How many of you were deceived in the world of Forex, because you’ve read the night unexpected or fortunes were made? Or maybe you’ve read or heard that making 50 -100% every month was achievable. Perhaps you also read that with a capital of $500 you can turn it into $10,000 in 3 weeks. And how many of you were discouraged and gave up when he realized what he heard were just empty promises.Sorry, but let me greet you with a harsh reality.
Most traders out there cannot achieve the above mentioned. I even openly say I can’t achieve 20% consistently every month. For me, I am a swing trader., for me, the setup program does not appear every day. Sometimes I just do 1 trade per week or at most 2 trades a week. So let’s do the calculations. If I risk and earn 2% and 4%, respectively, for each operation, and my win probability is 50%. If you trade 4 times in a month, my return will be 4% each month. If I were to trade 8 times a month, using the figures above, my returns will be about 8% in a month. Even with only 4% each month, on an annual basis that will be 48%pa. It doesn’t sound good, it is true that sounds good to me when fixed deposit in Singapore is paying less than 0.5% pa. So back to the 20%/month topic, in order to achieve this kind of returns, I will need to take 5 trades every month and all my trades have to be right. The question is, how many traders can be of 80% in its operations?
The next thing that I would like to share will be to take advantage of. If you read about making $10k in 3 weeks with only $500 what do think make this returns you to the possibility of other leverage. And what is true is that the Forex market offers the highest level of leverage that you can find, it can go as high as 400:1 for some brokers. This means that if you have a capital of $500. you can trade $200,000 worth of coins. Let me put it in a more ‘conservative’ manner, assuming that I am using a leverage of 100:1, this means that you can operate close to $50,000 worth of coins. Let’s say that the coins are moved in your favor by 0.5% which is not uncommon daily that means I made $50,000 x 0.5% = $250. That is, a performance of 50% of your capital in a day!! 50% return, all in a day’s work. It sounds good, isn’t it? Heard the saying that leverage is a double-edged sword? And in the world of Forex trading, there is no such thing as 100%. So if the currency moves against, you lose 50% of your capital, and you need only 1 more losing trade to blow your account!! Always remember as a trader, your capital is the ammunition. You have to learn to keep to fight the battle.
The reason I’m sharing this is because I just know a person that has many years of experience in dealing with financial products through my friend. My friend from the customs told me that the hatred burned his $20,000 account, and that certainly caught me by surprise. How could this happen if you stick to your fixed risk of every operation!? You need to lose 50 times in a row to blow your account if you risked $200 every trade and even Bobcats don’t do it wrong. The next thing my friend from customs to me was that his friend asked how much leverage do I used to trade. How much I can take advantage without doubt is the last thing on my mind as I just trade based on my fixed risk per trade and In the trade, depending on the size of the position. The reason she blown her account was because she used her capital of $20,000 for the trade of $2,000,000 value of the currency, all that is needed was a 1% fluctuation against you and your $20k is gone.
The moral of the story is Forex trading is definitely not like what some of the ads made to be where large amounts of money can be made quickly. Remember that if good returns can be achieved in such a short time, don’t you think that you will also lose the money back in a short period of time?
Learn how to negotiate with realistic expectations and you are on the right path to the success of a Forex trading effort!