is the concept of linguistic framing, which is the tendency for decisions to be made not necessarily based on the merit of the choices but instead on how they are presented to the trader.

 

Finally, in portfolio management, there is the concept of mental accounting, where money is automatically sorted into different pots based on what the money is for or where it came from.

This is why in some cases unexpected trading gains are reinvested more recklessly, a concept often referred to as “playing with house money”.

 

Biases And Fallacies

 

The most common topic discussed when it comes to behavioural finance is the logical fallacies and cognitive biases that lead to irrational trading decisions and aberrations in the market compared to models that assume rational actors and equal access to information that could affect the market.

 

The most well-known of these, as well as the first one to bring behavioural finance theory to the attention of a wider group of economists, is loss aversion, which is the fallacy that a loss will affect a trader far more than an equivalent gain.

 

That intensely negative feeling will cause traders to opt for strategies that avoid losses rather than maximise their overall profits by avoiding trades that would otherwise have an acceptable level of risk.

 

However, it is far from the only cognitive bias out there. Several biases are widely cited and discussed outside of the financial markets but have particular resonance for traders, including:

 

● Confirmation Bias – a cognitive bias where we place greater weight on any information we already agree with compared to information that stands opposed to this.

● Recency Bias – when we place more weight on recent events or information than historic ones. In market terms, this is the assumption that a bull market will keep going up and a bear market will keep falling.

● Familiarity Bias – when people stick close to what they know rather than researching new markets and solutions.

● Status Quo Bias – where people opt for choices that keeps their situation as close to the way it is as possible instead of seeking more radical changes.

● Present Bias – where people prefer to take a small gain now rather than a higher payoff later.

 

There are also several fallacies based on how people handle incomplete or difficult-to-process information:

 

● Narrative Fallacy – This is where people tell themselves or other investors stories to connect random events and information. This is often part of a black swan event or a surprising major financial event rationalised after the fact.

● The Gambler’s Fallacy – The idea that an event that has happened recently is less likely to happen again, even in cases where that should not affect the odds. This is often why an investor dealing with a string of losses will keep going assuming the next win is around the corner.

● The Hot Hand Fallacy – The opposite of the gambler’s fallacy, this is the belief that a string of successful trades should be continued, even if the most rational option is to trade more conservatively or study the market’s trajectory.

WHY TRAVEL AND TRADING GO HAND IN HAND

Posted on by FTUK

Why Travel & Trading Go Hand In Hand

More often than not, the realities of working life in the 21st century mean being stuck at a desk in front of a computer for hours on end, staring at the same four walls day in, day out. 

 

As the years go on, this can very quickly become really rather soul destroying and, when dissatisfaction sets in, depression often isn’t very far behind.

 

It’s a big wide world out there and one that’s ripe for exploration, which is why it’s so important to find a job that affords you the flexibility to work, yes, but to also devote your time and energy to other pursuits… and you may well find that forex trading is the absolute perfect choice for helping you to do just that.

 

Of course, you do still need to be at a desk for a portion of the day when you’re trading so you can make your trades and keep up to date with all the latest goings-on, but what’s great about playing the markets is that you can do it absolutely anywhere you like and you can pick and choose your trading times to a certain extent, giving you the freedom to pursue other avenues of your life while also pursuing a lucrative career as a trader.

 

For those of you with itchy feet and something of a wanderlust outlook on life, forex trading represents the perfect business opportunity for you. You’re able to travel while earning income – and what could be better than that? 

 

Interestingly, ever since the pandemic saw an increase in working remotely, it seems that one of the knock-on effects of this is a lasting trend for workcations, where work and play are combined. Growing numbers of people are now opting to head off on their travels armed with a laptop so they can get the job done and still have fun at the same time.

 

You might well think that blending work and play in this way would be counterproductive, especially given how important it is to maintain a distinction between your work and home life, but this can easily be achieved while you travel as long as you put certain measures in place. 

 

For example, you could adopt a task-based approach to work rather than an hours-based approach… as long as the same amount of work gets done and you hit your deadlines, why should you be sat at your desk for the typical 9-5? Being able to set your own hours and keep to your own timetable is incredibly empowering and happy workers are productive workers, after all!

 

For traders, one of the biggest benefits when it comes to performance is that travel absolutely broadens your horizons – and very quickly indeed. 

 

Seeing the world and being a globetrotter helps you learn all sorts of new skills that you’ll be able to apply to other areas of your life, such as resilience, self-sufficiency and independent thinking… skills that will really serve you well when you’re trading currency pairs.

 

In fact, one of the most interesting aspects of forex trading as a profession is the journey of self-discovery you’ll inevitably have to go on. It’s often necessary to be introspective and build your own self-awareness in order to progress as a trader and travelling the world far and wide can really help you develop on a personal level, something that will really help with your overall trading performance.

 

Planning & forethought

 

Organisation, for example, is absolutely key for trading success and this is a skill that travel can really help you hone. Heading off on an adventure to parts unknown takes a huge amount of planning and you’ll need to make all sorts of arrangements depending on where you’re going, covering your living arrangements, vaccinations, insurance, visas, travel documents… the list is endless.

 

But over time, the more you travel, the easier you’ll find it – and you’ll also find that your newly acquired organisational skills start having an impact on how you trade. 

 

Being organised and coming up with a plan before opening any trades is the best plan of attack if you want to drive wins your way. Markets can be very unpredictable and if your emotions start to get the better of you, you’ll find that you start making mistakes or start doubting yourself, or even start letting greed take over.

 

But if you’re organised and stick to your trading plan, you’ll be able to weather the storms that gather far more successfully and you’ll see more consistent wins over time.

 

Decisions, decisions

 

Another key skill that the most lucrative traders out there will have in abundance are excellent decision-making abilities and, again, this is something that travelling and seeing the world will really help you hone to the nth degree.

 

Choosing what to see and where to go, what order to do everything in, where to eat, where to stay, what to put on the itinerary and what to leave off it, what food to eat, what food to avoid, how to stay safe… you’ll constantly be making decisions at every turn when you’re on the road and the more decisions you make, the more confident you’ll become and the more you’ll trust yourself and your instincts and intuition.

 

The same is true for trading. The more you do it, the better you’ll become at making timely and relevant decisions that are based on rational thought, rather than emotion or whim. 

 

Travel can also help you think on your feet and it helps you build resilience, which allows you to make quick decisions in the face of adversity – something else that will really work in your favour when you embark on your trading career.

 

Stress buster!

 

One universally accepted truth about forex trading is that it is inherently stressful. This is natural, of course, because the stakes can be very high when you’re risking your money. 

 

When you’re on a losing streak, you can start to lose your focus at the same time, making poor decisions based on your emotional state… which will only increase your stress levels as you continue to trade.

 

We all know that taking regular breaks can help you with stress management, but there’s a huge amount that can be said for the mental health benefits of travelling. 

 

Exploring new and exciting plays and discovering interesting new cultures is incredibly mentally stimulating and if you’re doing this regularly, you’re sure to start reaping the benefits when you are back at the trading desk.

 

Feeling the pressure at work can have a significant impact on your mind, body and soul, but you can step back, clear your mind and renew your focus when you travel. 

 

Meeting new people, learning new languages, trying different cuisines, listening to different types of music… all of this has been linked to an increase in creative thinking and can even help you develop your problem-solving skills, which will certainly help you as a trader.

 

While a logical and well-thought out approach to trading is definitely a must, there’s also a very real place for creativity, as well. 

 

Having new ideas and being able to identify potential opportunities will really help you as a trader and this is something you can foster through travel, enhancing your depth of thought and helping you to see the world through new eyes… so the next time you find yourself in foreign climes, make sure you immerse yourself in and engage with the local culture of the place you’re in. 

 

You might well be surprised at the results the next time you’re at your computer, reviewing currency pairs.

 

Productivity boost

 

Even the most seasoned of traders will find themselves losing their focus from time to time, with productivity taking a serious dip as a result. But you can help sidestep this landmine through travel and by taking regular breaks to make sure you’re not working too hard and potentially burning yourself out.

 

Recent research carried out by the University of East London revealed that the majority of business travellers believe that workcations and business-leisure travel actually makes them more productive, with 78 per cent of those surveyed saying they experienced an increase in personal wellbeing when back at their desks post-travel.

 

It was also found that 61 per cent believed they were more productive when they returned to work, while 36 per cent said they chose to extend their business trip in order to have some more leisure time while away.

 

Unfortunately, however, it seems that employers themselves may not yet fully recognise the benefits of workcations from a mental health perspective. The study also found that 71 per cent of people say that the company they work for doesn’t actively promote leisure activities either before or after business trips.

As such, now could well be the time to consider a career move, leaving the confines of your office to take up forex trading full time. Who knows how good you could feel?

Interested in securing forex funding so you can start trading immediately? Check out the programs we have available to see if any suit you and your ambitions.

5 TIPS FOR TIME FRAMES IN FOREX

Posted on by FTUK

5 TIPS FOR TIMEFRAME ANALYSIS

Start at the higher time frame to trade Forex – Locate the larger trends, trade direction and trend analysis

https://www.youtube.com/watch?v=gNJZ_SslVEk&t=318s

After the trend has been determined on the monthly chart (lower highs and lower lows), you can look to trade in the direction of the weekly chart in a variety of ways. It’s great to utilize price action (as seen in our video) for determining trends and/or entering positions, but indicators can be utilized here as well.

As you go through and gain chart time and experience on your chosen time frames, it’s also important to understand the main time frames in Forex that most other traders will be viewing – for example, the daily chart or the hourly chart. These time frames can be the most manipulated in a way to throw traders off, so make sure to build a robust structure for identifying long-term trends.

Until the larger time frame analysis is mastered, beginner Forex traders should generally avoid trading on the lower time frames. As you get used to dealing with the increased market variability connected with the lower time frames, you can become more experienced in trading on the Forex market.

If you need clarity – take step back!

Most traders get lost in too many drawing tools to the point where they can’t see the candles. Remove some of the mess and step out to a higher time frame in Forex to regain chart clarity.

If you feel like you have enough information from a time frame, choose a shorter time frame

Once you are satisfied with your level of analysis on a certain time frame, drop down to get further detail. Ultimately, once you feel comfortable with the longer-term chart, you can then look to move slightly shorter in your approach and desired trade length times. This can inject more variability into your approach. It is important to carry out a plan and identify your perception of a trend before dropping down time frames.

Minimise the number of time frames in Forex

Aiming for three to five time frames will keep your trading at a level where it’s sustainable long term. This will allow you to understand the long-term perspectives without clouding your judgement.

As for the currency pairs you use for Forex trading, you may not need to view the monthly or weekly time frames in Forex every day because a stronger analysis is usually going to last several weeks. But, before each Forex trading session, have a set goal and plan for the time frames you intend to use to discover the information you need to make better trading decisions.

Do not go below the hourly chart

Staying above the 1-hour time frame will lead to more understanding and a better trading experience for your mental well-being. Whilst certain strategies and tactics work below this time frame, if any traders do venture below it, they will discover the mental strain and huge disadvantages that going below the hourly chart can cause in the short term. 

Conclusion

Be an all-around trader and repeat many similar trades over and over with low risk. Gather a large sample size of trades on similar time frames and iron out spots where they can be adjusted. Do not put yourself in a box, as many traders either jump on the side of ‘day traders’ or ‘swing traders’. Be both and stay on your toes. 

Forex Traders UK is passionate about educating traders about winning trading strategies. In addition to articles on technical analysis, we also write about technical mindset and other Forex-related topics. Subscribe to our newsletter to keep informed about our newest blog posts.

Share:

Share on facebook Share on whatsapp Share on twitter

LEARN FOREX TRADING

Posted on by FTUK

LEARN FOREX TRADING

Educate yourself while becoming a successful Forex Trader

Every day, thousands of traders begin trading in the Forex market, because Forex trading sounds so simple and attractive. But, every day, many people stop Forex trading as well, disillusioned and some with high losses, as the Forex trading market can be quite cruel. The Forex market offers massive possibilities, but takes a knowledgeable trader to navigate, which is why learning about the market is necessary for success.

Learn forex trading first

Forex trading is nothing like gambling. Real traders must learn Forex trading and educate themselves to become successful. The currency rate of foreign exchange and the majority of its price movement can be predicted. When you understand the market in which you are trading, use an effective set of trading strategies, and realize the right trader’s mindset, you too can become a successful Forex trader.

However, you need patience as well. Of course, if you are a day trader, Forex values can hectically fluctuate, but most often, one must take their time when Forex trading and learning Forex trading. The most successful Forex traders have educated themselves properly by reading about successful trading strategies or enrolling in Forex trading courses.

Minimize your risk of losing money

Forex is generally considered a market with a high risk of loss. If you do not minimize your risks, you may be losing your money very quickly. This danger is why it is beneficial to spread risk and only go all-in when you are 100% confident of a development. Unfortunately, that 100% certainty can never be achieved in Forex trading. There is always the possibility of economic developments due to unpredictable world events – like terroristic attacks or natural disasters.

Even the most experienced and successful traders do not have 100% security when Forex trading, but they know how to minimize risk by analysing the market to get as close to that 100% as possible. They know exactly the right time to sell when a development does not manifest in the way they predicted.

Switch off your emotions

Forex trading does not allow any space for pride or ego; it is all about rationality and functional decisions. When you learn the technicalities of Forex trading, you must plan upfront the amount of time you want to spend Forex trading, your budget, your profit aim, and, most importantly, the maximum amount you are willing to lose. The more rational your goals, the better.

Learn the best trading strategy for you

There are numerous successful Forex trading strategies available to use. When you begin to learn Forex trading, educate yourself on various strategies and select the strategy or combination of strategies that suits you best. Most experienced, successful Forex traders have developed their own strategy by combining different well-known effective strategies.

Dedicate time to learn strategies

Do not put yourself at a disadvantage by not investing the time to learn Forex trading strategies that are effective, as there is an abundance of valuable information in the market already. By learning about effective strategies, you can easily shorten your learning curve by months, or even years. You do not have to learn by risking your own money and making mistakes. Educate yourself with lessons learned from others’ mistakes. Education from experienced traders will give you the head start you are searching for.

How to begin to learn Forex trading

Do you start to learn Forex trading on a demo account or in the real market? We believe that trading is something you need to experience in the real market to truly learn. Only when you are trading real money in the real market can you achieve the right trader’s mindset. In this way you see your actual results, and whether you can remain rational within the emotional pressure of the real Forex market.

Yet even when beginning in the real market, you may want to start to learn Forex trading small. Trade small monetary amounts first, do not use your maximum leverage quite yet and minimize your risks. In this way, you are getting acquainted with the market and the dynamics of Forex trading. While you begin your learning journey, you can apply your new knowledge immediately in the real market. Little by little you are increasing your positions, even when using your leverage.

Learn Forex trading from the best traders

Every trader, even the most successful ones, once started small. As a beginner Forex trader, you now have the benefit of limitless sources from which you can attain trading knowledge, knowledge that was not available when most senior traders started.

By choosing the right course to build your Forex foundation, you can avoid all the mistakes former successful Forex traders had to make to achieve success. The proper foundation will save you a lot of time and money.

When you learn Forex trading and its fundamentals, you must treat yourself like a start-up business. Every business needs an investment to get started. Most businesses need something tangible, like stock or a website presence, but Forex trading is all about the investment of a knowledge base.

Of course, you can instruct yourself, and maybe even one day teach your own inventive strategy to new Forex traders. Reaching the right knowledge about Forex trading will save you so much time that you can shortcut your learning curve tremendously. The right way to learn Forex trading is to educate yourself and begin trading in the real market.

Want to learn Forex trading with a funded Forex account?

Do you want to learn Forex trading on a funded Forex account? Forex Traders UK is a UK-based Forex trading firm that provides you with a funded Forex account. Forex Traders UK does not work with initial trading exams or demo accounts, and you can start trading with real money on the trading floor immediately.

You will be provided with a starting capital and your capital will be quadrupled the first time you hit a milestone and doubled every succeeding time you hit a milestone. Forex Traders UK provides you with a guaranteed capital of £1 million when you show constant profit levels with a consistent trading style, regardless of if you are an aggressive or a low-risk trader.


Share:

Share on facebook
Share on whatsapp
Share on twitter

LEARN TO RELAX YOUR MIND. – A TRADER’S MINDSET

Posted on by FTUK

LEARN TO RELAX YOUR MIND

Keep Your Trading in Perspective – Look beyond your short-term goals and see the bigger, more successful picture!

In Forex trading, the bigger picture rules all decisions. When it comes to technical ability and applying the best trading strategies and risk management, trading psychology is most important!

It is not always easy to consider the bigger picture in dire trading moments, especially when pressure is involved. To achieve a sucessful trading mindset, rigorous mental work is required to stay disciplined and make the correct trading decisions.

Are you working on sharpening your big picture thinking strategy while trading? Let us delve into strategies to implement to become a big picture trader and trade successfully.

Be clear about what you expect from your portfolio- The clearer your goals, the smoother and more successful your trades will be.

Every Monday, build a plan – how do you see your week going? What risk limits are you working with? Be upfront with the amount of time you will spend behind the computer analysing, and be strict with your time! This will earn you more money in the long run.

Write your plan down and select two to three hours per day to dedicate to your trading in total, with the number of trades you allow yourself, the total risk that fits your plan, and only trade the opportunities that make sense within your specifications.

Once you have built a plan and understand your limitations to earn reasonable outcomes, you can start to work in a way in which you can see the big picture. With a big picture view, you can focus on the details of trading in a more structured way. The only leadership you have as a trader is yourself, so make sure you do enough prep work and do not jump in blindly.

Learn to relax – No matter how hectic trading can get, remember less is more and it is all in the preparation.

Like in any field, taking time away from a stressful environment to relax whichever way best suits you. Give your mind time to heal and rejuvenate after expanding with new experiences and knowledge. REST IS GROWTH.

Too many traders believe that “going harder generates more profit,” but this is not how you become the best trader and best version of yourself. The power that comes with taking a day off can vastly improve your ability to build on your long-term goals.

Another important aspect of your trading journey to focus on is embracing failure. You will find when learning to be a winning trader, that failure is something to embrace. Reimagining your current outlook on failure as a positive rather than a negative is extremely important.

Failing at something indicates many things. First, you tried and tested a method. Second, you have learned something new and can adapt your style to succeed in the future. Only through attempting and learning can you become a better and more profitable trader.

The bigger picture of a traders mindset

Now that you have the trading plan for detail trading vs the plan for the big picture, start flexing your big picture thinking muscles. In doing so, you are likely to improve your odds of success. And we have the data to back this claim – successful traders tend to think more broadly with long-term goals than the average traders by a solid 30-48%.

Forex Traders UK is passionate about educating traders about winning trading strategies. In addition to articles about trading mindsets, we also write about technical strategies. Subscribe to our newsletter to be informed about our newest blog posts.


Share:

Share on facebook
Share on whatsapp
Share on twitter

WHAT ARE THE MOST RELIABLE FOREX SIGNALS?

Posted on by FTUK

WHAT ARE THE MOST RELIABLE FOREX SIGNALS?

The best way to discover the most reliable Forex signals

A blog about Forex signals, the value of utilizing signals, the risks involved, and an excellent method of generating your own tailor-made Forex signals with limited effort.

What are Forex signals?

One thing all trading experts can agree on is that Forex signals mean BIG BUSINESS. Most people still want to get rich with limited effort, and the initiators behind Forex signals benefit from this search for easy money. If you think you can get rich by blindly following someone’s advice, you are about to lose a lot of money. Your journey to wealth will end before it even begins.

A trading signal is no more than a trading recommendation. Most trading recommendations are based on a trend or a “hunch”, but whether a trend can be extrapolated depends on many factors. Thus, a common disclaimer in the financial sector is: results from the past never give any guarantee for the future.

So, Forex signals are worthless?

Not at all! Forex signals are vital tools for any prediction; the best trade ideas come from signals. However, you have to keep in mind that a Forex signal is no more than a recommendation. Whether or not you follow the recommendation, common sense and technical analysis should always be applied to your trades.

When a certain currency pair is increasing quickly in the morning, you may expect that it will continue to rise all day. Speculation from other traders may corroborate your expectation. What if at noon, a country’s central bank is making an announcement that will substantially diminish the price of the currency pair? Forex signals can only be used as guidance to inform a hunch or your search for trading opportunities.

Forex signals by professional traders with a proven track record

When we are talking about trading signals, we are referring to trade recommendations that are issued by a professional trader, a trader robot, or a trading program. Forex trading signals typically provide you with an opening price, opening time, the take profit target (BUY), and the stop loss target (SELL).

There are several Forex signals services that have very good reviews, but, of course, these trading signals are used by Forex traders that analyse the market themselves, and do not blindly follow the market signals provided.

Several providers of Forex signals have different reviews. Do your research before you compromise yourself to a FX signal subscription. Signal scams are prevalent, and you may be buying worthless information based on incorrect or outdated information.

Forex signals scams

As you can probably imagine, signals are not an exact science, so it is very difficult to distinguish a scammer and it is nearly impossible to prove someone is scamming. To give bad advice is not illegal after all, and a scammer’s alibi is always “good intentions”. However, if you base your buying and selling strategy on this bad advice, you will lose the money that you paid for the signals, as well as the money you traded following the scam signal.

If companies offer you great results without any verifiable proof, you can usually assume it is a scam, and you should be very careful. Free Forex signals are also available, but you can lose a lot of money when you trade on false information, even if this information is for free.

There are also Forex signal providers who offer to trade your money. You should never get involved with these businesses, as you are most likely going to lose all your money.

As the Forex market is less regulated than other trading markets, and the enormous size of it attracts a lot of crooked individuals, you should always remain suspicious. When something appears too good to be true, it almost certainly is too good to be true. If you have any doubts about a company, regardless of how attractive the offer might be, avoid wasting your money and do not get involved.

What are the costs of Forex signals?

There are many free Forex signals out there, but of course, all of these providers try to upsell you something, as they have to earn their money somehow. Never expect quality when it is for free!

The paid ones instead can offer you great value, if you use the right signal services the right way. Costs can vary from below 100 dollars to thousands of dollars per year. This might seem like a lot of money, but when you consider that you could make a five or six-figure income with Forex trading, a thousand dollars is a minor investment – if you use signals the correct way.

What are the best Forex signals for starters?

Your analytical skills are the best signals in seeking trade opportunities! We always recommend beginners get to know the market. To understand how Forex trading works, read the news and drown yourself in as much as information you need to understand market patterns. Identify which economic factors have the greatest influence on rates. It is a akill that cannot be learned by reading, but by doing. Only in this way can you discover your best trading strategy.

Of course, trainings can help you to understand trading strategies and how to approach the FX market. When you have selected your focus area, you must understand the major factors that influence the Forex market. Once you understand the FX market, it will be much easier to interpret Forex signals. You will be able to distinguish which Forex signal sellers are offering garbage, and which ones sell valuable information.

Over time, you also learn how to interpret valuable information. This skill will save you a lot of time when you are able to see possible trading opportunities more quickly. With your newfound analytical skills, you can distinguish if the trading opportunity applies to your portfolio.

How do I create my own Forex signals?

As a Forex trader, you can use an expert’s opinion to advise you on where to look for opportunities, but an experienced Forex trader creates their own Forex signals. Listed below, you can find the three steps to designing your own Forex Signals System.

Step 1: Identify the key indicators that enlighten a certain trend.

The biggest challenge in Forex trading is identifying trends as soon as possible. The longer a trend continues, the smaller your possible profit becomes. A greater number of traders also see the trend and influence the rate with their trading actions.

The most successful traders use moving averages to distinguish real trends from false trends. Most traders use both a real-time slow-moving average and a real-time fast-moving average to define new trends.

Typically, when the fast-moving average shows a turning point, the slow-moving average is used to confirm the trend a while later; both are good indicators a new trend is emerging. Of course, as we must continue to emphasize, trends are never a guarantee, just a recommendation.

Step 2: Define the indicators that help you to confirm the trend.

You can see a trend in your charts, but how can you confirm it is actually a new trend, and not just a glitch, after which the old trend will continue? You need to use other sources to confirm the trend. This is often completed by using third party indicators. When you are thorough, you do not get caught following false trends and betting on the wrong horses.

Step 3: Set your risk, entry level, and exit level

Next, it is time to set your risk level and the levels of entry and exit. By honoring these numbers, you make your trade purely rational, rather that emotional. You define how much you are willing to lose on a trade and the number of pips you consider a successful trade.

Do not get overwhelmed by your increasing profits. The trends will turn around at a certain moment, and you want to get out of the trade before that moment occurs. If you have done your job analyzing the trend, you will know what to expect and when you have to settle the deal. By doing the work before trading, you maximize your profit.

Having said this, it is most important to write down all your rules and conclusions. You will know what rules to follow, and what you need to learn. In this way, you can improve your skills and generate the most reliable Forex signals. Do not forget, you are the only person who is able to create the most reliable Forex signals for yourself.

 

Start Forex trading with Forex Traders UK!

Forex Traders UK is funding you with £1,000,000 of guaranteed capital when you prove you have excellent FX trading skills. Start today with a real budget of £10,000 to £70,000, regardless of your trading experience and history. You can show your Forex trading skills on the trading floor with real money.

Forex Trading with Forex Traders UK is risk-free, as we cover your losses. Most importantly, you keep 50% of your profits, so it is a win-win situation. Start FX Trading without your own capital with Forex Traders UK!


Share:

Share on facebook
Share on whatsapp
Share on twitter